Category: Contracts & management
Prepared by Eng. Ahmed Fathy, Projects Manager ·
Definition
Delay damages are an amount set in the contract for each day or week the project finishes late, usually with a cap.
Why it matters on a project
The contractor protects against them by claiming extensions of time promptly for every delay outside its responsibility.
Measurement and pricing
Usually a percentage of contract value per period of delay, up to a stated cap.
Worked example
Damages of 1,000 SAR per day capped at 10% of a 2,000,000 SAR contract: a 30-day delay = 30,000 SAR, and the cap is 200,000 SAR.
Common mistake
Waiting until the end of the job to claim time for delays that happened at the start.
Frequently asked questions
Do damages apply if the owner caused the delay?
No; owner-caused delay entitles the contractor to an extension and blocks damages for that period.
Are damages deducted from payments?
Usually yes, as the contract provides.
Related terms
- Extension of time (EOT)The contractor’s entitlement to additional time for delay not of its making, subject to timely notice.
- Baseline programmeThe programme approved at project start against which progress is measured.
- Critical pathThe sequence of activities where any delay delays project completion.
- FIDIC contractsInternational standard forms of engineering contract defining rights, notices, claims and change management.
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