Along with a schedule, most construction contracts will include a financial punishment for failing to complete your work on time. This penalization is known as delay damage. Usually, delay damages show up as a per-day charge for each day you are late completing your work.
How is construction delay claim calculated?
The formula is calculated as follows: Overhead allocable to the contract equals contract billings divided by total billings for the contract period times total company overhead for the contract period. Daily contract overhead equals allocable overhead divided by days of performance.
What is the delay clause in a construction contract?
Delay or Disruption Costs Clause
This clause covers the recovery of extra costs that result from delays due to granting a time extension. It doesn't address how delay costs and disruption costs differ, but it may include language that covers “extra costs due to delay or disruption.”
What are consequential damages for delay?
Examples of these damages are lost anticipated profits, cost to repair defective goods, loss of goodwill, loss of reputation, loss of future sales or rents due to the delay, added interest paid on construction loans, etc.
What are the types of delay damages?
The damages that would result from critical delay include the full battery of delay damages – extended field overhead, unabsorbed home office overhead, liquidated damages, idle labor and equipment costs, labor and material cost escalation, and many other costs.
How do you calculate Cost of Delay in a construction project?
Here is a simple formula for quickly estimating Cost of Delay: the profit lost per-month of delay. Total COD = Lost Month Cost + Peak Reduction Cost.