Delay Costs Explained: How to calculate liquidated damages & prevent delays when building a home
Most people building new homes in Australia underestimate the cost delays- with the average cost being $4,600 for every month of delay.
Here are simple strategies to avoid costly delays when building a new home in Australia.
What are Liquidated Damages in my HIA Contract?
Liquidated Damages (LDs) are is pre-agreed compensation owed to you if construction extends beyond the agreed building period.
How are Liquidated Damages calculated in my HIA Contract?
In the HIA contract, LDs are calculated on a predetermined daily rate which Owners nominate in the ‘Particulars’ of the contract before signing.
LDs must be based on a genuine calculation of damages to the Owner for delated building works. There must be a clear link that the costs will be directly incurred because of delayed completion of the project.
Costs to consider when calculating LDs:
Loan Interest
Additional Rent
Loss of Income
Fees
Storage Costs
Rental Costs
I have a Liquidated Damages calculator that I share with clients during a Building Contract Health Check that helps calculate their weekly LDs rate.
Protect your dream build with a Building Contract Health Check:
Avoid budget blowouts before they happen
Lock in a quality control processes
Save your future self a huge amount of stress
Save thousands by spotting the hidden risks first.
Happy building! 💚
Thanks for reading and catch you on my next post :)
Annelyse
Construction Management | M. Construction Law
