They are meant to compensate, not punish. Courts will refuse to enforce a rate that functions as a penalty rather than a reasonable forecast of the harm caused by delay. On construction contracts the rate is stated per calendar day. It often includes the agency's added inspection and oversight costs.
On public projects the daily figure can also reflect the public cost of delay, such as extended detours, deferred use of a treatment plant, or lost revenue on a toll facility. That is why rates vary widely from job to job. Some contracts add separate damages for missing interim milestones, not just final completion. Total schedule exposure can be larger than the headline number suggests. The daily rate affects schedule risk and contingency, so knowing it before you bid matters. Nonlinear extracts the liquidated damages figure during Spec Takeoff so estimators can weigh schedule exposure while the bid is still open.
