Understanding Delay Damages and How to Protect Your Position on Delayed Projects
Construction projects rarely go entirely to plan. When delays occur, employers may seek to impose liquidated damages (LDs) — fixed daily or weekly penalties designed to compensate for late completion. But contractors aren’t always liable. The key is understanding the legal and contractual context of LDs — and knowing how to defend your position.
What Are Delay Damages?
Most standard-form construction contracts, such as JCT and NEC, allow the employer to specify a daily or weekly rate for delay damages. These are designed to:
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Provide certainty around compensation for delay
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Avoid the need for the employer to prove actual loss
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Act as a commercial incentive to meet completion dates
But LDs must be genuine pre-estimates of loss — not arbitrary penalties. If the rate is excessive or punitive, a contractor may be able to challenge them.
When Are Delay Damages Enforceable?
For LDs to be enforceable, several conditions must be met:
1. Valid Completion Date Must Be Defined
If the completion date has changed (e.g., through variations or EoT entitlement), but the contract isn’t updated, LDs may no longer apply.
2. Contractor Must Be Responsible for the Delay
If the delay was caused by the employer (e.g. late access, design issues, or instructions), the contractor may be entitled to an Extension of Time — and LDs would be inapplicable.
3. The LD Clause Must Be Properly Drafted
Ambiguities in the wording of LD clauses can render them unenforceable. Poorly structured clauses can even invalidate the employer’s entitlement altogether.
How to Challenge Unfair Delay Deductions
If you’re facing delay damages, act quickly to assess and protect your position.
A. Review the Contract
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Is the LD clause clearly drafted?
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Has the employer followed the correct procedures (e.g., issuing a non-completion certificate under JCT)?
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Were any relevant notices of delay or entitlement served in time?
B. Analyse the Delay Events
Undertake a forensic delay analysis to determine:
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What caused the delay?
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Were there concurrent delays?
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Were delays outside your control?
This helps establish entitlement to EoT — and can nullify or reduce LD exposure.
C. Gather Evidence
Use:
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Programme updates
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Correspondence
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Site diaries
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Meeting minutes
To build a cause-and-effect timeline.
The Role of Expert Input
A delay analyst or quantum expert can help:
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Prepare a structured defence
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Apply industry recognised analysis techniques (e.g. Time Impact Analysis)
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Quantify the commercial impact of invalid LDs
This is particularly important if the issue escalates to adjudication or litigation.
Be Proactive, Not Reactive
Too often, contractors only challenge LDs once deductions are made — sometimes months later. By contrast, proactive contractors:
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Notify delays as they occur
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Protect EoT entitlements
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Engage experts early to shape the narrative
Get Support from Precision Consultancy
We’ve helped contractors successfully challenge delay damages and recover withheld payments. Whether you're negotiating with a client or preparing for adjudication, our expert support can be the difference between loss and recovery.
