Managing Delay and Price Escalation Claims: Practical Strategies for Construction Projects

Construction projects are increasingly affected by supply chain disruptions, evolving tariff regimes and broader geopolitical uncertainty, all of which can significantly impact project schedules and costs. As delay and price escalation become more common, owners and contractors are placing greater emphasis on proactive risk management throughout the project lifecycle. Careful planning during procurement, disciplined project execution and strategic dispute preparation can help reduce claims and improve project outcomes.

Below are key considerations for owners and contractors seeking to proactively manage delay and price escalation risks.

1. Risk Trends. External market forces continue to reshape the construction landscape. Material shortages, labour constraints, inflation and changing trade policies have increased the likelihood of both schedule delays and cost escalation. These evolving risks reinforce the importance of anticipating potential disruptions early and implementing contractual and project management strategies that improve resilience when unexpected events occur.
2. Contract Planning. Effective claims management begins before construction starts. Progressive contracting models and development phases allow parties to identify, assess and allocate project-specific risks before they escalate into disputes. Early contractor involvement, improved design maturity, realistic scheduling and structured procurement planning can significantly reduce uncertainty. Well-defined supervening events and price escalation regimes also establish clear processes for allocating risk and responding to changing market conditions throughout the project.
3. Project Controls. Even the strongest contract cannot eliminate every dispute. During project execution, early issue identification, robust project controls and comprehensive contemporaneous documentation are critical to managing delay and price escalation. Maintaining accurate project schedules, documenting project impacts through formal correspondence and engaging experts early can strengthen decision-making, support mitigation efforts and establish the evidentiary record required should a dispute arise. 
4. Dispute Strategy. Once a dispute arises, parties should promptly review contractual notice requirements, dispute-resolution procedures and available insurance coverage, while taking steps to preserve evidence and mitigate losses. Early engagement of qualified experts can help establish causation, quantify damages and support effective resolution, whether through negotiation, arbitration or litigation.
5. Case Lessons. Recent Canadian decisions reinforce the practical importance of disciplined contract administration. Courts continue to place significant weight on contemporaneous project records, compliance with contractual notice provisions and well-supported expert evidence when determining entitlement to delay and price escalation claims. These decisions underscore that proactive risk management and careful documentation remain fundamental to successfully navigating complex construction projects.

Have more than five minutes? Watch our recent webinar on this topic or contact any member of our Construction Dispute Resolution group to learn more.