ASSESSMENT OF LIQUIDATED DAMAGE PRACTICES ON PROJECTS DONE BY MICRO AND SMALL SCALE CONSTRUCTION ENTERPRISES: A CASE IN MIZAN AMAN TOWN, SOUTH WEST ETHIOPIA

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