10/26/2016

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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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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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