Recalculate the liquidated damages before you argue about the delay
Before anyone argues about whose fault the delay was, re-run your main contractor's own liquidated damages calculation. The calculation is wrong more often than the delay is.
Updated: . By Jack Butler-Kettle, Construction Claims Consultant.
Why it matters
A damages deduction is usually put together quickly, from the original completion date to the date the whole project finished. Both dates can be wrong for your work. Extensions already granted get left out. Your own completion is taken as the main contract's. Sections handed over early are charged at the full rate. A cap is forgotten. The right sum is the rate your subcontract states. It is counted from your completion date as extended to the date your work was completed or taken over. It is reduced where part was taken over early, and it stops at any cap. You need no delay expert to find the errors, only the subcontract, the dates and the extension decisions side by side. It is also the quickest ground to agree on, because it is your main contractor's own arithmetic.
How to do it
- Take the rate, the counting rule, any cap and any rule for parts taken over early from your signed subcontract, not the standard form.
- List every extension granted, and work out the completion date as extended.
- Fix the date your work was actually completed or taken over, from records made at the time.
- Re-run the sum, including any reduction for parts taken over early, and set your figure beside the deduction line by line.
Example
Illustrative example. The scenario and figures are invented.
The facts
A mechanical subcontractor's final account carries a deduction of £60,000. That is 12 weeks at £5,000 a week, from the original completion date to the date the main contract works were completed.
What happens
- The subcontract caps damages at 5 per cent of the £900,000 subcontract sum, £45,000.
- The main contractor granted a 4-week extension in month 9, which the calculation leaves out.
- The subcontractor's commissioning records show its own works completed 3 weeks before the main contract works.
- The recount is 12 weeks, less 4 for the extension and 3 for the earlier completion: 5 weeks at £5,000, £25,000, inside the cap.
The deduction recounted
| Item | Weeks | Amount |
|---|---|---|
| As deducted | 12 | £60,000 |
| Extension granted, left out | 4 | £20,000 |
| Earlier completion of the subcontract works | 3 | £15,000 |
| As recounted | 5 | £25,000 |
The outcome
The main contractor accepts the recount, and £35,000 is returned in the final account. Nobody has yet argued about the cause of the other 5 weeks.
To have this done for you, see our Delay Damages Claim service.