Every week, subcontractors across Australia finish jobs they did well, on time and to spec, and still end up fighting to get paid properly.
Not because the builder is crooked. Not because the subcontractor did anything wrong. But because somewhere in the 80-page subcontract they signed before the job started, a clause quietly took away their right to recover costs when things went sideways. Most of the time, they never knew it was there.
This guide explains how that clause works, what it costs, and what you can do about it before you sign and after a delay hits.
The delay-cost problem
Here’s a scenario that plays out constantly on Australian sites. The builder is late giving you access. Or the structural work ahead of you runs three weeks behind. Or the drawings you need don’t arrive until halfway through your programmed install. None of that is your fault.
But your contract says the only remedy for any delay, whoever caused it, is an extension of time. You get more days. You don’t get a single extra dollar.
Meanwhile the costs keep running:
- Supervision you’re still paying for while you wait.
- Plant and equipment sitting idle on hire.
- Crews you can’t stand down, because you need them back the moment access opens.
- Site overheads: vehicles, insurance, amenities, phones.
- Workshop and fabrication time you’ve already locked in.
Contractually, all of that is your problem, even though the builder caused it.
What a six-week delay can cost
Take a $1.5 million subcontract and a six-week delay caused by someone else. The figures below are illustrative, but they’re typical of what we see:
| Cost while delayed | Per week | Six weeks |
|---|---|---|
| Site supervisor | $3,000 | $18,000 |
| Crew kept on but not productive | $6,000 | $36,000 |
| Idle plant and equipment hire | $2,000 | $12,000 |
| Site overheads | $1,500 | $9,000 |
| Total | $12,500 | $75,000 |
On a job with a 10% margin, that’s half your profit gone. Depending on your trade and crew size, the real figure can easily run from $60,000 to $100,000. And under a time-only delay clause, none of it is recoverable.
How delay clauses take your money
Not every delay clause looks the same. These are the versions to watch for:
- “Time only” clauses. An extension of time is your sole remedy for delay. Costs are expressly excluded.
- Delay damages deleted or set to nil. Australian Standard contracts like AS 4000 include a delay damages clause for delays the principal causes. Head contractors often delete it, or fill in the rate as $0.
- Narrow “compensable causes”. Costs are payable only for a short list of events, which leaves out the delays that actually happen on site.
- Caps. Delay costs are capped at a figure that bears no relation to what a delay really costs you.
- “Absolute discretion” to extend time. The builder decides whether you get an extension at all, with no obligation to act fairly.
Why subcontractors keep signing these clauses
It’s not because they’re naive. It’s because of how and when contracts arrive.
By the time a subcontract lands in your inbox, you’ve usually been awarded the job. The relationship is warm and the team is excited. You may have ordered materials or started mobilising, and the head contractor wants the signed contract back within days.
Reading 100 pages of dense legal language in that window, and understanding it well enough to push back, isn’t realistic for most subcontracting businesses. So the contract gets signed, the job starts, and the clauses cause exactly the problems they were always going to cause.
The notice trap
The delay clause is the most expensive, but it’s not the only one that catches subcontractors out.
Almost every subcontract has strict notice requirements: deadlines for formally telling the builder about a delay if you want to keep your entitlement. Miss the deadline and the entitlement is gone. Not reduced. Not disputed. Gone.
In some contracts the window is as short as two business days from when you became aware of the issue, or when you should have become aware. On a busy site, with a site manager juggling a dozen things, two business days is nothing.
Miss a notice on a delay event and in many contracts you don’t just lose the right to claim costs. You lose the right to an extension of time too. That means liquidated damages can start running against you for a delay that wasn’t your fault.
That’s why every ClauseIQ risk report includes a notice obligations tracker: a plain-English list of every time bar in your contract, what triggers it, how long you have and what you lose if you miss it.
Does the law protect you?
Sometimes, but don’t count on it. Courts in Australia generally enforce clear contract terms, even harsh ones. There are some limits:
- The prevention principle. A builder generally can’t hold you to a completion date it stopped you meeting. In Probuild v DDI Group [2017] NSWCA 151, the NSW Court of Appeal held that a head contractor had to use its power to grant an extension even though the subcontractor hadn’t claimed one in time. But courts have also enforced clauses that give the builder “absolute discretion”, so the wording matters.
- Unfair contract terms law. Since 9 November 2023, unfair terms in standard form contracts with small businesses (fewer than 100 employees or under $10 million turnover) can be void, and the business that uses them can face large penalties. A one-sided delay or time-bar clause in a take-it-or-leave-it subcontract may be open to challenge.
- Western Australia. The WA Security of Payment Act lets an adjudicator or court declare a notice-based time bar unfair if complying wasn’t reasonably possible, for contracts made from 1 August 2022.
Each of these is a fight after the damage is done. Fixing the clause before you sign is far cheaper.
What to negotiate before you sign
Head contractors expect subcontractors to push back on contract terms. The ones who do it professionally, with clear reasons and drafted amendment wording, are taken seriously. Many of these clauses get amended. Not always, not completely, but often enough to be worth it every time.
Ask for:
- Delay costs for builder-caused delays. Time and money when the delay is caused by the head contractor, other trades or late information.
- A real delay-cost rate. A daily or weekly rate that reflects your actual costs, not $0.
- Workable notice periods. At least 10 business days, running from when you actually became aware of the delay.
- No double time bar. Missing a cost notice shouldn’t also wipe out your extension of time.
- Fair extension decisions. The builder must act reasonably and in good faith when deciding extensions.
- Liquidated damages that match your scope. A daily rate proportionate to your package, with a cap.
The starting point is knowing what’s in the contract before you sign it. Not a general sense of it: which clauses create financial exposure, how big that exposure is and what to ask for in return.
What to do when a delay hits
If you’re already on site and a delay starts:
- Check your notice clause today. Find the deadline and what the notice must contain.
- Notify in writing, even if the site manager says “don’t worry about it”. A conversation isn’t a notice.
- Record everything. Daily diaries, photos, emails, who was standing down and what was sitting idle.
- Track costs separately for each delay event, so you can prove what it cost.
- Claim it. Include recoverable delay costs in your payment claim. Under security of payment laws, the builder must respond with a payment schedule on time or risk paying the full amount. See our plain-English guide to the Security of Payment Act NSW.
Delay clauses often sit next to other one-sided risk. Indemnity clauses are the usual culprit: here’s what “indemnify” really means in a construction contract.
Frequently asked questions
Can I claim delay costs if the builder caused the delay?
Only if your contract allows it, or the law steps in. Many subcontracts allow an extension of time but exclude costs. Check the delay clause and any delay damages rate before you sign.
What happens if I miss a notice deadline?
Under a strict time bar, you can lose the claim entirely, sometimes including your extension of time. Some legal protections exist, but they’re uncertain and expensive to rely on.
What is an extension of time?
An extension of time moves your completion date so you aren’t liable for liquidated damages for the delay. On its own it doesn’t pay your extra costs.
Can I negotiate a head contractor’s subcontract?
Yes. Head contractors expect it, and reasonable, well-drafted amendments are often accepted, especially on delay costs, notice periods and liquidated damages.
Are one-sided delay clauses legal?
Generally yes, if they’re clear. But unfair terms in standard form contracts with small businesses can be void under Australian Consumer Law.
Know what you’re signing
The best protection against a bad contract outcome isn’t a lawyer after the dispute. It’s understanding what you’re signing before the job starts.
Upload your subcontract for a free risk rating. Within minutes, ClauseIQ gives you a plain-English breakdown of every significant risk, including delay and notice clauses, with negotiation wording ready to go. $49 per contract.
This article is general information, not legal advice. For advice on your situation, speak to a construction lawyer.
