This question was recently asked by a client after the baseline project schedule was submitted and approved…

“Can we show the actual start date of two activities before the contract award date?  The reason we would like to do this is that some of the work (manufacturing of cranes), was started before the contract was awarded and we have very high liquidated damages for each major milestone.  Please let us know if it is correct to show the actual start date of the two activities before the contract award date”.

Before I share my thoughts on this, stop and think for a moment on how you would answer this question…

Now, let’s look at a few key points:

• First off, it is important to remind ourselves that liquidated damages are intended to compensate the client for costs incurred as the result of a delay.
• The bid schedule showed a particular date of delivery and the client had accepted that date.
• Presumably, the damages are only incurred after that accepted date.
• Liquidated damages are NOT another word for “penalty” and apply to the contractual schedule (or notice to proceed, but that depends on what the contract and the notice to proceed said).

 

Given the above points, I would only show the dates if the client agreed that liquidated damage’s apply to the original contractual schedule rather than the accelerated date, and I would get that in writing.

Presumably if an accelerated completion date is so important, the client should be mature enough to appreciate efforts to mitigate schedule risk, rather than play games with the schedule and liquidated damages. I would hope that there is even a possibility to beat that original contractual deadline.

I have told clients in the past, that their managers would be more pleased if they deliver early, than if they set an aggressive date then have to make excuses (and find someone to place blame the blame on, usually the contractor) about being late.

They can throw around blame all day, and apply all the liquidated damages in the world, but at the end of the day they still have to stand up in front of their management or client and explain why they are late and have all the associated uncomfortable and time wasting arguments, discussions, and claims as to whose fault the delay was.

What would you have said to the client and why?