'No damage for delay' clauses and your right of recovery.(CONSTRUCTION CORNER)

The "no damage for delay" clause is a common method used by owners and contractors to shift the risks of delay on construction projects to subcontractors--the party with the least amount of control over the progress of construction. As noted in Donald Gregory's article, Negotiating a Contract You Can Live With (The Contractor's Compass, 3rd Quarter 2005, p. 9), the "no damage for delay" clause is considered one of the top 10 "deadliest" provisions in a subcontract and should be avoided.

All is not lost, however, in the event that a subcontract contains such a provision. The subcontractor may still be entitled to additional compensation for delays because there exist several exceptions to the enforcement of the "no damage for delay" clause. In addition, delay-related damages such as impact and disruption damages may also be recoverable.

The key to preserving any potential delay or impact claim is strict compliance with the terms of the subcontract--specifically, the notice requirements.

A Typical "No Damage For Delay" Clause

Typically, a "no damage for delay" provision provides that the only remedy to the subcontractor for delays wit[ be an extension of time. For example:

 
   [Should the Subcontractor's performance be delayed 
   by any acts of the Contractor, its subcontractor or 
   suppliers, or delayed by the acts or causes which 
   entitle Contractor to an extension of time under 
   the prime contract, the Subcontractor shall 
   receive an extension of time for its performance. 
   Subcontractor agrees that an extension of time 
   shall be its sole remedy for delays. Subcontractor 
   shall notify the Contractor in writing within five 
   days of the event giving rise to the delay or the 
   Subcontractor's claim for an extension of time is 
   forever waived.] 

Under this provision, the subcontractor receives a time extension for "excusable" delays, which are events "beyond the control" of the parties. It is typical for performance time to be extended in cases of unusually severe weather, natural disasters, acts of government, or unforeseeable Labor strikes. But why should the subcontractor absorb additional costs for delays actually caused by the contractor or its subcontractors, delays which are categorized in the industry as "compensabre"?