Liquidated Damages & Incentives Summary and Recommendations The cost of financial damage to the City after the runway has been closed for a certain amount of time may be included in the construction contract. This is called liquidated damage. In turn, an incentive payment may also be included in the contract. Both can be used as “insurance” that the project will be completed within a reasonable time. All contractors interviewed have advised that the cost of liquidated damage can be included in the contractor’s bid amount if thought to be excessive or damaging; therefore, it would be wise to keep the amount to reasonable expenses that are incurred by all parties. Contractors also recommend maintaining an incentive payment that is greater than liquidated damages. This cost is not eligible for federal or state funding and must be paid by the City. RECOMMENDATIONS: A. Liquidated Damage $4,850 plus the City’s daily tenant restitution expense can be charged to the contractor for each day the runway remains closed after the proposed construction completion date. B. Incentive Understanding the City’s desire to open the runway as quickly as possible in accordance with prescribed standards, KSA Engineers recommends an incentive that is a minimum of 35% greater than the liquidated damage total. Such an amount would demonstrate the City’s determination to complete the project as soon as possible. This amount would be paid to the contractor for each day that the runway is open under the proposed construction completion date.
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