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The main contractor is passing its delay costs down to me

The client charged the main contractor for a late finish. Now that bill, and its own site costs, have landed on our account.

Updated: . By Jack Butler-Kettle, Construction Claims Consultant.

What's happening?

Your subcontract has no damages rate, or your main contractor says the rate is not the whole story. Your account has come back cut by the damages its client took from it, plus its own extended site costs. The whole project's delay has been put down to you.

Where there is no rate, your main contractor can claim only the loss your late finish actually caused it. That loss is measured from your completion date as extended, not the project's. It has to prove the loss, and show that your delay caused it rather than its own or another trade's. Where several trades were late, it has to show how the cost was shared. Accept the charge as it stands and you carry the whole project's delay.

The solution

Ask for the breakdown of every charge. You need the damages paid to the client, the site costs, the period each covers and the record that puts it down to you. Then set it beside your completion date as extended and your delay notices.

Delay Damages Claim tests each charge for evidence, amount and your share. It puts the reduced figure to your main contractor, and takes it to adjudication where the sum justifies it. Where the charge turns on who caused which weeks, a programming expert assesses it, and we value each answer in money. Delay Damages Prevention keeps the notices and records that fix your own completion date, so the next charge is measured against it.

Example

Illustrative example. The scenario and figures are invented.

The facts

A groundworks subcontractor's £640,000 account is cut by £98,000. Of that, £70,000 is the damages the client took from the main contractor for finishing 7 weeks late, at £10,000 a week. The other £28,000 is the main contractor's extended site costs, at £4,000 a week. The subcontract has no damages rate.

What happens

  1. The subcontractor asks for the breakdown of both charges, and the record that puts each week down to it.
  2. Its own works finished 3 weeks after its subcontract completion date as extended.
  3. The main contractor's own progress reports put the last 4 weeks of the project's delay down to late mechanical commissioning.
  4. The subcontractor puts forward 3 weeks of each charge, £42,000, as the most its late finish could have cost.

The passed-down costs

ItemChargedPut forward
Client's damages, 7 weeks at £10,000£70,000£30,000
Extended site costs, 7 weeks at £4,000£28,000£12,000
Total£98,000£42,000

The outcome

The main contractor settles at £42,000, and £56,000 is returned in the final account.