⚠️ Liquidated Damages Calculator
Understand your LD exposure — because schedule delays have a price tag.
What Are Liquidated Damages?
Liquidated damages (LDs) are a pre-agreed daily penalty for late completion. They're meant to compensate the owner for losses caused by delay without having to prove actual damages.
Typical LD rates:
- Small commercial: $500-1,500/day
- Large commercial: $2,000-10,000/day
- Schools: $1,000-5,000/day
- Hospitals: $5,000-25,000/day
- Infrastructure: $2,000-20,000/day
Quick Calculation
Total LDs = Daily LD Rate × Days Late
Example:
- LD rate: $2,500/day
- Days late: 30
- Total exposure: $75,000
LD vs Profit Comparison
Always compare potential LDs to project profit:
| Project Value | Profit (5%) | LD Rate | Days to Wipe Out Profit |
|---|---|---|---|
| $500,000 | $25,000 | $1,000 | 25 days |
| $1,000,000 | $50,000 | $2,500 | 20 days |
| $5,000,000 | $250,000 | $5,000 | 50 days |
| $10,000,000 | $500,000 | $10,000 | 50 days |
LDs can exceed your profit margin in weeks. Factor this into bid decisions.
Are LDs Enforceable?
LDs are enforceable if they:
- Are reasonable — Related to actual anticipated damages
- Aren't penalties — Excessive LDs may be struck down
- Were agreed upfront — In the signed contract
- Delays are your fault — Not owner-caused or force majeure
Excusable Delays (No LDs)
You typically aren't liable for delays caused by:
| Excusable Delay | Documentation Needed |
|---|---|
| Owner-caused delays | RFIs, change orders, directives |
| Weather (unusual) | Weather logs, comparison to averages |
| Unforeseen conditions | Site condition reports |
| Force majeure | Event documentation |
| Design errors | RFIs, clarifications |
| Permit delays (owner's) | Timeline documentation |
Calculating Net Delay
Not all late days are your fault:
Net Delay = Actual Late Days - Excusable Delay Days
Actual LDs = Net Delay × Daily Rate
Example:
- Contract completion: Jan 1
- Actual completion: Feb 15 (45 days late)
- Excusable delays: 30 days (documented)
- Net delay: 15 days
- LD rate: $2,000/day
- Actual LD exposure: $30,000 (not $90,000)
Milestone LDs vs Final LDs
Some contracts have LDs for:
- Interim milestones — Key dates during construction
- Substantial completion — When owner can use the space
- Final completion — Punch list complete, all docs submitted
Watch for cumulative LDs — They can stack up.
LD Caps
Look for LD caps in your contract:
| Cap Type | Example |
|---|---|
| Dollar cap | LDs not to exceed $100,000 |
| Percentage cap | LDs not to exceed 10% of contract value |
| Time cap | LDs apply for maximum of 60 days |
No cap = unlimited exposure (dangerous)
Cost to Accelerate vs LDs
Sometimes it's cheaper to accelerate than pay LDs:
| Option | Cost |
|---|---|
| Accept 30 days LDs @ $2,500 | $75,000 |
| Add weekend crew for 6 weeks | $60,000 |
| Add second shift | $80,000 |
In this example, weekend work saves $15,000.
Negotiating LDs in Bid Phase
| Strategy | Approach |
|---|---|
| Request reduction | Propose lower daily rate |
| Add cap | "LDs not to exceed X% of contract" |
| Adjust schedule | More float = less risk |
| Increase price | Build LD risk into bid |
| Exclude | Remove LD clause (rare success) |
Documenting Schedule Protection
Protect yourself from LDs by documenting:
- Daily reports noting delays
- Weather logs (temperature, precipitation)
- RFI response time tracking
- Change order processing time
- Owner-caused delays
- Design coordination issues
- Permit timeline
- Material delivery delays (owner-specified)