Colorado Courts Redefine Risk for Subcontractors in Project Delay Claims

Delays on public works projects are more than just a scheduling headache—they are a financial minefield. For years, subcontractors in Colorado faced a terrifying “all-or-nothing” risk: If a court deemed your delay claim excessive, you could forfeit your right to payment entirely.

A 2026 Colorado Supreme Court ruling has finally brought clarity to this high-stakes environment. In R. Wadsworth Construction Company v. Regional Rail Partners, the court addressed a dispute stemming from a $343 million regional transit project. While the ruling offers a more nuanced path for subcontractors, it also serves as a stern reminder that precision in paperwork is non-negotiable.

Delays on public works projects don’t just mess up your schedule. They drain your budget while you sit around waiting for answers from project owners, and you risk losing your entire payment just because you filed a claim the court didn’t like.

The Supreme Court Limits the “Death Penalty” for Claims

The core of the legal battle centered on whether an overstated claim should result in the total forfeiture of a subcontractor’s remedies under the Colorado Public Works Act (CPWA).

Lower courts had previously applied a harsh interpretation, suggesting that if any part of a verified statement of claim was found to be excessive, the subcontractor lost all statutory protections. The Supreme Court has now stepped in to refine this “forfeiture rule.”

Key Takeaways from the Ruling:

• The Case Continues: Contrary to initial reports of a final payout, the Supreme Court remanded the case (sent back to the lower court) for further proceedings. The final dollar amount Wadsworth will recover is still being determined based on the newly clarified standards.
• Clarified Forfeiture: The court ruled that a subcontractor doesn’t automatically lose all rights just because a claim is disputed. However, if a claim is found to be knowingly or excessively overstated, the subcontractor risks losing all remedies provided by the Public Works Act—not just the disputed portion.
• Protection of the Base Amount: A critical warning for contractors: the law doesnotautomatically protect your undisputed base contract amount if you attach it to an excessive or fraudulent delay claim. If the claim as a whole violates the CPWA’s standards, your entire right to use the Act’s recovery mechanisms could be at risk.

Defining “Used in the Prosecution of the Work”

To win a delay claim in Colorado, you must prove your costs fall under the specific statutory language of the CPWA. The Supreme Court emphasized the correct legal standard: the costs must be for labor, materials, or services “used in the prosecution of the work.”

This is a distinct and narrower standard than simply being “provided” to the project. To withstand judicial scrutiny, your claim must focus on items that directly contributed to the construction process during the delay.

What is Generally Recoverable?

The court recognizes that certain costs are essential to keeping a project moving, even during a delay:

• Direct Labor: Workforce costs physically required to advance the project.
• Materials: Consumables and permanent materials integrated into the build.
• Equipment Costs: Machinery and tools actually utilized on-site for project tasks.

What Remains Excluded?

The CPWA is not a “catch-all” for every financial loss. Seeking reliable construction litigation insights helps contractors properly identify billable services before filing paperwork. The following are generally not considered “used in the prosecution of the work”:

• Lost Profits: Anticipated earnings you missed out on because of the delay.
• Idle Time/Standby: Costs for equipment or labor sitting stagnant are difficult to recover under the Act, as they are often viewed as purely financial damages rather than work “prosecuted.”

Revised Breakdown of Claim Validity

Claim Item	Status under CPWA	Legal Justification
Direct Labor & Materials	Permissible	Directly involved in the “prosecution of the work.”
Active Equipment Use	Permissible	Essential for performing the actual construction tasks.
Lost Profits	Excluded	Financial “opportunity costs” are not physical work or materials.
Unsubstantiated Overruns	High Risk	Can trigger total forfeiture of all CPWA remedies.

Best Practices for Subcontractors Facing Delays

With the average time to resolve construction disputes at 13.6 months, you cannot afford to have your case tossed on a technicality after a year of litigation. On top of that, a change in project scope hits 36.9% of major projects globally. If your company operates in the seven- or eight-figure range, detailed documentation isn’t optional.

• Strict Documentation: Maintain daily logs that specifically tie labor and equipment to “prosecution of the work.” Do not just record that you were “there”; record what was being done.
• Audit Before Filing: Because an excessive claim can jeopardize your entire recovery (including the undisputed portion), have a construction transition expert or legal counsel audit your verified statement of claim before submission.
• Separate Your Damages: If you have claims for lost profits, pursue them through breach-of-contract avenues rather than bundling them into a CPWA-verified statement of claim.

The Bottom Line

The Colorado Supreme Court has moved away from a hair-trigger forfeiture rule, but the safety net is still thin. Subcontractors have a clearer path to recover legitimate delay costs, but the burden of proof remains heavy. Accuracy in your verified statement of claim isn’t just a best practice—it’s the only way to ensure your right to payment remains protected.