No-Damages-for-Delay Clauses:Pricing the Risk and Building the Record

Start With a Scenario

The scenario below is a composite rather than any one project, but nothing in it is unusual for a building department or for the other agencies holding review authority over the work.

A building official reinterprets a provision partway through construction. The trigger might be a design-build delivery, a change in scope or a deferred submittal. Or the jurisdiction adopts a new code edition and applies it to a permit already in review. The work stops and by the time it restarts six weeks are gone: six weeks of general conditions, extended supervision, a superintendent now on the job into the rainy season and subcontractor pricing that has moved.

Somebody is going to absorb that cost. The contract usually has an opinion about who, in language that reads something like this:

The Contractor’s sole remedy for any delay shall be an extension of the Contract Time. No claim for damages, extended overhead or additional compensation on account of delay shall be made.

That is a no-damages-for-delay clause. It is common in construction contracts, it is frequently passed straight down to subcontractors and it is rarely priced at bid time.

This article looks at the clause from the construction side: where delays on real projects come from, how to put a number on the exposure before signing and how to keep the project record that any later delay argument will depend on. Whether the clause is enforceable is a legal question and we deal with it in one paragraph below, because that is a question for counsel.

Where Delays Actually Come From

The scenario above is an agency delay. Agencies are only one source. On most projects delay reaches the schedule through two broad channels and it matters which one a given delay came through.

Agency and permitting delays

None of the following requires anyone to have done anything wrong:

• A new plan examiner. The file changes hands mid-review and the new reviewer reads the drawings differently.
• A request to approve an alternative material, design or method of construction. Building codes based on the International Building Code carry a provision that lets the building official accept something the code does not specifically prescribe. The decision to grant, condition or refuse is the official’s, not the design team’s. Review time is hard to predict.
• A phased or partial permit. Foundation-only ahead of full approval, with the later phases still in review while work proceeds.
• A second agency with its own review authority. Fire marshal, health department, accessibility and on some project types a state-level agency on top of the local one.
• A field inspector calling something different from the approved plans. That is a separate exposure from plan review and a common one.

Owner and design-side delays

The second channel runs through the owner and the owner’s design team:

• Slow submittal and RFI responses. Each late answer is small. Across a project they add up to weeks.
• Design changes and late design completion. Revised drawings issued after work in the affected area has started.
• Site access and owner-furnished items. A site that is not available when the schedule says it will be. Owner-furnished equipment that arrives late.
• Suspensions and slow change-order approvals. Work held pending a decision that takes longer than the work itself.
• Late payment. Subcontractors slow down when they are not being paid.

This distinction is the part of the opening scenario that most often gets misread. An agency delay is not automatically the owner’s delay. Who carries it depends on the contract: who was responsible for obtaining the permit, whose design the reviewer rejected, how the contract classifies the delay and what the notice provisions required. A delay that looks like the owner’s problem on the first day can turn out to be nobody’s compensable delay once the contract is read. The reverse happens too. Sorting each delay into the right channel is construction analysis. Deciding what the contract then does with it is for counsel.

Enforceability Varies by State

Whether a no-damages-for-delay clause is enforceable on a given project varies widely by state and often differs between public and private work in the same state. Some states limit these clauses by statute, others through court decisions and the answer can turn on who caused the delay. Counsel determines how the rule applies to a given contract. For a state-by-state reference, ClaimDuke.com maintains state-rules pages, including Arizona, California, Florida, Georgia, Massachusetts, Michigan, Nevada, New York, Ohio, Texas, Virginia and Washington. Our state guides for California, Texas, Florida and New York cover the wider construction framework in those states.

From the construction side, two points hold wherever the project is. First, the legal answer is available before the contract is signed, so it belongs in the price rather than in a dispute. Second, wherever the clause is limited, the argument on either side turns on facts about what caused the delay and how the parties responded to it. Those facts come from the project record.

Pricing Delay Exposure

A clause that limits the remedy for delay to more time is a cost transfer. If the delay happens and the clause holds, the contractor pays for the extended duration. That cost can be estimated before bid day like any other risk.

1. Find the review-dependent activities. Walk the schedule and mark every activity that cannot start until an agency, the owner or the design team acts: permits, phased approvals, deferred submittals, special inspections, owner decisions and owner-furnished items.
2. Estimate realistic durations for those approvals. Use the review times the local jurisdiction actually delivers on similar work, not the durations the schedule assumes. Local experience with the building department and any second agency is worth more here than any published target.
3. Build a daily time-related cost. General conditions, field supervision, site facilities, equipment on standby, insurance and bonds tied to duration and a share of home office overhead. Add the costs that move with the calendar: labor and material escalation, seasonal weather exposure and subcontractor remobilization.
4. Weight it and compare it with the contract. Multiply the probable delay days by the daily cost and weight the result by how likely each delay is. Then read the contract: if a delay would earn time but no money, the full figure is the contractor’s exposure. That figure belongs in the bid, in contingency or in a negotiated change to the clause.
5. Read the flow-down before a subcontract is signed. Subcontracts often incorporate the prime contract by reference. A subcontractor can end up bound by a delay clause in a contract it never saw. Ask for the prime contract and price against it.
6. Price acceleration separately. The cost of added crews, shift work and compressed sequencing to hold a date is a different cost from the cost of a longer job. Estimate it and track it under its own cost codes, because it will be analyzed separately later.

For owners and developers the same arithmetic runs in reverse. A contractor that has priced delay exposure is charging for it, whether or not the clause is enforceable where the project sits. A flat delay contingency applied across every jurisdiction ignores real differences in agency review times and in the legal treatment of the clause.

Building the Project Record

Whatever the clause says and whatever the governing rule, a delay claim is proved or disproved with contemporaneous project documentation. Records made during the job carry weight that reconstructions made after a dispute begins do not. A mistake our team has seen repeatedly over their careers is a project with a sound delay story and no record to support it.

• Submittal log. Date submitted, date returned, action taken and the number of resubmittal cycles. Resubmittal cycles show whether the delay came from the submitter or the reviewer.
• RFI log. Date issued, date answered, whether the answer changed the design and which schedule activities were waiting on it.
• Agency approval dates. Permit application, each round of plan-check comments, each resubmittal and each approval. Keep the reviewer’s comments with the dates, because they show what the agency actually required.
• Daily reports. Crews and equipment on site, work performed, areas that could not be worked and why. A daily report that says “standing by for revised drawings” on the day it happened is worth more than a narrative written a year later.
• Schedule updates. Regular updates with a written narrative explaining what moved and why. The updates are the baseline any later schedule analysis starts from. Prospective time impact analysis is covered by AACE International Recommended Practice 52R-06; forensic (retrospective) schedule analysis by AACE RP 29R-03. Both depend on the updates having been kept.
• Notices. Written notice of each delay event in the form and within the time the contract requires, with the contract section it relies on. Late or missing notice can undo an otherwise sound delay position.
• Cost tracking. Separate cost codes for delay-related and acceleration costs, opened when the event starts rather than reconstructed at the end.
• Correspondence and photographs. Meeting minutes, emails and dated photographs of idle areas and waiting crews.

Almost every argument about a delay clause, on either side, comes back to what these records show: what caused the delay, when each party knew about it, how each responded and what it cost. The legal rule decides which questions matter. The project record decides the answers.

A Note on Sourcing

PCC is a construction forensics and construction management firm, not a law firm. What we do is analyze schedules, quantify delay and defect exposure and explain it to the people who have to decide what a claim is worth. Readers should rely on counsel for whether a no-damages-for-delay clause is enforceable and how any rule applies to their contract.

State-by-state reference figures, including statutory interest rates and accrual dates, actual cash value and labor depreciation treatment, delay-clause enforceability and construction contract filing deadlines, are compiled with citations at ClaimDuke.com.

This article is a general informational overview, not legal advice and does not create an attorney-client or expert-client relationship. Statutes and case law change. Confirm current applicability with qualified counsel in the relevant jurisdiction before relying on anything described above.