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Lastedited29Jun2016
Seefullhistory
Delaydamages
NECwasfirstpublishedin1993astheNewEngineeringContract.Itisasuiteofconstruction
contractsintendedtopromotepartneringandcollaborationbetweenthecontractorandclient.The
thirdedition,NEC3waspublishedin2005.
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Acceptedprogramme.
Articlesofagreement.
Thetermdelaydamagesreferstooneofthe15secondaryoptionsavailableaspartofNEC3.
Compensationevent.
X7Delaydamages(liquidateddamages)canbeselectedinpart1ofthecontractdata,and
Contractconditions.
thelevelofdamagespayablecanbedefined.IfoptionX7isselected,andthecontractordoes
notachievethecompletiondatethendelaydamageswillbeduefromthecontractor.Thisis
similartoliquidateddamages(orliquidatedandascertaineddamages,sometimesreferredtoas
LAD's)inotherformsofcontractsuchasJCTcontracts.
Costreimbursablecontract.
Defects.
Definedcost.
Disallowedcost.
NECguidancerecommendsthatthisoptionisincludedinmostcontracts.Itisalso
recommendedthattheemployermaintainsarecordofhowdelaydamagesarecalculatedin
casetheyarechallengedbythecontractor.Delaydamagesarenotapenalty,theymustbe
basedonagenuinecalculationofdamages.Iftheyarenotgenuine,theymaybeconsidereda
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penaltybythecourtsandsowillbeunenforceable.Underthesecircumstances,theclientwould
stillbeabletopursueaclaimforbreachofcontract.
ZahaHadidArchitects
Acontractorwishingtoavoidaclaimagainstthemfordelaydamages,maymakeadelayclaim,
demonstratingthat:
Acompensationeventhasoccurred.
Theeventcausedadelaytotheprojectscompletion.
Compensationeventsaresimilartorelevanteventsandrelevantmattersreferredtoinother
formsofcontractsuchasJCTcontracts.Verybroadly,compensationeventstendtobethose
eventsthatimpactonthecompletiondate,butarenotthecontractorsfault.Thismightinclude
eventsthatarecausedbytheclient,orneutraleventssuchasexceptionallyadverseweather.
ZHAwincompetitiontobuildanUrban
Adelayclaimforacompensationeventcanonlybemadebythecontractoriftheeventactually
HeritageAdministrationCentreinSaudi
delayscompletion.Thiscanrequirecarefulanalysiswheretherearemultiplepossiblecausesof
Arabia.
adelaytoascertaintheimpactofthecompensationeventitself.
Generally,therearetwoapproachesthatcanbeadoptedforthissortofanalysis:
BREresponsetoFarmerReview
Prospective:Anassessmentatthetimetheeventoccurs.
Retrospective:Anassessmentaftertheeventhasoccurred.
WhilstthereisnoexpressguidancegiveninNEC3astowhichofthetwomethodstouse,itis
thoughtthattheintentionofNEC3tosolveproblemsastheyoccur,preferablybefore
completion,makestheprospectiveapproachmorefavourable.Althoughthereremainsariskthat
thismayresultinthecontractorbeingunderorovercompensated.
However,courtsmayprefertheretrospectiveapproach,asitcanotherwisebedifficultto
establishacausalconnectionbetweenthecompensationeventandthedelay,anditalsoallows
forthebenefitofhindsight.
http://www.designingbuildings.co.uk/wiki/Delay_damages
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DelaydamagesDesigningBuildingsWiki
ThereisprovisioninclauseX7.3foradelaydamagesreductionintheeventthattheemployer
takescontrolofapartoftheworkspriortothecompletion.
Findoutmore
RelatedarticlesonDesigningBuildingsWiki:
Acceptedprogramme.
Articlesofagreement.
Compensationevent.
Contractconditions.
Costreimbursablecontract.
Defects.
Definedcost.
Disallowedcost.
Earlywarningnotice.
Extensionoftime.
Keydates.
LathamReport.
Liquidateddamages.
NEC3.
NECcontractchangemanagementsystems.
NECearlycontractorinvolvement.
Periodforreply.
Procurementroute.
TimeRiskAllowanceTRA.
Variations.
Zclauses.
Leaps,notsteps,areneededtoavoida
tickingtimebomb,sayBREinresponseto
FarmerReview.
Unusualbuildingoftheweek
Externalreferences
RICSConsultationsDelaydamages(https://consultations.rics.org/consult.ti/delay/view?
objectId=987380)
RPCDelayclaimsunderNEC3
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