Delay Costs Explained: How to calculate liquidated damages & prevent delays when building
Shockingly the average cost to a homeowner for building delays is $4,600 every month. Here are my simple strategies to avoid these costly delays when building a new home in Australia.
What are Liquidated Damages in my HIA Contract?
Liquidated Damages (LDs) are a pre-agreed mechanism in the HIA Building Contract which allow Owners to claim compensation if the Builder fails to complete the build within the timeframe specified in the contract.
LDs are often thought of as penalties, but instead it’s more helpful to think of the mechanism as a consequence of the agreed build timeline not being met.
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
We have a Liquidated Damages calculator that we share with clients that helps calculate their weekly rate.
Building Contract reviews for New Home Builds & Renovations
If you're looking for a personalised review of your Building Contract at a reasonable price, you can find out more information about my Building Contract Health Checks here.
I support clients with their HIA and Master Builders Home Building contracts from all states in Australia, including Victoria, ACT, Queensland, New South Wales, Tasmania, WA, and the Northern Territory.
Building Contract reviews are for people who want to understand their contract better before they sign.
If you're a person like me who wants to dive into the details, wants education on what makes a good contract, and what to look out for - then you're a great match for a Building Contract Review with me.
Ultimately, I want you to walk away from our session with confidence to proceed with signing your contract.
We go through any of your questions like how to avoid delays, what to watch out for and how to keep costs within your original building quote.
Happy building! 💚
Thanks for reading and catch you on my next post :)
Annelyse
Construction Management | M. Construction Law
