IN A CONSTRUCTION CONTRACT TRIAL, IT IS IMPROPER TO DETERMINE ADDITIONAL LABOR COST DUE TO DELAY BY USING A DEFENDANT’S PRECONTRACT ESTIMATE OF LABOR COST (FIRST DEPT).

The First Department, reversing (modifying) Supreme Court in this construction contract case, determined the labor cost associated with a delay could not be determined by using the defendant’s precontract estimate of what its labor cost would be:

The trial court should not have awarded damages for additional labor costs due to defendants’ delays in the construction project. In general, it is impermissible to calculate delay damages for additional labor costs based on a comparison of the contractor’s precontract estimate of what its labor cost would be and what it claimed its labor cost actually turned out to be … . Nevertheless, in calculating the additional labor costs that plaintiff incurred from defendants’ delays, plaintiff’s expert improperly used plaintiff’s pre-bid estimate of the project’s expected labor costs, and Supreme Court erred in basing the award on this improper method of calculation. Five Star Elec. Corp. v A.J. Pegno Constr. Co., Inc./Tully Constr. Co., Inc.,2022 NY Slip Op 05659, First Dept 10-11-22

Practice Point: Here in this construction-contract trial, plaintiff’s expert should not have calculated the additional labor cost due to delay by using the defendant’s precontract labor cost estimate.