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Contracts & Legal

Delay Damages

In Plain English

The money a contractor loses because of delays caused by someone else on the project.

Definition

Delay damages are the financial losses incurred by the contractor as a result of project delays caused by the owner or other parties. They include extended general conditions, escalated material costs, lost productivity, and additional financing costs. Recovery of delay damages may be limited or barred by no-damage-for-delay clauses in the contract.

Why It Matters in Bidding

Delay damages represent the real dollars a contractor bleeds when a project runs long, and whether those dollars are recoverable hinges on contract language reviewed before bidding. A no-damage-for-delay clause can shift this entire risk onto the contractor, which should influence bid contingency and markup. Underpricing extended general conditions exposure is a common way thin-margin jobs go negative.

Example

After an owner-caused stoppage extends the job two months, the contractor tallies its delay damages as extended supervision, trailer rental, and material escalation, then submits the documented total with its delay claim for reimbursement.

Related Terms

Delay ClaimNo Damage for Delay ClauseLiquidated DamagesClaim

Frequently Asked Questions

Common categories include extended general conditions like supervision, jobsite trailers, and equipment rental, plus lost labor productivity, material price escalation, and added financing or bonding costs. Home-office overhead is sometimes claimed using formulas. Each category must be documented and causally tied to the delaying event to survive owner scrutiny.
Such clauses bar the contractor from recovering money for delays, allowing only time extensions. When present, estimators should price additional contingency for schedule risk, scrutinize the schedule's feasibility, and consider qualifying the bid. Many states limit enforceability for bad-faith or active interference, but contractors shouldn't bid assuming an exception will apply.
Estimators isolate time-dependent jobsite costs, such as superintendents, project trailers, utilities, and small tools, then compute a daily or weekly rate. Multiplying that rate by the number of compensable delay days yields the extended general conditions claim. A clean breakout in the original bid makes this calculation far easier to defend later.

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