The year 2025 will be a very challenging year for the construction industry. From the executive order of the President Nos. 14151 and 14174 (signed on January 20 and 21, 2025) try to end DEI-related programs in federal contracts (including construction) to the tariffs that have been set up on building materials such as steel, aluminum and wood and stock, there is uncertainty for 2025.
This article explains how project participants can better understand, take into account and assign the risks associated with delays or increases in costs, which can result from these types of state measures.
The three most common types of delay regulations in building contracts
Delays or prices are nothing new for the construction industry. In fact, it is common for construction contracts how the risk of delays and additional costs should be assigned to the parties and how all claims that result from it should be increased and solved under the contracting parties. In general, there are three types of contractual provisions that deal with delays. They are: (1) excusable, compensable delays; (2) excusable, non -compensable delays; and (3) not excessive delays.
Excessive, compensable delays are delays that are not caused by the contractor, which is entitled to adapt the contract time for implementation and price adjustment. A classic example of an excusable, compensable delay is a design change directed by owners. Excessive, non -compensable delays are delays that entitle the contractor to extend the contract time to carry out the contract, but no corresponding adjustment of the contract price. These types of delays are often dealt with in the contract Force majeure Clause and are often caused by factors that are one of the contracting parties outside the control. Often (but not always), state measures that disrupt or delay construction projects are classified as an excusable, non -compensable delay. After all, there are no delays delayed, which are caused by or within the control of the contractor. Since such delays are under the control of the contractor, the contractor is not entitled to an adaptation of the time for the implementation or the contract price.
Strategies for dealing with the current state and economic climate
You only have to look at the messages for a few minutes to understand the constant river state in terms of enforcement of executive contracts and tariffs. In fact, on March 14, 2025, a government court only granted the government to remain a nationwide interim decision that blocked the implementation of certain parts of the nos of the executive. 14151 and 14173 – Representation of a further turn in the fight for enforcement (or fulfilling) these commands. It is expected that this landscape will continue to change in the next few months and that additional tariffs can be imposed (whether additional materials or in different quantities; after writing this article, steel and aluminum are subject to a tariff of 25 percent, a tariff of 25 percent, without exceptions to large trading partners such as Mexico or Canada.
The best way to tackle this uncertainty is to ensure how such delays (and the corresponding cost increases) – if you occur – are treated by the project participants. In other words, the parties have to tackle these problems in advance in their contract. Above all, a rule is outstanding in order to create future-oriented contractual clauses such as delay and cost escalation regulations: clarity is king. If it is the project owner and not the contractor who bears the increased material costs due to tariffs, the contract must clearly place the risk for the owner (or vice versa). The same applies to delays (remember that the last time tariffs also have the problems with the supply chain): Is the contract price adjusted to take into account the delays or only the time for the implementation? By assigning these risks in advance the use of a clear and clear language it is ensured that these problems are treated immediately and inexpensively, which in turn helps to keep projects on schedule (or minimize the effects of delays). But the clarity does not begin and end up with the contract – the contractor and subcontractor should be clear in their offers and suggestions, which assumptions they rely on (e.g. this will ensure that all project participants agree to the provision of the risk of state -caused delays and increases in costs. In these uncertain times, a clear risk distribution in contracts will be much more critical, since it will help reduce uncertainty.