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Delay Penalty for Milestones

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Tue, 2024-03-26 08:44
Kannan CP
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Hi,

Is there any form of Contract specifically mentioning the Delay Penalty/LDs for not meeting a milestone. In FIDIC -Red Book, in my understanding it is not clearly linked with a milestone, but for the overall works completion.

Appreciate- expert's advices.

Regards

Kannan

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Sat, 2024-03-30 02:39
#1
Patrick Weaver
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Under Common Law, failing to make progress on a project is generally not a basis for the client establishing a claim for damages. LDs are a reasonable pre-estimate of the damage suffered by the client for the late delivery of a project.  However, if the milestone is a staged handover of part of the project, then LDs can certainly be applied. 

Example: 

Milestone 1 - complete piling under wharf.  LDs cannot be applied, the only work following on is the contractor completing the wharf deck.

Milestone 2 - Hand over container berth 1 for commissioning (project involves several berths). LDs can apply the handover allows the client to start work towards earning revenue. 

Civil Law is a bit different, it allows the partie to a contract to pre-set damages for failing to achieve a contractual objective.

For more on LDs see: https://mosaicprojects.com.au/PMKI-ITC-020.php#Process1

 

   

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