A project loses time for three reasons that do not resemble one another, and treating them together is the error that loses delay files. The first is covered physical damage: something broke, it is repaired, work resumes. The second is an external event that damages nothing but prevents work. The third is somebody's failure, contractor, supplier or authority. Those three families open entirely different rights, and the second traps everyone because it looks like the first.
Take the flooded trench, which is the textbook case. Exceptional rain fills a foundation excavation. Nobody disputes that the site stops, that resuming takes three weeks of pumping and drying, and that the schedule slips accordingly. The question that decides everything lies elsewhere: was there PHYSICAL DAMAGE to the insured works? If the water merely filled an empty volume, the answer is no. The ground is not the works, the water did not harm them, and pumping is a site operating cost, which policies ordinarily classify among means of execution rather than among losses.
The same event changes nature entirely if the excavation wall collapses, if reinforcement already placed is washed away, or if concrete still curing is ruined. There, damage to the works exists, cover responds, and the resulting delay becomes attributable to covered damage, which opens the door to advance loss of profits. The boundary therefore turns not on the intensity of the rain nor on the length of the stoppage, but on whether there was material harm to what the policy insures. Two neighboring sites under the same downpour can end up one covered and the other not, depending on how far their works had progressed that day.
That distinction carries another, finer and just as expensive: the one between damage and protection. Costs incurred to PREVENT imminent damage, sheeting, shoring, pumping before the water reaches the works, are often covered as protective measures, but within a narrow limit and only where the loss was imminent. The same costs incurred out of seasonal prudence, because the forecast announces a wet winter, are nothing but site means. A project owner presenting a pumping invoice without being able to date the imminence is declined on the ground that it produced an execution quotation, not a loss account.
Then comes the contractual layer, and that is where confusion settles for good. The works contract provides delay penalties borne by the contractor, and a force majeure clause relieving it in certain cases. Those two mechanisms live in the contract, not in the policy, and they answer a different question: not who pays for the damage, but who bears the lost time. A well-drafted force majeure clause relieves the contractor of penalties where the event is unforeseeable, irresistible and external. It creates no indemnity, and it binds no insurer.
Hence the asymmetry that decides the outcome, and which few project owners see coming. An exceptional natural event can simultaneously relieve the contractor of its penalties, because it ticks the three force majeure criteria, AND trigger no cover at all, because it caused no physical damage. The project owner then bears the entire delay: it collects no penalties, it collects no indemnity, and its commissioning slips. It is the only case where both protections fall away together, and it is precisely the one that large weather events produce most often.
Finally there is the way policies bound natural events on a site, and it justifies itself easily. A structure under construction is by definition open, without roof, without waterproofing, often in excavation: its exposure to storm and flood bears no comparison with that of a finished building. Wordings answer with sub-limits specific to natural events, with increased deductibles, and sometimes with precise prevention conditions, such as securing light elements above an announced wind speed. Those conditions are of performance, not of form: a site that failed to secure while the warning was published is met with the breach, and the question stops being one of damage and becomes one of prevention.
On a wastewater treatment plant site, rain with a fifty-year return period fills the excavations of two basins in one night. The walls hold, the reinforcement is not displaced, no concrete was curing. Pumping, drying and resuming take twenty-two days, at a cost of 310,000 euros. The schedule slips by 40 days, of which 18 are prior drift due to a membrane supply delay. The contract provides penalties of 12,000 euros per day borne by the contractor, with a standard force majeure clause. The project owner holds advance loss of profits cover, 30-day deductible, forecast margin 9,000 euros per day. It claims the 310,000 euros from the construction insurer and 480,000 euros of penalties from the contractor. What will it get?
It will very probably get neither, and the reasoning runs in three steps. On the 310,000 euros: the walls held, the reinforcement did not move, no concrete was curing. There is therefore no physical damage to the insured works, only water in an empty volume. Pumping is a means-of-execution cost, and the construction insurer will decline on the ground that there is no loss, not because rain is not a covered peril. On the 480,000 euros of penalties: fifty-year rain ticks unforeseeability, irresistibility and externality, so the force majeure clause very likely relieves the contractor for the 22 days of stoppage. That leaves the 18 membrane days, which are not force majeure and remain penalizable, that is 216,000 euros rather than 480,000. On the delay cover, finally: it requires covered physical damage at its origin, and there is none, so it owes nothing, deductible or not. The project owner bears the 22 days in full plus the pumping cost: this is the case where both protections fall away together. What should have been done sat before the downpour and turned on one point: documenting imminence so as to place the pumping and sheeting under protective measures, which would at least have opened a debate on the 310,000 euros instead of a flat decline.
- 01Three families of delay open three different rights, and the second traps everyone: an external event that damages nothing is not a loss.
- 02Water in an empty excavation is not damage to the works; a collapsing wall, washed-away reinforcement or ruined curing concrete are.
- 03Protection costs are covered only as protective measures, and only if the imminence of the damage can be dated.
- 04Force majeure lives in the works contract, never in the policy: it relieves penalties, it creates no indemnity.
- 05A large natural event can relieve the contractor AND trigger nothing at the insurer: it is the only case where both protections fall away together, and the project owner bears everything.