Causes of liquidated damage: the case of agaro campus lot ii construction project

Abstract

The construction project site is located in Oromia Regional State in Jimma zone, in Agaro town. Agaro town is located at 390km from Addis Ababa. Agaro Campus Lot II Construction Project is property of Jimma University. Projects are often implemented as a means of achieving an organization’s strategic plan. Almost all civil engineering constructions are undertaken in project form having a predefined cost, completion time and quality. A timely performance of the contractor in the construction field is essentially important for the client and the contractor. It is generally accepted that liquidated damages clauses have benefits for both parties to a contract. Liquidated damages is a sum fixed by the parties to a contract as a genuine pre-estimate of damage in the event of a breach, whether as a predetermined lump sum, or by means of a specific calculation or scale of charges. On the specific case of Agaro campus lot II project, a desk research method was employed to assess the causes and effect of the construction progress which lets to the project to liquidate. Consequently, the results of payment utilization, advance payment repayment, and the work plan progress evaluation over the entire months of the contract period, shows the project liquidated on the progress status of below ten percent. And this were attributed to the disinterest to work caused by advance payment misuse by the contractor and bankruptcy fear. However the contractor’s intention was not strongly realized by the client and the consultant for he should have been terminated by mutual agreement before the contract period has expired.