Why 80% of LD Claims Originate in Administration, Not Drafting

The most expensive contract failures are not born in the legal review. They are born in the daily administration — missed notices, expired time bars, and undocumented variations.

When a liquidated damages claim lands on a contractor's desk, the instinct is to look at the contract drafting. Was the LD rate reasonable? Was the cap adequate? Were the conditions precedent properly defined? These are valid questions, but they rarely address the actual cause of the exposure.

In CALIM's experience across dozens of engagements, approximately 80% of LD claims that succeed against contractors do so not because of poor drafting, but because of poor administration. The contract was adequate. The protections were there. But the day-to-day discipline required to activate those protections was absent.

The pattern repeats: a delay event occurs. The project team acknowledges it informally. Nobody issues a formal notice under the contract. The 28-day window passes. The entitlement to an extension of time — which would have reduced or eliminated the LD exposure — is lost.

Or a variation is instructed verbally. The work is done. The cost is incurred. But the formal process of instruction, valuation, and agreement is never completed. When the employer assesses LDs against the original completion date, the contractor has no documented basis to argue that the completion date should have been extended.

These are not exotic scenarios. They are the standard operating reality on most construction projects in the GCC. And they are entirely preventable with proper contract administration discipline.