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X7

Delay damages

Reviewed by LazyQS Editorial·Last reviewed: 2026-02-19

Plain English Explanation

X7 provides for delay damages (liquidated damages) to be levied against the Contractor if they fail to complete the works by the Completion date. The rate of delay damages is stated in the Contract Data as a daily or weekly amount. Delay damages are the pre-agreed consequence of late completion and replace any claim for unliquidated damages by the Client.

Delay damages under NEC can only be levied after the PM has certified Completion. They run from the contractual Completion date until the earlier of actual Completion or the date the Client takes over the works. If the Completion date has been extended through compensation events, the extended date applies.

Delay damages are the most commercially significant risk for contractors and subcontractors. An incorrect or disproportionate delay damages rate, or a failure to secure programme extensions through CEs, can result in severe financial consequences.

Key Takeaway

Check the delay damages rate in your subcontract — if it exceeds what is proportionate to your package value, or replicates the full main contract rate, you are carrying more risk than the main contractor intended to pass on.

What This Means for Subcontractors

Subcontractors should check the delay damages rate in their subcontract carefully. A disproportionately high rate (especially for a subpackage) can result in losses that exceed the subcontract value. Check whether the rate is a direct pass-through from the main contract or whether it has been adjusted. Ensure all CE entitlements are notified promptly to protect your programme and the Completion date.

Common Risks & Disputes

  • 1Failure to notify CEs promptly, losing programme extension entitlement and increasing delay damage exposure
  • 2Delay damages rate in the subcontract being disproportionate to the subcontract value
  • 3The main contractor applying delay damages before Completion has been formally certified
  • 4Disputes about when the Completion date was (after CE extensions) versus when completion actually occurred
  • 5Sectional delay damages (under X5/X7) creating multiple simultaneous delay damage exposures

Sources

  1. NEC4 ECC Secondary Option X7— NEC4 ECC
  2. RICS Guidance Note: Liquidated Damages and Delay in NEC Contracts— RICS
  3. Fenwick Elliott: Delay Damages Under NEC4 — Rate Setting and Proportionality— Fenwick Elliott
  4. Society of Construction Law: Liquidated Damages and Extension of Time— SCL

Related Clauses

X5

Sectional completion

Sectional completion — creates multiple simultaneous delay damage exposures under X7

X6

Bonus for early Completion

Early Completion bonus — the commercial upside that balances the X7 downside

Continue Learning

Category Overview

Back to X Clauses (Secondary Options)

Adjacent Clauses

X6 Bonus for early CompletionX8 Undertakings to the Client or Others

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