When the Owner Delays You and the Contract Says Tough Luck - Understanding "No Damage for Delay" Clauses in 2026

There’s a clause in a lot of construction contracts that says even if the Owner sits on a decision for four months and pushes your project back, you can’t recover a dollar. You get a time extension. That’s it. It’s called a no damages for delay clause (“NFND”).  And in 2026, between the projects we’re actually building and the kind of changes Owners are making mid-job, it’s a much bigger risk than most Contractors are treating it as.

What an NDFD Clause Actually Does

The premise is simple. The Contractor agrees that if the project is delayed, even by the Owner, the only remedy is more time. No extended general conditions. No equipment standby. No additional supervision. No home office overhead. Nothing that costs money. In a normal commercial environment, that’s irritating but manageable. The delays are usually short, the carrying costs are containable, and most projects finish close enough to schedule that the clause never gets tested.  2026 is not a normal commercial environment.

Why This Matters Right Now

Look at what’s actually happening on active projects. The kinds of Owner decisions causing the most pain right now look like this:

Owner-driven scope and design changes mid-project. On data center work especially, the design can be evolving in real time. Tenant load calculations change. Cooling capacity gets bumped up in month four. Power requirements get rewritten. The Contractor was building to one set of drawings; the Owner now wants something different. That’s an Owner delay, and it’s happening constantly on hyperscale and AI infrastructure projects.

Late Owner decisions and approvals. Submittal turnaround that runs 60 days when the contract says 14. RFI responses that disappear into a black hole. Finish selections that don’t come until the trade is on site waiting. Every one of these is the Owner missing a contractual obligation, and every one of them ripples into the schedule.

Owner-furnished equipment arriving late. When the Owner is procuring the transformers, switchgear, generators, or specialty equipment (more and more common on data centers, healthcare, and industrial work), the Owner owns that delivery risk. When the OFCI gear shows up four months late, the Contractor is sitting on crews and overhead waiting for someone else’s purchase order. That’s an Owner delay.

Owner failure to provide site access or clear conditions. The existing tenant didn’t vacate. The demolition the Owner was responsible for isn’t done. The right of way isn’t cleared. The utility easement the Owner promised hasn’t come through. All of these are usually Owner obligations, and all of them push the schedule when the Owner doesn’t deliver.

Owner-directed material substitutions. Tariffs aren’t an Owner delay on their own. But when the Owner directs the Contractor to switch from one specified material to another to manage tariff exposure, and the substitute material is on a longer lead time, the resulting delay could be on the Owner. Same with Owner-directed value engineering that disrupts a sequenced procurement plan.

Owner-caused phasing and coordination problems. Multi-prime jobs where the Owner is supposed to coordinate the trades and doesn’t. Sequencing changes the Owner directs without acknowledging the impact. Late mobilization of an Owner-controlled vendor (FF&E, IT, low voltage).

And the reason it hurts more in 2026 than it would have in 2018 is the environment around them: tariffs squeezing margins, labor costs running hot, equipment lead times stretched out, schedules tighter than they’ve ever been on the megaprojects driving the industry. A four-month Owner delay on a $500M data center build is a very different financial event than the same delay on a $40M warehouse five years ago.

What the Courts Will and Won’t Enforce

The good news is that NDFD clauses aren’t bulletproof. Most jurisdictions have developed exceptions that limit enforcement. The bad news is that proving you fall within an exception means litigation, and litigation is slow, expensive, and uncertain.

The exceptions most courts recognize:

Bad faith or active interference. If the Owner deliberately or maliciously caused the delay, courts in most states won’t enforce the NDFD clause. Active interference is a higher bar than passive delay. It usually requires affirmative Owner conduct, like ordering work to stop without justification or refusing to release information the Contractor needed to proceed.  Most Owner conduct will not meet this really high standard.

Delays not contemplated by the parties. Courts often refuse to enforce NDFD clauses against delays so unforeseeable or extreme that the parties couldn’t have intended the clause to cover them. Fact-specific and inconsistently applied, but it’s a real argument.

Fraud or misrepresentation. If the Owner withheld material information about site conditions, design status, or other facts bearing on the schedule, the NDFD clause may not bar a claim.

Gross negligence. Some jurisdictions exclude grossly negligent Owner conduct from NDFD protection. Others don’t.

Statutory limits. A handful of states (notably North Carolina, Virginia, and a few others) have statutes that void or limit NDFD clauses on public projects, and sometimes on private work too. Always check the law of the state where the project is located.

These exceptions matter. But relying on them isn’t a strategy. They’re a fallback you invoke after the delay has already cost you real money. The right approach is to deal with the clause before you sign the contract.

How to Negotiate Around It

In my experience, Owners and GCs are more willing to negotiate NDFD language than Contractors realize. Most won’t agree to delete the clause entirely. Most will accept reasonable carve-outs if you ask. The Contractors who never get carve-outs are usually the ones who never asked.

Here’s what’s worth pushing for.

Owner-caused delays. At a minimum, push for monetary recovery on delays caused by the Owner’s own actions or inactions. Late decisions. Late approvals. Late RFI responses. Failure to provide access. Failure to coordinate with Owner-controlled trades or vendors. This is the most defensible carve-out and the one Owners most often accept.

Suspension of work. If the Owner suspends work, the Contractor should recover delay damages. Standard form contracts handle this fairly well. Owner-drafted forms often don’t.

Differing site conditions. If a differing site condition causes delay, the Contractor should recover both time and money. NDFD clauses that bar recovery on DSC delays effectively gut the differing site conditions clause. Don’t let that happen.

Owner-furnished materials and equipment. If the Owner is providing equipment with long lead times (transformers and switchgear on data centers, specialty mechanical equipment, owner-purchased FF&E), the Contractor shouldn’t bear the financial risk of late Owner deliveries. Carve out OFCI delays explicitly.

Cap on no-recovery exposure. Even if the Owner won’t accept full carve-outs, push for a cap. The Contractor bears the first 10 days of delay damages without recovery, but anything beyond that converts to a recoverable claim. This shifts the conversation from “whether” to “how much.”

If You Can’t Get Rid of It, Price It

Sometimes you’re told the NDFD clause is non-negotiable. Public work, certain Owner forms, take-it-or-leave-it dynamics on hot pursuits. If you can’t get the clause out and you still want the job, the only responsible move is to price the risk.

That means asking, before you submit the bid: what’s the realistic delay exposure on this project, and what does it cost to absorb 30, 60, or 90 days of Owner-caused delay without recovery? Add some version of that number to your bid. Yes, you may be less competitive. But Contractors who don’t price NDFD exposure aren’t actually less expensive. They’re absorbing risk for free, and eventually it catches up.

On a $50M project with 90 days of delay exposure, the carrying cost on extended general conditions, equipment, and supervision could easily run into seven figures. If the contract caps your remedy at time only, that money has to come from somewhere. Either you priced it in, or you’re eating it out of profit.

What to Do When You’re Already in It

If you’re reading this on an active project that has an NDFD clause and is starting to slip, a few things to do this week.

Send notice anyway. Even if the contract bars monetary recovery, the notice provision still applies. Document every Owner-caused delay event in writing, in real time, in the format the contract requires. You may need this paper trail to argue an exception later.

Look at the exceptions. Is the delay traceable to active interference? To information the Owner withheld? To Owner-caused decisions that fall outside the contemplated scope of the contract? If yes, you have an argument. Talk to counsel before you concede the issue.

Look at related provisions. Differing site conditions. Suspension of work. Changes. Force majeure. These provisions sometimes provide recovery paths that NDFD doesn’t bar.

Don’t just accept the time extension. Owners often respond to delay impact requests with a time extension and silence on cost. Accepting that response can waive your right to argue cost recovery later. (Or, sometimes, even the inverse of this!).  Reserve your rights in writing every time.

The Bottom Line

Time extensions don’t pay the bills. On a 2026 construction project, where Owners are making more changes mid-job, decisions are running late, and OFCI equipment is moving across the country on stretched lead times, an unmodified NDFD clause is a much bigger risk than it was five years ago. The clause is negotiable more often than Contractors think. The exceptions exist but aren’t reliable. The pricing math can be done before the bid goes out, but only if someone reads the clause first. Read it. Push back on it. Carve out the obvious Owner-caused categories. And if you can’t move the language, price the risk like a real risk. Because right now, that’s exactly what it is.

This article is for informational purposes only and does not constitute legal advice. Every construction project and contract is different, and state law governing no damages for delay clauses varies meaningfully. If you have a specific NDFD or delay claim issue, consult with a construction attorney who can review your contract and advise based on your jurisdiction and the facts of your project.

About the Author

Nate Simon is the founder of Simon Law, PLLC, a construction law firm based in Lexington, Kentucky. He represents general contractors, subcontractors, developers, and suppliers across the United States. Before founding Simon Law, Nate spent years as in-house counsel for a large general contractor, where he managed contract negotiation, claims, and dispute resolution on projects totaling billions of dollars in value. He can be reached at nate@simonlawky.com.