The delay cost results from the inability or lack of action to immediately complete the trade of buying or selling a security. It reflects the difference between desired price (decision price) and execution price (arrival price) due to delay in filling an order.

In formula form, it is given by:

Delay cost = (filled shares/ ordered shares) [(benchmark₁ – benchmark₂)/benchmark₂] × 100

Where: benchmark₁ is the revised benchmark and benchmark₂ is the original benchmark.

For example, if filled shares, ordered shares, revised benchmark, and original benchmark were 800, 1000, $51, and $50, respectively, then the delay cost for this specific trade is:

Delay cost = (800/1000) [(51-50)/50] × 100 = 1.6%

This cost is part of the implementation cost (implementation shortfall) of a trade.