College of Architecture and Environmental Design
Construction Management Department
BS in Construction Management
Thomas Kommer, Phil Barlow
A construction company’s success and/or failure is dependent upon project completion with respect to time and budget. Failure to meet the contract completion date results in a loss of profit for owners and contractors alike. In order to help mitigate project delays, liquidated damage clauses have been included into construction contracts. Incorporating provisions within the construction contracts in the form of liquidated damages aims to help shift the financial burden when there is a failure to meet contractual obligations, hopefully offering quick compensation for delays. Unlike general or actual damages, liquidated damages are pre-defined and agreed upon prior to entering project construction. These daily monetary amounts are chargeable against finances due to the contractor. This paper will discuss the features and requirements of liquidated damages as well as define the established laws that are written on liquidated clauses. Both prime contractor and subcontractor approaches to this clause will be discussed and analyzed. Finally, this paper will examine both the usefulness and effectiveness of including liquidated damages to mitigate project delays.