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During the execution of work by a company, it happens that the work is delayed and that the delivery of job site is postponed. The owner can then take advantage of delay penalties. But how does this compensation for delay work? Within what timeframe? And above all, how is it calculated? These are all questions to which we will provide precise answers. We will also study which situations justify an exception and how to avoid these delays of job site.
The penalties of job site correspond to the compensation to be paid following missed deadlines within the framework of a delivery of job site. Indeed, any construction company is bound by obligations towards its clients. In particular, it must provide a service in accordance with what was defined in the specifications and this on the date announced in the estimate. The term of delivery of work can be fixed in a more or less precise way. But once the estimate validated and signed by the customer, it is equivalent to a contract and thus engages the responsibility of the project manager in the event of non respect of the deadlines.
This procedure was established by the legislator in order to protect the client from the bad faith of indelicate contractors and to avoid abuses in this area. Indeed, some could, otherwise, announce unattainable deadlines but attractive for a client. This would be misleading advertising, which could deceive the consumer. It is also a security for the client. Indeed, with theobligation of respecting the deadlines under penalty of financial sanction, the contractors try as much as possible to be in conformity with the work schedule. However, a small tolerance applies in order not to penalize a short delay.
It is article 1231-1 of the Civil Code (formerly article 1147 of the Civil Code) which allows the application of the principle of damages in case of delay in the execution of any contract.
In practice, there is a little le eway for construction companies. Indeed, in practice, the penalties for delay of job site will only apply beyond the 30 days threshold. This period is assessed from the expected date of completion of job site. In other words, delays of less than 30 days are not considered to be prejudicial and are therefore not subject to compensation.
However, if the 30-day time limit is exceeded, the project manager's insurance company will be responsible for paying the overrun compensation to the project manager.
Depending on whether it is a private works contract or a job site public works contract, the calculation of the penalties for delay will not be the same.
Thus, even if the payment is made after 30 days of delay, the penalties apply from the first day of delay. The texts relating to the calculation of the penalties are different according to the type of work carried out.
Late penalties for private works
For private works, it is the standard AFNOR NF P03-001, and more precisely the article 9.5 which applies and which stops the modalities of calculation, except in the case of constructions of individual houses.
This standard, revised regularly, constitutes the General Administrative Clauses (GAC). It concerns the building works subject to a private market.
The cost of compensation for delay is calculated in calendar days, i.e. including Saturdays and Sundays. The daily amount is equal to 1/1,000th of the price of job site. However, a cap of 5% of the total price applies.
Let's take the example of a private job site of 300.000 euros. The amount of the penalty will be 300.000 * 1/1.000 = 300 euros per day of delay, with a maximum of 5% of the total price of the work order, i.e. 15.000 euros of compensation.
The exception to the above rule are contracts governing the construction of individual houses. In this case, it is no longer the AFNOR standard but the Code de la construction et de l'habitat, the CCH, which determines the rules, particularly articles R.231-14 and R.232-7.
The difference lies in the fact that the applicable penalties must be mentioned on the contract, under penalty of nullity. Also, the calculation of penalties for delay is not identical. Concerning the building sites of individual houses, the daily indemnity of overrun is less high, since it is of 1/3.000th of the total of the Contract of Construction of Individual House, the CCMI.
Using the same example as above, for a construction contract of 300,000 euros, the calculation will be as follows: 300,000 * 1/3,000 = 100 euros per calendar day of overrun.
In order to compensate for the prejudice suffered by the contracting authority, i.e. the client of a public works contract, penalties for delay must be included in the terms of this contract. This amount is limited to 10% of the amount of the purchase order.
Thus, still in our example of a job site of public works of 300.000 euros, the fixed penalty of delay of delivery of this job site could not exceed 300.000 * 10% = 30.000 euros. Moreover, the holder of the contract, i.e. the company which won this contract, will benefit from an exemption from the payment of these penalties if they do not reach the threshold of 1000 euros excluding tax.
In addition, if the purchaser intends to request the application of these penalties, he is required to write to the contractor to specify the conditions likely to be retained for this compensation. The project manager then has a period of time in which to submit his observations. The new GCC have established these rules.
The payment of late fees is not systematic. In certain duly listed situations, the project manager will not be required to pay penalties for delay because certain time overruns are not of his making. There are three types of causes: when the delay is due to the project owner's responsibility, in the case of additional work and when bad weather occurs.
The project owner may, at times, be directly responsible for a postponement of the completion date of the work.
If, during the execution of the job site, the initial requests are modified, the good progress of the work will be impacted. However, in this case, the client cannot, in good faith, blame the company for postponing the delivery of the job site. Indeed, a basic principle prevails: the deadline for completion of the work is set according to the initial tasks to be performed.
In addition, sometimes, administrative steps must be taken by the client prior to a stage of the job site. If the client has delayed and still has not obtained the necessary authorizations, the craftsman will not be held responsible.
Last but not least, if the client has not paid the installments due to the contractor within the prescribed time , the latter will be cleared of the delay caused and will therefore not suffer any financial penalty.
Again on the basis that the term of the work was conditioned by the scope of the work to be carried out at the time of signing the contract, any additional request from the client will not be attributable to the company. In this case, it is advisable to draw up an amendment to the contract and to include the terms and conditions concerning the new delivery deadlines of job site.
Likewise, all unforeseen urgent works that arise during the job site and that are essential to guarantee the solidity and the conformity of the work.
These two cases will not allow the customer to claim compensation for delay.
However, you must be able to justify the extra work with photos and other elements to justify your good faith. To do this, you can use our work tracking tool, which has a module for extra work!
Construction and public works, often taking place outdoors, are easily affected by bad weather. Moreover, the bad weather leave is there to compensate for the days of work lost by the workers. It also exempts the company from paying late penalties at job site.
Be careful, however, of the conditions that must be met. In particular, the bad weather leave generally concerns only the professionals of the building and public works industry who deal with the structural work and the second work.
Similarly, the notion of bad weather is assessed through the definition given by the Labour Code and the situations covered by the leave fund in the context of bad weather leave. Thus, in practice, very often only floods, snowfalls and storms are considered to be bad weather conditions exempting the employee from any interruption of job site.
We have seen the financial repercussions that delays in the forecast schedule can have for a company. It is thus interesting to foresee and especially to avoid the delays of job site.
It may seem obvious, but the priority is to deliver your job site on time. For that, some golden rules to know. First of all, it is better not to set too tight a schedule and give a delivery date that is too prone to problems. Keeping a margin of maneuver will allow you to absorb a slight delay, due to imponderables.
Then, think about identifying the potential risks of postponement according to your activity. Thus, placing material orders as far in advance as possible and ensuring the availability of the various parties involved are precautions to be taken.
Don't hesitate to use tools that will make your task easier. For example, an application dedicated to the management of work schedules will help you see things clearly. Moreover, by facilitating the sharing of information between all collaborators, this type of software allows you to identify a potential delay more quickly.
Establishing good communication, whether with the workers, the other craftsmen or the owner, will allow for a dynamic management of the work. This will increase everyone's reactivity and consequently limit problems.
A final advantage is that regular and transparent communication with the client is essential. Informing him of the problems encountered can encourage him to be lenient with regard to the payment of penalties for delay.
You have seen that vigilance is required regarding the problem of late delivery of work. Not only will they damage the company's reputation but they are also likely to have a significant budgetary impact. Also, whether it is for a public or private market, it is important if the delay is not your responsibility, to put it in writing. This way, you will free yourself from responsibility and will be protected from any financial repercussions.
