Liquidated damages are basically a prenup for construction projects. Here's why that protects everyone and what it means for your ARE.

Liquidated damages work exactly like a prenup. You sit down before the project starts, when everyone is optimistic and getting along, and you decide what happens if things go wrong. Nobody wants to have that conversation, but it saves everyone a massive headache later.

Without liquidated damages, an owner whose project runs late has to prove actual damages in court. How much revenue did that hotel lose? What would that retail store have earned during the holiday season? These are real losses, but they're nearly impossible to quantify. You'd spend years in litigation arguing over hypothetical numbers.

Liquidated damages cut through all of that. Both parties agree on a daily dollar amount upfront. The owner gets compensated without a court fight. The contractor knows exactly what they're risking. Everyone has certainty.

In this episode, we cover how these amounts get calculated, when the clock starts (substantial completion), and where liquidated damages appear in AIA contracts. We also explain why the A201 protects liquidated damages even when consequential damages are waived. Critical knowledge for CE, PcM, and PjM.

Chapters:

0:00 - Introduction

0:20 - The Kitchen Renovation Story

2:36 - What Are Liquidated Damages?

4:08 - Why Do Liquidated Damages Exist?

5:44 - How Liquidated Damages Work

7:54 - Liquidated Damages vs. Other Types of Damages

9:37 - Where Liquidated Damages Show Up in AIA Contracts

11:50 - What This Means for You 13:04 - Conclusion

Episode Resources:

• Read the full blog post: https://academy2.youngarchitect.com/liquidated-damages/

• Download free 2-page study notes: https://YoungArchitect.com/Damages

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