Abstract:
A project is a temporary endeavour undertaken to create a unique product or service. Cost, time
and quality performances of the projects are used to measure the project success. Now a day
construction projects specifically in Mizan-Aman town are facing time and cost overrun,
contractual wise unjustified delays are associated with liquidated. Most of those projects are
held by SME construction enterprises.
The objective of this study is to assess the liquidated damage practices on projects done by SME
in Mizan–Aman Town administration. The data for this study was gathered both qualitative and
quantitative data through detailed questionnaires, desk study and interview of the firms was
conducted. Purposive sampling of the research population was followed and analyzed using
excels software. The populations of the study were 35 SMEs’ projects in Mizan Aman town and
105 questionnaires were distributed to the stakeholders and 86 Questionnaires were returned
and analized. Relative Importance Index (RII) was used to rank the problems in liquidated
damage practice and impacts of LD on construction parties. Cronbach’s coefficient was used to
test the reliability and Spearman rank relationship coefficient was also used to test their
correlation and significance.
From this research, most of the respondents have awareness regarding to LD clauses. Reason
for practicing liquidated damage clause in relation to SMEs are Payment of contractor not paid
on time, Undetailed work study at initial stage of the project with their (RII=0.823) and Inability
of contractor to study the contract documents very well before signing with (RII=0.816) are the
most important problems in LD practice. The impacts of liquidated damage on construction
parties are LD is accepted as procedure that provides the parties positive, cost effective and time
sensitive solution to provide a win-win solution to contracting parties (RII=0.84) and
Contractual LD provision indicates the owner’s willingness to submit in timely manner
(RII=0.80). To minimize the problem of practicing LD, all parties should have proper
organizational and project management practices
