The Project Is Delayed — But Who Bears the Cost? Allocating Responsibility for Delay in UAE Construction Disputes

The project has passed its contractual completion date. The project owner seeks delay damages. The contractor claims an Extension of Time. The project records, however, show delayed approvals, variations, changes to the sequence of works and periods of contractor underperformance.

This is where many construction disputes become significantly more complex.

The fact that a project was completed late does not, by itself, establish that the contractor is responsible for the entire period of delay.

For project owners and developers, delay may mean postponed operation of an investment asset, delayed unit handovers, lost expected revenue, additional financing exposure and extended project costs.

For contractors, it may result in substantial delay damages, rejection of Extension of Time claims, prolonged site costs and liability for periods of delay that they contend were caused by events outside their control.

The central question is therefore not simply:

How late was the project?

It is:

Who caused each period of delay, what effect did that event actually have on completion, and what can the project records prove?

Construction delay should not be treated as a single block of time.

A project may experience late site access, delayed drawings, pending material approvals, variations, late instructions, insufficient contractor resources and procurement delays at different stages of execution.

Some of these events may affect completion. Others may not.

A three-week delay in approving a material does not automatically produce a three-week Extension of Time. If the contractor could continue other works and the delayed activity was not critical to completion, the actual effect may be significantly different.

Conversely, a relatively short event affecting a critical activity may disrupt a sequence of dependent works and materially move the completion date.

This is why sophisticated delay analysis focuses not merely on the existence of a delay event, but on its actual impact on the project programme and the critical path.

The starting point in any construction delay dispute is the contract.

The commencement date, contractual completion period, approved programme, Extension of Time provisions, notice requirements, consultant's authority, variation procedures, drawing and material approval mechanisms and provisions governing delay damages may all affect the parties' respective rights and liabilities.

Where a contract incorporates FIDIC Conditions of Contract, those conditions operate as contractual provisions to the extent incorporated into the parties' agreement and subject to any Particular Conditions or amendments agreed between them. FIDIC is not, in itself, the governing law of the dispute.

A proper delay assessment therefore requires considerably more than comparing the contractual completion date with the actual completion date.

The project timeline may need to be reconstructed to determine what was planned, what actually occurred, which activities were affected and whether a particular event actually moved the completion date.

This is where the Critical Path becomes particularly important.

Not every delayed activity is critical. Likewise, not every late approval, instruction or delivery necessarily delays completion of the project.

The analysis must determine whether the relevant event affected an activity that was critical to completion and whether that event actually caused the completion date to move.

This also explains why an Extension of Time claim is more than a request for additional days.

Depending on the terms of the contract, a properly substantiated EOT claim may need to identify the relevant delay event, the contractual basis for entitlement, the dates involved, the affected activities, the impact on the programme and compliance with contractual notice and substantiation requirements.

A genuine delay event may therefore exist while the corresponding EOT claim remains difficult to establish because its actual impact on completion cannot be demonstrated.

Where delay events attributable to different parties overlap, issues of Concurrent Delay may arise. However, temporal overlap alone does not determine whether legally or technically relevant concurrent delay exists, nor does it automatically determine its consequences.

The causal effect of each event must be examined. This may require determining whether each event independently affected completion, whether the relevant events affected critical activities and what the contract and applicable law provide regarding their respective time and financial consequences.

Statements such as “the contractor was already in delay” or “the project owner also caused delay” are therefore rarely sufficient on their own.

Causation and actual programme impact must be established.

DELAY DAMAGES AND CONTRIBUTORY FAULT

Delay damages should not necessarily begin and end with a mathematical calculation:

Number of delay days × contractual daily rate.

For contracts governed by Federal Decree-Law No. 25 of 2025 promulgating the UAE Civil Transactions Law, Article 340 permits contracting parties to agree in advance on the amount of compensation, while providing for judicial adjustment in the circumstances specified by law.

Among other matters, Article 340 permits the court to reduce agreed compensation where the debtor establishes that the agreed amount is excessive or that the principal obligation has been partially performed. It also addresses circumstances in which the creditor's own fault contributed to the occurrence or aggravation of the damage.

This is particularly relevant to construction delay disputes.

Where a project owner seeks agreed delay damages for an entire period while the evidence establishes that its own acts or omissions contributed to the relevant damage, the assessment cannot necessarily end with the contractual daily rate and the total number of days.

Equally, the contractor cannot avoid liability merely by identifying some event attributable to the project owner. The causal effect and actual impact of that event must still be established.

The strongest delay case is rarely created after proceedings begin.

Developers, project owners and contractors should manage project records in a manner that allows the history of the project to be reconstructed if a dispute later arises.

This does not mean treating every project as anticipated litigation. It means ensuring that significant events affecting time and cost are properly recorded when they occur.

• Review the contractual completion date and all approved extensions
• Preserve the original Baseline Programme and all subsequent programme updates
• Identify each material delay event separately rather than treating delay as one continuous period
• Determine which activities were affected by each event
• Analyse whether the affected activities were on the Critical Path
• Review all Extension of Time notices and supporting submissions
• Match variations and consultant instructions to their actual programme impact
• Maintain drawing and material approval logs
• Preserve daily, weekly and monthly progress records
• Record contractor resource shortages and procurement delays contemporaneously
• Document delayed decisions, approvals or access attributable to the project owner or consultant
• Separate Time Claims from Cost Claims
• Review contractual notice requirements before entitlement becomes disputed
• Prepare a chronological delay matrix linking each event to the relevant document, responsible party and alleged time impact