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NEC ECS: Delay Damages negotiable, capped or fixed?

+1 vote
148 views
NEC3 ECS Main Option A

Subcontract includes X7 and Employer provided a breakdown of X7 Delay Damages at tender stage. The project is now into its 2nd week of delay and forecasting to be delayed by a further 10 weeks. All compensation events have been implemented to date and both parties are in agreement that the delay is clearly the Contractor's own delay.

Approximately 50% of the original X7 breakdown items is not applicable at this point in time.

Can the Employer charge the amount stated in the Subcontract Data even if their actual costs incurred is 50% less per day. Likewise, what if their actual costs were 150% of the figure in the Subcontract Data?

If there was no breakdown originally, would the Employer be required to substantiate the sum per day in the Subcontract Data?
asked Nov 19, 2018 in Secondary X, W and Y options by Yahik (370 points)  

1 Answer

+1 vote
Firstly you are slightly confused here talking about Employer/Subcontractor. I assume you mean the Contractor rather than the Employer in the wording of this question.

The answer is that if the Subcontractor finishes beyond Completion Date as stated in contract data (or as altered in accordance with any implemented compensation events) then they are liable for the amount stated within the contract.

It is down to the Contractor's discretion if they choose not to levy them at all or at the amount stated. I used to work as a Contractor myself and we ALWAYS had delay damages in our Subcontracts and they were OFTEN late but rarely if ever did
 we charge them as in the bigger picture we as the Contractor were OK.

However, delay damages are legally not meant to be a penalty, and if the amount charged is nothing like of which it is actually costing then as a separate legal remedy that could be challenged in court (but outside of the boundaries of the NEC contract). For that reason/risk it MAY be in the Contractor's interest not to charge the full amount stated.
answered Nov 19, 2018 by Glenn Hide Panel Members (74,860 points)