What are damages for delay?

On Behalf of | Apr 9, 2020 | Construction Litigation |

Construction contracts will almost always feature a time set for the completion of a project. Assuming all goes well, a contractor may finish a project within the specified time frame. However, contractors generally understand that unforeseen events may occur that could slow their progress or even bring it to a halt.

You as a contractor do not want a site owner to litigate you for not completing a project by a certain date. At the same time, you would not want your company to suffer financial loss from construction delays. Many contractors, sharing these concerns, try to work a damages for delay provision into their construction contracts.

Defining damages for delay

A contractor can run into different problems while trying to carry out a project. The soil may contain unknown pockets of groundwater beneath the surface. The owner of the property or the project architect may suddenly want to make changes to the project. Contractors can also experience problems like equipment breakdowns, labor disputes, injuries on the job, or a fire breaking out on the jobsite.

As explained by Best Construction Practices, a damages for delay provision can cover a contractor if an unforeseen event occurs. Contractors seek out these clauses in a contract so they do not have to worry about losing money if a delay should occur. Otherwise, they may lose a lot of money while trying to repair equipment or readjust a work schedule to compensate for an event.

Contract requirements

Some contracts do not provide damages for delays except for exceptions specified by the contract or state law. Even if you have managed to include a damages for delay provision in your contract, be aware that the provision may strictly define the delays. A contract may only cover delays caused by the property owner. This would exclude any delays that occur outside of the control of the owner.

Conversely, a contract may cover delays caused by anything beyond the control of a contractor. Some contracts may provide a middle ground that does not cover every delay but gives contractors greater protection than owner-caused actions. These contracts may specify coverage for delays that the reasonable diligence of a contractor could not have avoided.

FindLaw Network