Time and delay damages in energy projects
Produced in partnership with Clarke Willmott LLP
Time and delay damages in energy projects

The following Construction guidance note Produced in partnership with Clarke Willmott LLP provides comprehensive and up to date legal information covering:

  • Time and delay damages in energy projects
  • The importance of time in energy projects
  • Delays and extensions of time under FIDIC contract
  • Delay damages under FIDIC
  • Beware of sectional completion
  • A consideration of other forms of construction contract
  • Practical considerations
  • On-shore wind farm example

Despite the development of sophisticated procurement methods, programming and project management software packages, construction projects will still overrun and become delayed. Any delay means costs are incurred.

This Practice Note examines the delay damages mechanisms in place to protect an employer in the event of delay, and the relevant clauses of the FIDIC contracts and some of the other standard form contracts used in the energy sector relating to delay damages.

See also Practice Notes: Delay and disruption in construction projects and Time and money claims.

The importance of time in energy projects

Within construction and energy contract documents, extensive provision is made for the concept of time, particularly relating to fixing a completion date.

Construction contracts almost always include delay damages (also known as liquidated damages or liquidated and ascertained damages (LADs)). The underlying principle is that damages are payable by the contractor to the employer in the event of certain specified breaches of contract. Usually, the breach relates to late completion of the works, however it could also relate to performance issues, for example. Ascertaining damages at the pre-contract stage aims to prevent lengthy and costly legal proceedings in trying to prove actual loss. It also provides certainty for both parties at tender stage and enables the contractor to gauge its risk exposure properly.

If no fixed completion date is specified it