Law firms have warned that disputes over late or unfinished contracts will soar this year as clients look to make more savings from construction companies.
Cases involving liquidity damages, which occur when contractors are sued for overrunning on projects, have risen steadily in the past year, a leading lawyer told the Financial Times.
Lindy Patterson, a partner at Dundas & Wilson, said: “As projects come to an end, but with fewer tenants to occupy the buildings, there will be a big increase in this kind of dispute during the year.”
Patterson said that liquidated damages disputes occur on about 10% of all construction contracts, up from 2% two years ago. She expects the figure to rise further this year.
Liquidated damages typically cost a contractor £10,000 for every week of overrun but can be much higher on larger projects.
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