A Study Of Liquidated Damages Caused By Subcontractor

With the development of reforming and opening in China, more and more foreigner enterprises found the opportunities of China market and invested to build new factory. Most of these companies are from Europe and United State of America. For the factory building, they have very good relationship with some construction companies in their country and they are not familiar with the Chinese construction market and construction companies. Therefore, the construction contract for these factories will be certainly awarded to these international project management companies.As the diversity on the management style, culture and management capability, there will always be dispute and claims, such as design change, construction sequence adjust, coordination among subcontractors and schedule delay etc. The schedule is the most difficult dispute to manage. International project management company normally will specify the final completion date and the Liquidated Damages terms, and they will strictly follow the contract terms and conditions during execution. They will rise up the claims for the liquidated damages if subcontractor delayed. With more and more disputes on this issue, the Chinese construction company noticed that this is a potential risk to them so they added these cost to their quotation as the contingency. In the other side, international construction company dissatisfies the contract execution ability and they change the subcontractor frequently. Both parties lost and it is negative impact for the long term cooperation.In the current research for the schedule delay claim, most researches are focus on how to impose claim to the General Contractor or Client. This paper stands for international construction company position, starts from contract management, subcontractor management, schedule management, delay responsibility and dispute resolution to do the research on how to avoid schedule delay, and how to successfully get the claim from subcontractor for the schedule delay. Meanwhile, author used the work practice as the case study to analysis and came out the conclusion. Hopefully, the paper can be referenced for international construction companies and Chinese construction companies on their cooperation in China construction market.