ASSESSMENT OF LIQUIDATED DAMAGES CLAUSES IN ROAD CONSTRUCTION CONTRACT IN ONDO STATE, NIGERIA.

Abstract

The study assessed liquidated damages clauses, with a view to examining the use in controlling delay. It provided an insight on the use of liquidated damages clause in road construction contracts. The study identified causes of delay in road construction projects and examined the effects of such delay on road projects. It assessed the effects of liquidated damages clauses in road construction projects. The survey method was adopted for this work through questionnaire. 140 questionnaires were distributed to contractors, clients, consultants and quantity surveyors in road construction project in Ondo State while 111 were returned. The data collected were analyzed in ranking form to determine the severity of the causes and effects of delay in road construction projects. Spearman Correlation were used to assess the relationship that exist between liquidated damages and delay . The result revealed that the most significant effect of liquidated damages clauses is that it determine how risk of delay is allocated with a mean score of 4.35, agreements by the parties as to the appropriate compensation for breach of contract with mean score of 4.29 and prevent/ minimize delay with score of 4.25. A correlation coefficient of .468 i.e. (r=0.468) indicates that there is a strong positive relationship between liquidated damages clause and delay in road construction projects in Ondo State, Nigeria. The relationship were found to be statistically significant at 0.05 level. The study concluded that while some of these effects has impact on road project delivery time, in reality, it remains to be felt how liquidated damages clause minimize delay in road project. The study recommended that liquidated damages clause should be specified, communicated and agreed upon by parties as a penalty to control stakeholders in execution of road project so as to avoid incessant project delay or abandonment.