Time is Money…Except When It Isn’t

Financial Consequences of Extensions of Time in Construction Contracts

Time and money are often seen as going hand in hand in construction contracts. In a typical employer contractor relationship, if the project is delayed by matters for which the contractor is responsible (non-excusable delay events), then the contractor may find itself liable to the employer for damages.

Damages payable to an employer for late completion of a construction project are commonly referred to as liquidated damages. They are typically expressed as an amount per week and should represent an estimate of the losses the employer will suffer as a result of a delay to the completion of the project.

By contrast, if the project is delayed by matters which, so far as time is concerned, are the responsibility of the employer (excusable delay events), the contractor will ordinarily be entitled to an extension of the time which it has to complete its works.

Extension of time awards are frequently followed by claims for prolongation and loss and/or expense are often seen as the financial side of delay claims.

However, an award for an extension of time does not automatically give rise to a right to recover prolongation and loss and expense. There are in fact a number of considerations that should be applied to a contractor’s claim for delay associated costs, and a number of obstacles that stand between an award of an extension of time and the ability to successfully recover prolongation and other loss and expense costs.

It is not uncommon to find a contractor who, having been awarded an extension of time, has subsequently been unsuccessful, either in part or in full, in its efforts to recover prolongation and other delay associated costs.