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Construction Law/1999 FIDIC - Delay Damages

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Question
QUESTION: Dear Sir

In saw an article that the Delay Damages can be calculated as 10% of the Accepted Contract Amount / 20% of the Time for Completion.

Could you give your comment for the above? Is the above correct?

Br

Sudantha

ANSWER: Hi Sudantha
It is common practice to limit the amount of LD's to 10% of the contract sum. This gives the contractor some degree of certainty on the risk he is taking and leads to lower tender prices. This 10% is the maximum amount that can be deducted - it is not an agreed settlement figure which may be zero.
I have not heard of a time settlement of 20% - that seems to be nonsense.
Best regards
Mike Testro

---------- FOLLOW-UP ----------

QUESTION: Dear Sir

"10% of the Accepted Contract Amount" was divided by "20% of the Time for Completion" to get the daily rate to calculate Delay Damages.

Whether the above formula correct?

Br

Sudantha

Answer
Hi Sudantha
I suppose that is one way of calculating a daily rate - for example:
Sum   1,000,000
10%   100,000
Days   300
20%   60
Daily Rate 1,667
Normally LD's have to be a genuine estimate of the anticipated losses and the number can be challenged if it is not realistic.
Best regards
Mike T.

Construction Law

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Mike Testro

Expertise

Anything related to extensions of time and delay analysis.

Experience

45 years in the Construction Industry 15 Years as a consultant delay analyst - I now hold myself to be expert in this field.

Organizations
Society of Construction Law Adjudication Society ex Planning Engineers Organisation

Publications
6 articles on the relevance of the India Contract Act 1872 and its relevance to modern construction in India. Waiting Publication

Education/Credentials
Associate Member of the Institue of Building

Past/Present Clients
Currently employed in India by Punj Lloyd as expert delay analyst. Engaged in ongoing arbitrations and EoT claims. Prior an Indepenent consultant in delay analysis.

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