Robust Determination of Liquidated Damage Rates for State Highway Agencies

Liquidated damages (LDs) in highway construction contracts are daily monetary rates meant to compensate the owning agency for additional costs incurred because a project did not meet its completion date because of contractor delay. When LD provisions are challenged in court, provisions that lack proper documentation outlining the procedure used to determine rates have been deemed a penalty and unenforceable. This research effort sought to develop a methodology for developing a schedule of LD rates to be adopted by the Alabama Department of Transportation (ALDOT). The procedure outlined is to be used periodically to review and update the LD rates found in ALDOT’s standard specifications for highway construction contracts, since their current schedule and review procedure has come under legal scrutiny. A statistically justifiable procedure was developed to calculate LD rates using historical project cost accounting data to create a traditional provision based on FHWA guidelines with the LD rates stipulated in a contract-size categorized table. The proposed procedure was then compared with a typical procedure used for developing LD rates. After comparisons, the proposed procedure stipulating LD rates in a table by contract value was determined to be the more robust method. The final product of this research is stepwise guidelines for practitioners to use on a periodic basis to review and update their schedule of LD rates.

• Record URL:
  https://doi.org/10.3141/2081-07
• Summary URL:
  http://scholar.google.com/scholar_lookup?title=Robust+Determination+of+Liquidated+Damage+Rates+for+State+Highway+Agencies&author=W.+Zech&author=C.+Bailey&author=L.+Crowley&publication_year=2008
• Availability:
  • Find a library where document is available. Order URL: http://www.trb.org/Main/Public/Blurbs/160658.aspx
• Authors:
  • Zech, Wesley Charles
  • Bailey, Clark B
  • Crowley, Larry Glenn
• Publication Date: 2008

Language

• English

Media Info

• Media Type: Print
• Features: Figures; References; Tables;
• Pagination: pp 65-73
• Monograph Title: Construction 2008
• Serial:
  • Transportation Research Record: Journal of the Transportation Research Board
  • Issue Number: 2081
  • Publisher: Transportation Research Board
  • ISSN: 0361-1981

Subject/Index Terms

• TRT Terms: Contractors; Contracts; Law enforcement; Legal factors; Methodology; Road construction; Specifications; State highway departments
• Identifier Terms: Alabama Department of Transportation
• Uncontrolled Terms: Compensation claims; Construction delays; Delay costs; Liquidated damages
• Subject Areas: Construction; Highways; Law; I50: Construction and Supervision of Construction;

Filing Info

• Accession Number: 01091600
• Record Type: Publication
• ISBN: 9780309125949
• Files: TRIS, TRB, ATRI
• Created Date: Apr 23 2008 9:26AM