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.
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:
Provide certainty around compensation for delay
Avoid the need for the employer to prove actual loss
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.
For LDs to be enforceable, several conditions must be met:
If the completion date has changed (e.g., through variations or EoT entitlement), but the contract isn’t updated, LDs may no longer apply.
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.
Ambiguities in the wording of LD clauses can render them unenforceable. Poorly structured clauses can even invalidate the employer’s entitlement altogether.
If you’re facing delay damages, act quickly to assess and protect your position.
Is the LD clause clearly drafted?
Has the employer followed the correct procedures (e.g., issuing a non-completion certificate under JCT)?
Were any relevant notices of delay or entitlement served in time?
Undertake a forensic delay analysis to determine:
What caused the delay?
Were there concurrent delays?
Were delays outside your control?
This helps establish entitlement to EoT — and can nullify or reduce LD exposure.
Use:
Programme updates
Correspondence
Site diaries
Meeting minutes
To build a cause-and-effect timeline.
A delay analyst or quantum expert can help:
Prepare a structured defence
Apply industry recognised analysis techniques (e.g. Time Impact Analysis)
Quantify the commercial impact of invalid LDs
This is particularly important if the issue escalates to adjudication or litigation.
Too often, contractors only challenge LDs once deductions are made — sometimes months later. By contrast, proactive contractors:
Notify delays as they occur
Protect EoT entitlements
Engage experts early to shape the narrative
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.