They're taking liquidated damages out of my payments
The main contractor has started deducting a weekly rate for a late finish, and each payment is smaller than the last.
Updated: . By Jack Butler-Kettle, Construction Claims Consultant.
If the charge is your main contractor's own delay costs, not a weekly rate, see what to do when your main contractor passes its delay costs down to you.
What's happening?
A line for liquidated damages has appeared on your Pay Less Notice. That is the notice your main contractor sends when it plans to pay you less than the sum due. The line is a weekly rate times the weeks since your original completion date, and it grows every cycle. It looks like simple arithmetic, which is why hardly anyone checks it.
But the deduction only stands if every part of it holds up. The rate must be the one your subcontract states. The weeks must run from your completion date as extended. Work taken over early must be allowed for, and any cap applied. Each payment it comes out of needs a Pay Less Notice given in time. Whether your date should have moved further is a separate question. Leave it unchecked and you may pay for weeks that were never due.
The solution
Take the rate, the counting rule, the extension terms and any cap from your signed subcontract. List every extension you applied for and every decision. Then re-run the deduction against the dates your records support, and set your figure beside theirs.
Delay Damages Claim puts the recount, and any gaps in the notices, to your main contractor. It pursues the return of anything the documents do not support. Where the sum justifies it, we take it to adjudication. If you argue for more time, a programming expert assesses it and we value each answer. Delay Damages Prevention gets your next delay notified in time, so your completion date moves when it should.
Example
Illustrative example. The scenario and figures are invented.
The facts
A roofing subcontractor's last three Pay Less Notices have deducted £30,000 of liquidated damages. That is 12 weeks at £2,500 a week, counted from its original completion date. The subcontract reduces the rate in proportion to the value of any part taken over early.
What happens
- A 3-week extension granted in month 6 is missing from the count, which leaves 9 weeks.
- The roof over block A, worth 40 per cent of the subcontract, was taken over 5 weeks before the rest. For those 5 weeks the rate falls by £1,000, to £1,500.
- The recount is 9 weeks at £2,500, which is £22,500, less £5,000 for the 5 weeks at the reduced rate: £17,500.
- The subcontractor also thinks 2 more weeks were due for late roof access. That question goes to a programming expert, with the £3,000 at stake set out.
The deduction recounted
| Item | Amount |
|---|---|
| As deducted, 12 weeks | £30,000 |
| Extension left out, 3 weeks | £7,500 |
| Reduction for block A taken over, 5 weeks at £1,000 | £5,000 |
| As recounted | £17,500 |
The outcome
The main contractor accepts the recount and repays £12,500 in the next payment. The 2 disputed weeks are left to the expert.