After delays led to an additional 664 calendar days of work on an important highway bypass project in West Maui, Hawaii, the project’s general contractor is suing the Central Agency of Federal Lands & Highways (CFL).
General contractor Hawaii Dredging Construction Company (HDCC) is suing the CFL for $6,576,968 after multiple notices by HDCC to CFL about increased costs to the project that were rejected or allegedly took up to eight months to receive a response. According to the suit, these cost hikes were due to the prices of the materials needed for the project, as well as delays getting permission to build on various tracts of land.
According to the suit filed by HDCC, it was CFL’s responsibility to secure rights of way from landowners, approve various permits to work the area, and account for delays caused by utility relocation.
HDCC was hired to construct the overpass, tie-ins, road and bridge safety features, as well as various structures for erosion control by the Hawaiian Department Of Transportation (HDOT) back in 2018. CFL and HDOT had received grants of up to $38 million, which were then used toward the design-build contract to HDCC.
Deep dive: What is the design-build delivery method in construction?
The Lahaina bypass project was arranged in order to provide relief for traffic congestion, as well as mitigate rising sea levels and coastal erosion. Governor of Hawaii David Ige has communicated that his top priority during his second term has been to relieve all of these problems through new public works projects such as the Lahaina Bypass, which is part of a central artery of West Maui called the Honoapiilani Highway.
This part of the project covers 2.7 of the planned 6 miles of reconstruction on the Highway, which will total up to $90 million in costs. Local officials have claimed that keeping this road open is vital to maintaining tourism, public safety, and commerce. Some parts of the highway are just steps away from the shoreline and waves are sometimes high enough to wash over the road. So, in order for HDCC to meet these goals, the highway needed to be moved further inland, and HDCC claims it needed to wait for approval from CFL on various aspects of the project to move forward.
For instance, the contractor needed to wait for HDOT to finish acquiring the necessary land, and they needed to wait for various utility services to approve and perform the relocation of various utilities. These delays forced HDCC to wait on installing guard rails, making right of way adjustments, and building a retaining wall in one section of the project.
According to the CFL, HDCC did not make enough time for approval of some increased costs and various delays, the suit has many details of notices that were ignored or rejected within the required time.
Learn more: How to Write a Notice of Delay
“Even if a contractor doesn’t have all the necessary documentation or the full extent or impact of the delay is still unknown, it’s highly recommended to send a notice with as much information as possible,” says construction attorney Alex Benarroche. “Construction contracts generally have strict timing deadlines for delay claim notices, and failure to provide one within the requisite time frame can be fatal to an otherwise valid claim for additional time and/or compensation.”
HDCC filed a Certified Claim notice dated July 17, 2020 — to which CFL allegedly didn’t respond to until March 30, 2021. This was after HDCC claimed completion of their work on July 24, 2018, and had submitted regular notices throughout the project’s delays.
After HDCC’s claim was rejected by the CFL’s contracting officer, HDCC asked the Sage Group, based in Denver, Colorado, to perform their own independent assessment of the Certified Claim and Final Decision made by the CFL. The Sage Group completed their analysis on November 10, 2021, which was then submitted by HDCC to the CFL on November 17.
The CFL has not yet responded to this new information, and no ruling has been made in response to the Sage Group report.