Appellate Court Accepts Measured Mile Method for Calculating Acceleration of Work Damages in Case of First Impression

James Corp. v. N. Allegheny Sch. Dist., 2007 WL 4208589 (Pa. Commw. Ct. Nov. 30, 2007)

In this case, the Commonwealth Court of Pennsylvania held that the trial court properly measured acceleration damages sustained by a general contractor under the “measured mile” theory of recovery. In a multi-phased construction project entered into by the school district and James Corporation, the district delayed James’ performance by failing to obtain permits in a timely manner, by requiring extra work which interfered with the planned sequence of work, by relocating fencing and reconfiguring the erosion and sedimentation pond, and by requiring removal of asbestos (which was not in the contract). Amidst the delay, the district abandoned the contract schedule, refused to consider the time impact on the contractor’s planned sequence, and then terminated the contractor after substantial completion. The trial court awarded James damages for acceleration/compression of work, unpaid invoices, prevailing wages withheld, attorneys’ fees and expenses.

The district’s reliance on the standard “no damages for delay” clause was overcome by court findings that the district had affirmatively interfered with the contractor’s work. Extra work claims were accepted by the court as a matter of fact, because the district was fully aware that it had requested the extra work and performed under the district’s direction. The Commonwealth Procurement Code authorized damages as sanctions for the district’s bad faith, and interest on untimely progress payments and attorneys fees were ordered.

The most notable holding was that the “measured mile” analysis of damages was a proper method of determining a reasonable basis for calculating loss. James used a “measured mile” approach to compare the cost of completing work not subject to delay or acceleration with the costs of completing work during a period of impact, the difference representing the measure of damages. This comparison withstood the district’s criticism that “measured mile” was nothing more than a new version of the discredited “total cost” approach. James’ cost expert explained that his measured mile analysis included an “earned value fact” since the project had been delayed from the beginning of work, and the analyzed work was not the subject of an easy comparison. The earned value factor enabled the removal of inefficiencies from the contractor’s claims. This case is one of first impression.