What are Delay Damages?
The term “Delay Damages” is often used in construction change order requests, requests for equitable adjustments, and claims. When used in those instances, what exactly does “delay damages” mean?
Well, the answer to this question is not as simple as you may think. It’s reasonable to conclude that the term “delay damages” is simply defined as “damages that are caused by delay.” But this definition depends on the how one defines the term “delay.”
For example, when the term “delay” is defined as only critical project delay (a delay that is responsible for extending the project duration), then the term
“delay damages” can be narrowly defined as only the damages that result from the project’s extended duration.
The damages that would result from critical delay include the full battery of delay damages – extended field overhead, unabsorbed home office overhead, liquidated damages, idle labor and equipment costs, labor and material cost escalation, and many other costs.
If delay is defined more narrowly as only non-critical delay (a delay that is not the cause of an extended project duration), then the potential damages are still there, but would likely not include extended field overhead costs, unabsorbed home office overhead costs, and liquidated damages.
For the purposes of this discussion, the term “delay damages” is defined broadly to apply to both critical and non-critical delays.
Note that in each of the following discussions of the different types of delay damages, the damage will be defined as being the consequence of a critical delay or just a non-critical delay.
Types of Delay Damages
As described above, delay damages come in many flavors and can be caused by both critical and non-critical delays. The following list includes the most common types of delay damages, but is not intended to be exhaustive: