Construction Law/LD vs Delay damages



Can you please explain what is the difference between the terms "Damages", "Liquidated Damages" and "Delay Damages"?

Dear Muhammad Arsalan

Thanks for the question and extremely sorry for the delay.

'Damages' is a general term applicable to all damages which are defined as such in the Contract and it includes Liquidated Damages (LDs) and Delay Damages (DDs).

Liquidated Damages are the damages which the Employer actually bears due to delay in the completion of a certain Milestone, Section of a Work or the whole of the Works. These damages can be in the shape of loss in revenue or loss in expected profit due to delay in completion of any of the stage mentioned above.

Delay damages are generally the predetermined penalties imposed on the Contractor for delay in the completion of a milestone, section or whole of the works.

Apparently both the LDs and Delay Damages (DDs) seem to be the same but the main difference is that LDs refer to the actual loss incurred by the Employer and is not the predetermined penalty as is the case of DDs.

The interesting thing is that now a days LDs are also predetermined in the Contracts and mentioned in Contract at the time of signing the contract. Therefore the only technical difference is that one is considered as Employer's Loss (LDs) and the other as penalty (DDs).

Hope the question is answered.

Abdul Majid Khan  

Construction Law

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Abdul Majid Khan


I am interested in questions related to time Extension, Liquidated Damages,variations, price adjustments,payments, disputes and Dispute Board under FIDIC IV, FIDIC 1999 and FIDIC 2006 Harmonized Documents.


I have been heading the Construction Management Division and Contract Divisions of National Engineering Services Pakistan (PVT) Limited, NESPAK, the largest Consulting Engineering Firm in Pakistan, for more than seven years and two years respectively. I have also worked as "The Engineer" on a number of projects. I have been working in Saudi Arabia for about seven years on a road projects. Additionally I worked as Arbitrator and am member of few Dispute Boards in individual capacity on Asian Development Bank funded projects.

Inland and in Middle East. I have worked with National Engineering Services Pakistan (Pvt) Limited (NESPAK)as my Employer for more than 27 years in Pakistan. In Saudi Arabia I worked for Rashid Engineering, Consulting Engineers during 80s. After retirement I provided advisory services to NESPAK on technical and contractual matters to its various divisions and lately I was appointed as Advisor to Managing Director NESPAK on Technical and Contractual matters. Currently I work as Free Lance Contract Specialist on Fidic Form of Contracts.

I am a graduate with a B.E (Civil Engineering) degree. My year of graduation is 1970.

Awards and Honors
A few appreciation Letters and Honorariums during my service in NESPAK. I remained member of Administrative Committee and Board of Management of NESPAK. I had been part of the Management Committee in the absence of Managing Director.

Past/Present Clients
Most of the Clients used to be Government Departments, Corporations and Authorities. In Saudi Arabia the Client was Ministry of Communications. As Arbitrator and Dispute Board (DB) member, I provide services to various Government Departments and Contractors.

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