Liquidated damages are charges made by the Highway Department against a contractor at a stipulated daily rate for failure to complete the required work by the specified date or within the stated number of time units allowed. Before a contractor is placed “on damages,” both date and allowed time units must have expired. When delay or failure is due to causes beyond the control of the contractor, such as prolonged periods of rain, damages may be waived by the commission, director, or the engineer.
This report examined transactions involving liquidated damages in detail from July 1, 1973, to June 30, 1976. Exception was taken to the release of more than $486,000 of assessed damages and to the failure to record more than $380,000 in damages. Releases of $2,014,000 were not questioned.
It was recommended that the director and his legal staff enforce the provisions of the Standard Specifications for Road and Bridge Construction to discourage unwarranted delay by a contractor. Action should be taken to terminate a contract when work completed falls short of the amount specified. It also was recommended that the commission designate contract cancellation procedures as a management staff function. Finally, the Committee recommended that damages be released only when supported by facts demonstrated by the engineering staff responsible for maintaining the progress schedule.
For a paper copy of this report, contact PEER by telephone at 601-359-1226 or by e-mail at reports@peer.ms.gov.