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Claims in Construction – LIQUIDATED DAMAGES

Holloway Consulting provides a wide range of services associated with Claims in Construction. Some of Holloway Consulting’s past projects and cases are shown at Construction Cases and Construction Consulting Engagements.

This post continues Holloway Consulting’s series on the construction claims services we provide on project scheduling matters.




Start-Stop Dates

The date of commencement of liquidated damages is usually the contract completion date, as adjusted by any appropriate time extensions for compensable and excusable delays. Liquidated damages are generally recognized by the courts to stop when substantial completion is achieved or the date the owner takes beneficial occupancy. To avoid uncertainty, the liquidated damages clause should specify if weekends and holidays are to be included in the delay calculation. In the case of construction contract abandonment by the contractor, the courts have held that it is not reasonable for the daily sum to be paid forever, but commensurate with the period or amount of actual injury incurred by the owner.


Daily Rates

Liquidated damages may be estimated as a daily rate for the period of late performance based on one or more of the following:

1. Extra maintenance, operational or utility costs in continued use of an old or inefficient building or facility.

2. Maintenance of a new building or facility before its beneficial use.

3. Extra rental of other buildings because or late completion or the new building.

4. Interest on investment or borrowed capital of the project.

5. Costs for extra personnel who are on standby waiting for completion.

6. Extended supervision, inspection or engineering costs.

7. Loss of revenue, bridge tolls, sale of product, rental value of property, etc.

8. Moving costs.

9. Impact costs.

10. Wage/material cost increases.

Actual Damages

Inclusion of a liquidated damages clause in a contract is generally deemed to be in lieu of actual damages for delay. If there is no liquidated damages clause, however, the contractor may be liable for and the owner may withhold actual damages.

The owner is usually not entitled to collect both liquidated damages and actual damages, except where liquidated damages are limited to certain specified types of owner damages, such as extended engineering, interest, taxes, etc., and where other damages which may occur are specifically excluded in the liquidated damages calculation, such as claims of other contractors affected by the delay. Likewise, the owner should not circumvent the liquidated damages clause because its actual damages are greater, unless the liquidated damages are qualified by such exclusions.

Read more about Holloway’s Claims in Construction services

Holloway Consulting
Construction Claims Consultants
12081 W. Alameda Pkwy., #450
Lakewood, CO 80228-2701
Denver Phone: (303) 984-1941
International : (888) 545-0666
Fax: (303) 716-0432

Email: steve.holloway@disputesinconstruction.com
Blog: disputesinconstruction.com
Web: hcgexperts.com

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