How to Calculate Liquidated Damages in Construction

Liquidated Damages in Construction Projects : In construction, time equals money , and delays can be costly both for clients and contractors. In contract a provision is provided most of the time for LD, it’s a Pre-defined sum contractor has to pay if required if contractual breach occurs e.g. delay in work, substandard work , quality issues or to meet specific obligations Liquidated Damages ≠ Penalty Clause Liquidated Damages = A fair estimate of expected loss Penalty Clause = Punishment (and often unenforceable in court)

"The Hidden Cost of Inaccurate Quantities" Even a small mistake in quantity take-off can lead to major cost and time overruns, something I’ve seen firsthand in EPC and infrastructure projects. Accuracy in quantity surveying isn’t just about numbers; it’s about integrity, coordination, and accountability from design to billing. A few practices I’ve found effective: Cross-check drawings before take-off Keep control points verified Update BOQs with every design change Always confirm quantities on site I would truly appreciate hearing from experienced professionals and seniors in the field, What key practices or tools do you recommend to maintain accuracy in quantity take-offs and site measurements? #QuantitySurveying #CivilEngineering #EPCM #CostControl #ProjectExecution #ConstructionIndustry

🚀 New Video Alert! We just dropped a new tutorial on how to prepare a Bill of Completion using PlanSwift — a practical guide every Quantity Surveyor and Construction Professional should know. In this video, I break down how to: ✅ Measure completed works in PlanSwift ✅ Track project progress and valuation ✅ Generate accurate and professional Bills of Completion ✅ Simplify your interim and final payment certificates This step-by-step walkthrough will help you save time, eliminate manual errors, and create structured completion reports for your projects. https://lnkd.in/dS7pMRKW

There’s TWO contingencies on your construction project. 1. Owner Contingency = your protection. 2. Contractor Contingency = their protection. But BOTH pull from YOUR total project cost. So if you never ask how each contingency is being used… you could lose control of YOUR money fast. If you don’t tie every contingency use to a reason + documentation — someone else is spending your budget for you. Visit https://lnkd.in/gna-MKiy to learn more

There’s TWO contingencies on your construction project. 1. Owner Contingency = your protection. 2. Contractor Contingency = their protection. But BOTH pull from YOUR total project cost. So if you never ask how each contingency is being used… you could lose control of YOUR money fast. If you don’t tie every contingency use to a reason + documentation — someone else is spending your budget for you. visit https://lnkd.in/e4skk4mk

Rate analysis is the process of calculating the unit cost (or rate) of a construction item based on the materials, labor, equipment, overheads, and profit involved in completing that item. #QS #Estimation #Civil #Mep #costcontrol

Why Force Majeure Clauses Matter — Especially Now Force majeure clauses have always been essential in construction contracts, but they’ve been receiving renewed attention in recent years — and for good reason. “Force majeure,” French for “a superior force,” refers to an event that can neither be anticipated nor controlled. These provisions allocate risk when performance becomes impossible or impracticable due to extraordinary events — whether acts of nature (floods, hurricanes) or acts of people (riots, strikes, wars). They are particularly critical when a contract includes a Time Is of the Essence clause. Without a clear force majeure provision, parties can find themselves exposed to substantial delay damages — the costs that arise when a contractor or subcontractor fails to perform on time. Establishing such damages requires proving the extent of the delay, responsibility for it, and the related losses. Many construction agreements also contain no-damages-for-delay clauses, which limit recovery for delay-related losses. While these clauses are generally enforceable, they are not absolute. Courts may decline to enforce them when the owner actively interferes with a contractor’s work — for example, by restricting access, withholding essential approvals, or concealing known design issues that existed before bidding. In today’s economy, where global events, supply chain disruptions, and regulatory changes can quickly alter project timelines, it’s more important than ever to understand how your contract allocates risk for the unexpected.

Interim Claim – The Most Overlooked Right in Construction Contracts Many contractors lose their entitlement to Extension of Time simply because they don’t submit an Interim Claim. Under FIDIC and most standard contracts, if the contractor fails to notify within the allowed period (usually 28 days), he loses the right to claim — even if the delay is fully justified. The Interim Claim is your legal “placeholder”. It keeps your entitlement alive while the delay event is still ongoing. Never wait until the issue ends — notify first, analyze later. 💡 Missing an Interim Claim can cost you your entire EOT entitlement.

How to Handle Costs When Both Client and Contractor Are Liable for Delay In construction projects, delays can occur for various reasons. When both the client and contractor are responsible, we face concurrent delays. Calculating costs depends on the contract type (e.g., FIDIC) and the nature of the costs. 1️⃣ Identify the Delay Type Contractor-caused delay: Inefficiencies, labor issues, or late submissions → contractor bears costs, may face liquidated damages (LDs). Client-caused delay: Variations, late approvals, or unforeseen events → contractor may claim compensation costs. Concurrent delay: Both parties contributed during the same period. 2️⃣ Determine Entitlement Costs must be directly linked to the delay (labor, idle machinery, site overheads). Contractor delays → client may claim LDs. Client delays → contractor may claim prolongation costs. 3️⃣ Apportion the Delay Period Contractor-only days: Contractor liable for LDs. Client-only days: Contractor may claim prolongation costs. Concurrent days: Often no cost recovery, unless the contract allows partial claims. 4️⃣ Example under FIDIC 1999 Sub-Clause 8.4 (Extension of Time for Completion): Contractor can get EOT for client-caused delays. Sub-Clause 8.7 (Delay Damages): LDs may be reduced if the client contributed. Concurrent delays: Typically, contractor cannot claim prolongation costs for days they also caused delay. 5️⃣ Calculate Costs Determine days attributable to each party. Prolongation cost for client-caused days: Prolongation Cost=Daily Overhead Cost× Client caused Days Deduct avoided costs or savings. Contractor-caused days → calculate LDs if applicable.

Every Project Tells a Story Beyond Numbers In Quantity Surveying, our real challenge is not just managing costs it is managing value, risk, and expectations. Each cost plan, variation, and claim carries a story of collaboration, negotiation, and precision. The more I grow in this field, the more I realize technical knowledge builds accuracy, but experience builds judgment. And that’s what truly defines a professional. #QuantitySurveying #CostManagement #CommercialManagement #FIDIC #ConstructionIndustry #Infrastructure #ProjectControls #QS #Contracts