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Architect Exam Podcast

048 - Liquidated Damages: The Price Tag on Being Late

Dec 22, 2025 · 14 min · Episode 48 · 17.3 MB
0:00-14:44

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Liquidated damages are basically a prenup for construction projects. Both parties agree on a daily dollar amount before work starts, so nobody has to fight about it later if the project runs late.

Without liquidated damages, an owner has to prove actual losses in court. Those numbers are nearly impossible to prove, and you'd spend years in litigation. Liquidated damages cut through all of that by establishing a fixed daily amount upfront.

We cover how liquidated damages get calculated, when the clock starts at substantial completion, and where the clause appears in AIA contracts. We also break down liquidated damages vs consequential damages vs actual damages.

📝 Key topics covered:

  • Liquidated damages definition and how they work in construction contracts

  • Liquidated damages clause in AIA A101 and the A201 waiver of consequential damages

  • Liquidated damages vs penalty: why the distinction matters

  • Substantial completion as the trigger for liquidated damages

  • Actual damages vs consequential damages vs liquidated damages

  • How to calculate a reasonable liquidated damages amount

⏱️ Chapters:

(0:00) Introduction

(0:20) The Kitchen Renovation Story

(2:36) What Are Liquidated Damages?

(4:08) Why Do They Exist?

(5:44) How Liquidated Damages Work

(7:54) Liquidated vs Other Damages

(9:37) AIA Contract Locations

(11:50) What This Means for You

(13:04) Conclusion

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