FIDIC glossary · Payments
Delay Damages
Delay Damages
In short
Pre-assessed damages for delayed completion (liquidated damages), usually capped.
What is a Delay Damages?
Delay Damages are liquidated damages for late completion of the Works. People call them a penalty, but the legal nature is different and the difference is practical.
Delay damages are **not a penalty**: they are the parties' pre-agreed estimate of the Employer's loss from the facility not being in service on time. The Employer does not have to prove actual loss — it applies the rate from the Contract Data. The flip side is that it cannot recover more than that, even where the real loss was greater.
The rate is per day of delay, usually a percentage of the Accepted Contract Amount, and almost always subject to a cap — typically 5–15% of the contract price. **Check that the cap exists before bidding**: a contract without one means unlimited exposure to delay, which changes the economics of the bid entirely.
Accrual stops at the date stated in the Taking-Over Certificate — hence the value of an argument about that date.
An important limit: delay damages are the Employer's sole remedy for the delay itself. It cannot also claim general damages for the same lateness. That does not stop it claiming on other grounds — defects, missed performance figures, other breaches.
Where the delay was caused by the Employer and the Contractor did not receive the extension of time it was due, the accrual of damages becomes challengeable.
Where it sits in the contract
Related terms
Need this read against your own contract?
This explains how the mechanism works in the standard form. How it works in your contract, after the Particular Conditions, is a separate question.
Talk to an expert →A reference explanation of the FIDIC standard conditions. Not legal advice, and not a reproduction of the FIDIC books.