Liquidated Damages Incentives to the Contractor by broverya72

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									     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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