The Articulation and Current Practices of Liquidated Damages in Standard Specifications for Highways

Abstract

Delayed delivery of highway infrastructure could financially hurt businesses that rely on such facilities, disrupt the public commute, and increase road user costs. For these reasons, state highway agencies (SHAs) tend to use and enforce liquidated damages (LDs) for the contractor’s failure to meet the completion times. While SHAs may have similar experiences on how their standard specifications (SSs) are structured and written, there are differences among the states on how the LDs are articulated. Further, with their requirements, SHAs need to maintain that their LDs regulations follow and account for the Code of Federal Regulations, for example, CFR.635.127. Additionally, contractors may legally challenge the LDs enforceability as unreasonable, excessive, penalty statements, or concurrently caused. This work aims to critically examine and thoroughly analyze how LDs were articulated in the SSs. For that, the LDs sections, definitions, and contract times of the standard specifications of all departments of transportation in the United States were collected, thoroughly reviewed, compared, and analyzed. With commonalities and differences among the SSs, themes of LDs current practice were identified under LDs characterization, application periods, reference times, and implementation forms. A detailed account of the particulars of each theme and practice is discussed and explained. The work provides insights for SHAs to evaluate their current LDs practice to other states’ practices to improve how LDs provisions are articulated.