What is Liquidated Damages in a Construction Contract?
Liquidated Damages
Employer is entitled to Liquidated Damages If Contractor fails to complete the work within the contract period. Contractor shall submit documentary evidence to prove the delay if delay beyond the control of the Contractor's reason or
• Employer's Reason
• Engineer's Reason
• Beyond the control of all parties
If Contractor fails to prove above reason the Employer entitle to Liquidated Damages.
Minimum amount of Liquidated Damages is 1/4000 of Contract Price.
Maximum limit of Liquidated Damages should be state in the Contract.
Percentage of Liquidated Damages shall depend on the one day lost of the Employer.
In the maximum limit of the Liquidated Damages the Employer can terminate the Contractor or Contract.
Key requirements to closeout a contract.
a) Physical completion of the contract.
b) Handover the project.
c) All open actions and liabilities must be resolved.
d) Solving all the disputes and approval of the final amounts in the project.
e) Completing all the activities related to the legal affairs and administrative affairs.
f) Final settlement of account
• All Building systems complete, tested and certified and operational per specification
• All contract-required tools and spare parts submitted as per contract
• All keys should submit
• All regulatory documents properly submitted
• All documents on Warranty should submit
• All variations have been fully executed
Contract Closeout
• A contract is considered closed when it is physically, as well as administratively completed. The process of closeout of the contract starts from the stage of physical completion of the project.Key requirements to closeout a contract.
a) Physical completion of the contract.
b) Handover the project.
c) All open actions and liabilities must be resolved.
d) Solving all the disputes and approval of the final amounts in the project.
e) Completing all the activities related to the legal affairs and administrative affairs.
f) Final settlement of account
Things to ensure before close out a contract
• Site shall clean• All Building systems complete, tested and certified and operational per specification
• All contract-required tools and spare parts submitted as per contract
• All keys should submit
• All regulatory documents properly submitted
• All documents on Warranty should submit
• All variations have been fully executed
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