Construction Delay Claims: Are You Able to Make a Claim?

Construction delays are common. In fact, it’s not so much a question of if, but when.

A well-drafted construction contract must anticipate project delays caused by action or omission and provide clear parameters for making a claim based on the type of delay and its overall impact.

Notwithstanding contractual and legal protection, it’s vital for project owners and contractors to take steps to prevent delays if possible. Prevention is always better (and cheaper!) than cure.

Proactive steps will mitigate some key triggers of common project delays. However, sometimes a claim is just unavoidable. In this article, we will set out when you can make a delay claim, how the process works, and some of the pitfalls to avoid.

If you are dealing with a problem to do with construction delays and need advice or help with a dispute arising from this, reach out to our construction team today. We would be happy to assist you.

What is a Construction Delay Claim?

A construction delay claim is based on a delay that has caused the project to run over time or stall completely.

To bring a claim, you must demonstrate and evidence the delay – which may be critical ornon-critical – and, sometimes, its financial impact. Alternatively, the contract may provide for a fixed amount of compensation payable in the event of a delay.

The evidential process involves identifying the party responsible for the delay and the reasons why, e.g. the contractor failed to order materials in a timely manner.

Identifying Delays

Distinguishing Critical vs Non-Critical Delays

Delays are almost inevitable in any complex or long-running construction project. Not every delay will affect the completion date.

If there’s a delay, the first step is to consider whether this is ‘critical’ or ‘non-critical’. In other words, whether the delay is on the critical path or not.

A non-critical delay is one confined to certain activities or areas of the development; a delay that won’t impact the project completion date. 

A clear schedule of works that sets out the build programme, and contains detailed descriptions of the work planned will assist in categorising the delay.

Delay Analysis: How Delays Are Proved

A critical delay may seem obvious to a would-be claimant, but it’s necessary to prove that the project would have stayed on time were it not for the act or omission of the other party. 

You must evidence that the contractor caused the delay, and that the delay has impacted the critical path of the project, meaning completion won’t be at the specified time.

Usually, an expert witness will be required to undertake an in-depth delay analysis. There are various methodologies that an expert can use, and it’s their job to choose the most appropriate.

Some of the options are Prospective Analysis, Retrospective Analysis, Impacted As-Planned and Time Impact Analysis (TIA).

The right analysis for the claim will depend on factors such as the size and complexity of the project, as well as the quality of the available records.

Documenting and Notifying: Steps to Start a Claim

1. Gather Evidence

It’s vitally important to gather all relevant documentation to support the claim as the first step in the process. This record will ultimately determine the success or otherwise of your claim, and whether it’s even worth pursuing.

Relevant documents include the construction contract, drawings, any schedules, progress reports and updates, and correspondence that supports your position.

2. Review the Contract

A well-drafted construction contract will set out the protocol for handling delays so it’s essential to follow this as part of the claims process, including adhering to any deadlines within it. Certain standard forms of construction contracts require employers or contract administrators to take certain steps within specified time periods to preserve a claim for delay damages.

The contract may also allocate risk for certain causes of delay.

3. Expect Negotiations

Contractors will often argue that they were entitled to a time extension to mitigate or completely remove liability for delay.

Dispute Resolution Pathways: Litigation and ADR

Negotiation is often the first and preferred route to resolve a costly delay; however, if negotiations are not expertly guided, they can themselves become the subject of delay, thereby compounding the problem.

Before resorting to litigation, the parties may wish to explore Alternative Dispute Resolution methods. These may avoid court, can be much quicker to access than the courts and are often much more cost-effective.

The courts will also usually expect to see an attempt at ADR before litigation, even if it’s unsuccessful. If you skip ADR, then the courts may order proceedings to halt pending ADR and/or may reduce the costs awarded to a successful claimant..

ADR includes adjudication, mediation, and arbitration. A legal expert is the best guide for determining the most appropriate choice.

Damages, Extensions, and Termination

The claimant in a delay claim will seek an award of damages.. A monetary award should put you in the position you would have been in if the delay hadn’t occurred.

Construction contracts often make provision for liquidated and ascertained damages (LADs) in the event of a delay. This is a predetermined figure that is specified in the contract, which the employer will seek to recover for any delay. This saves the claimant the time and trouble of proving their financial losses.

However, the LADs clause needs to be carefully drafted to be valid and enforceable. Punitive figures risk being deemed invalid by the court. The amount of LADs should be a genuine pre-estimate of the employer’s loss for delay. In addition, an employer using a standard form construction contract needs to be careful to ensure that they do not inadvertently carve out their entitlement to general delay damages if the intention is to remove the liquidated damages provisions.

Some project owners want to maintain a working relationship with the contractor so that a time extension can neatly sidestep losing a valuable connection and the time and expense of finding a replacement contractor.

Even though the overall project completion date will inevitably slip back, an extension can offer a practical solution. It also doesn’t usually close the door to LADs if the new deadline is missed.

As a last resort, an employer may look to terminate the contract., This can be the best option depending on the specific circumstances, allowing the project owner to regain control and still potentially recoup financial losses. However, finding a new contractor may not be quick or easy, and the employer must be careful to ensure they are entitled to terminate.

Managing the Claim

Construction claims are complex and sometimes difficult to prove. A delay claim is not the time to find that records and documentation are patchy. Third-party experts will rely on the available documentation when conducting an analysis..

Maintaining accurate records and a proper account of all communications is vital to support a claim later, and it’s a relatively easy pitfall to avoid. 

Compliance with proper procedures is another common hazard in the claims process. You can invalidate an otherwise strong claim by not following the written notice procedures and timelines detailed in the construction contract.

Why Work with a Specialist: Legal Guidance for Delay Claims

It’s perhaps natural to think that you don’t need legal advice in the early stages of a delay claim. However, expert input is vital to protect your position and handle pre-issue negotiations, which can be fruitful if conducted by a skilled third party.

In complex cases where multiple delays occur and the contractor is counterclaiming, professional legal advice can mean the difference between success and failure.

Frequently Asked Questions

What Is the Remedy for Construction Delay?

The remedy for construction delay is typically referred damages or liquidated ascertained damages. Liquidated ascertained damages are pre-determined damages specified in the construction contract. 

What Are the Consequences of Project Delays?

Construction project delays cause increased costs, impact works elsewhere on site in a domino effect, and may lead to legal disputes. Increased costs may arise from the requirement to hire a replacement contractor, financial compensation claims, or delays to the completion date, resulting in loss of income from sales or rentals.

Ready To Contact Helix Law for Expert Legal Advice on Your Construction Delay Claim?

Construction litigation, adjudication and ADR is a technically precise area of work. Getting one technical item wrong can materially impact your ability to recover losses. Our construction litigation team work nationally in providing expert legal advice to assist you in navigating the requirements of a construction delay claim or broader dispute. As specialists we can help you navigate negotiations and to a successful conclusion.

Get the right help in this complex legal area with our construction team at Helix Law. Our specialised litigation solicitors have decades of experience dealing with delay claims and the various issues that can arise within them. Contact us today. We would love to help you.