Why the LD rate matters more than the number looks

A daily rate reads small on a page and large on a payment certificate. If your annexure says $2,000 a day, that is $14,000 over a fortnight and $60,000 over a month you spent waiting on access that never came. The number worth looking at is not the rate on its own: it is the rate multiplied by the longest delay you can realistically picture on this job, measured against your margin on it.

Six things to check in your liquidated damages clause

  1. The rate and the unit it runs in. The rate usually sits in the annexure or schedule rather than in the clause itself, so the clause can read harmlessly while the number does the damage. Check whether it runs per calendar day or per working day, because the same figure charges you seven days a week instead of five.
  2. The cap, and what it is a percentage of. Check whether there is a cap at all, and if there is, what it is calculated on: the subcontract sum, or something larger like the head contract value. An uncapped LD clause puts no ceiling on your exposure, which is the difference between a bad month and a debt you carry for a year.
  3. What “completion” means, and who decides you have reached it. LDs run from a date, and that date is set by somebody certifying whether you are complete. Check who makes that call, what they must be satisfied of, and whether outstanding minor items stop the clock. If completion is defined loosely, whoever applies the definition controls when your LDs start.
  4. How the completion date can move. The extension-of-time regime is the only lever you have on the LD start date, so read the EOT and notice clauses as part of the LD clause rather than as a separate topic. Miss a notice deadline and the date does not move, which means the LDs run whether or not the delay was yours — so check how long you have to notify before you agree to it.
  5. Whether LDs are the sole remedy for finishing late. Some contracts state that liquidated damages are the only thing recoverable for late completion; others set a daily rate and still leave the door open to other claims. Check which yours does, because a clause that fixes the daily figure but preserves everything else has not capped what late completion can cost you.
  6. How the money gets taken. LDs are usually deducted rather than invoiced — set off against a progress payment, taken out of retention, or called on a bank guarantee. Check which mechanism your contract nominates and what warning you get first, so a deduction does not simply appear on money you had already spent.

Read those six next to the other clauses that shift risk rather than in isolation — they work together, and so do their consequences.

Your delay records are the defence, and they have to exist before you need them

You defend liquidated damages with the extension of time that moves your completion date, and an EOT claim is only as strong as the contemporaneous record behind it. The records that carry the weight are the unglamorous ones: what stopped, when, why, who was standing around, what plant sat idle, and who you told at the time. Reconstructing that six months later from memory is where claims come apart, so it pays to know what to record before an EOT claim rather than after one.

What happens when LDs come out of a progress payment?

In Queensland, a head contractor that pays you less than you claimed cannot simply pay less and say nothing about it. Section 69(c) of the Building Industry Fairness (Security of Payment) Act 2017 (Qld) provides that a payment schedule must, where the amount proposed to be paid is less than the amount stated in the payment claim, state why it is less, including the respondent's reasons for withholding any payment. Section 76(1) requires that schedule to be given within whichever period ends first: the period set by your construction contract, if it sets one, or 15 business days after the payment claim is given. Section 77(2) provides that a respondent who does not give a payment schedule at all is liable to pay the amount claimed on the due date for that progress payment. (Act current as at 28 April 2026.)

That is Queensland, and it is a worked example rather than a national rule — every state and territory runs its own security of payment scheme with its own timeframes, so check the one that applies where you are working. The practical point travels: a deduction that has to be explained in writing is one you can put a reason and a number against, which is much of what a payment claim needs to do anyway.

Can they charge whatever rate they like?

That is a legal question, and this article deliberately does not answer it: whether a particular rate or cap holds up turns on the exact wording and the circumstances, and it is one to put to your own adviser. What is worth saying plainly is when to ask. The time to have the rate and the cap looked at is before you sign, while a change is still negotiable — once you are running late, it is a very different conversation.

What to do with your copy this week

  • Find the rate and the cap. They are usually in the annexure or schedule, not in the clause that refers to them.
  • Read the EOT and notice clauses in the same sitting, because they are what protects you from the LD clause.
  • Multiply the rate by a realistic worst case for this job and hold it against your margin.
  • Write down every question the document cannot answer, and get them answered before you sign.

If record-keeping is the weakest part of your setup, DelaySolve's free tools for subbies are a reasonable place to start tightening it.