NLA Insights
24 August 2026
The construction industry is a critical component of the Indian economy, yet given the scale and interdependencies of its projects, delays, disputes and claims remain almost inevitable. Indian jurisprudence on delay disputes has steadily evolved — from attributing delay on the basis of correspondence and the broad conduct of parties, to a dispute that now turns squarely on evidence.
According to Global Data, 46.6% of Indian construction projects experience delays. The contemporary question is no longer merely whether a project was delayed, but whether the claimant can demonstrate, through reliable records and analysis, the causal connection between a particular event, its impact on the critical path, and the resulting financial loss.
The Supreme Court’s decision in McDermott International Inc. v. Burn Standard Co. Ltd. remains an important starting point. The Court recognised the use of established formulae such as Hudson, Emden and Eichleay for quantifying overheads and loss of profit; however, the decision also demonstrates that such formulae operate on underlying factual assumptions. The Supreme Court’s earlier discussion in Bharat Coking Coal Ltd. v. L.K. Ahuja further emphasised that loss of profit cannot simply be awarded on an assumed percentage without material establishing the alleged loss. The evidentiary threshold since then has become more explicit and elaborate. In Unibros v. All India Radio, the Supreme Court identified four requirements for a claim for loss of profitability arising from prolongation:
The significance of the fourth requirement in Unibros is particularly noteworthy. An extension of time may establish that a project was delayed, but it does not by itself establish that the contractor suffered a corresponding financial loss. Having said that, it is pertinent that a claimant must demonstrate the link between delay and economic consequences. A 2026 analysis of delay and breach claims in construction arbitration notes that claims arising from delay — including site overheads, loss of profitability and head-office overheads — are frequently insufficiently corroborated by evidence, resulting in the rejection of otherwise meritorious claims by arbitral tribunals or the setting aside of awards by courts under Section 34 of the Arbitration and Conciliation Act, 1996.
One of the most important developments is the increasing value attributed to contemporaneous evidence. The Society of Construction Law Delay & Disruption Protocol expressly encourages parties to address the effect of employer-risk events contemporaneously rather than adopting a “wait and see” approach.
This approach has considerable practical significance in Indian construction disputes, where contemporaneous project records frequently form the evidentiary foundation for establishing delay and its consequences, and have been heavily relied upon by arbitrators as well as by judges in court proceedings. A hindrance register prepared during execution, for example, may demonstrate the date on which access to a work front became unavailable, the activity affected and the duration of the impediment. Similarly, daily progress reports, monthly progress reports, approved work programmes, drawing registers, site instructions, minutes of meetings, inspection records and correspondence can collectively establish a chronology that is difficult to reconstruct after a project has been completed or a completion certificate has been issued to the contractor.
The evidentiary importance of such records was recently highlighted in Indian construction litigation. In Airports Authority of India v. URC Construction (P) Ltd., the Delhi High Court considered contemporaneous site records, including the hindrance register, in assessing impediments affecting construction activities.
Even after establishing delay and causation, the claimant must establish quantum. The evidentiary challenge becomes more acute when the claimant seeks to translate delay into monetary loss.
In Batliboi Environmental Engineers Ltd. v. Hindustan Petroleum Corporation Ltd., the Supreme Court cautioned against treating formulae such as Hudson as automatic measures of loss. The Court noted that the assumptions underlying the Hudson formula must be satisfied and that material must be furnished to justify its application. It further cautioned against double recovery and stressed that damages must correspond to the loss actually sustained.
This distinction is particularly important for prolongation claims. A contractor may have incurred additional site overheads, idle-resource costs or financing costs, but the mere existence of a prolonged project does not establish the amount of each loss. Evidence must show what resources remained deployed, for how long, at what cost, and whether the claimed costs overlap with another head of damages. The same concern applies to head-office overheads and loss of profitability. A formula can provide a framework for calculation, but it cannot supply the missing evidence of loss.
Indian construction arbitration appears to be moving away from the idea that a contractor can establish entitlement merely by producing a long chronology of employer correspondence and applying a recognised formula to the resulting delay period. The emerging approach is more demanding: documents establish the event; programme analysis establishes its effect; expert evidence explains causation; and financial records establish the loss.
This does not diminish the importance of expert evidence or established formulae — it places them in their proper role. A delay expert cannot create facts that the project records do not contain, and a formula cannot create a loss that the claimant has not proved.
India may not yet have a completely standardised jurisprudence on forensic delay analysis, but the direction is increasingly clear: the future of construction arbitration is likely to favour not the party with the longest chronology, but the party with the strongest evidentiary chain.
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