Realistic penalty amount per working day for construction delay

Hello everyone,

I did some research on the above-mentioned topic and in the general recommendations it says that a maximum of 5% of the amount is allowed and a penalty of 0.2 to 0.3% of the amount per working day should be agreed upon. In our contract (which we have not yet signed) it currently states 35 €. Converted, that is only 0.01%! Or to put it differently: according to the recommended percentages, the amount should be somewhere between 500 and 900 € for us!

What is it like in reality? Are the recommendations totally exaggerated or is someone trying to pull a fast one on us?

What amounts are/were in your contracts?

In my opinion, you are mixing up monthly rates and daily rates. 0.2-0.3% are monthly rates, which correspond to €35, while 0.01% is the daily rate.

We had a flat rate of €700/month included. However, we did not pay attention to whether this applied per started month or per full month. We were about 80 days over. We were able to deduct the 2 full months without any problems from the invoices due, and for the started month (about 20 days) we did not start a discussion, since our construction company had already made concessions to us elsewhere. If I were to build again, I would make sure to have a clear agreement or arrange daily rates.

No, I'm not mixing anything up. Various sites mention that about 0.2% of the agreed remuneration per day täglich is a common value. That's why I was so surprised that the range between the recommendation and the actual number in the contract is so astronomically large. Hence my question about realistic example values.

As a possible source, the Bauherren-Schutzbund can be mentioned here. It states that the Federal Court of Justice even recommends 0.3% of the construction sum per working day of delay! That would be over €900 for us!!!

Hello,

I have done a bit of research on the above-mentioned topic, and the general recommendations state that at most 5% of the total amount is allowed and 0.2 to 0.3% of the total amount as a penalty per working day should be agreed upon.

With an assumed construction sum of TEUR 180, that would be €360.00 or €540.00 per day. Who do you think is willing to pay such amounts?

Musketier hit the nail on the head; the recommendation refers to monthly rates! Our contractors have committed to pay €50.00/workday (Monday - Friday) starting from the agreed completion date, but limited to a max. of 5% of the contract sum. The penalty amount due is sufficient to pay the rent well.

How does it look in reality? Are the recommendations totally exaggerated or is someone trying to pull a fast one on us?

As you can see from Musketier’s example, you are well within the average, since 35 x 20 equals €700.00/month.

I do wonder why you use the addition "or is someone trying to pull a fast one on us?" even before there are any answers...?

Regards from the Rhineland

I think some things should not be confused here. The question is whether the entire contract sum or a partial service is being reduced. In our contract, there is a reduction of the partial sum of 0.2% per working day of delay. For the entire contract sum, a maximum limit of 5% is set. Just think about what 0.2% per working day would mean for the entire amount for a construction company...

Hello,

As a possible source, the Bauherren-Schutzbund should be mentioned here. It states that the Federal Court of Justice even recommends 0.3% of the construction sum per working day of deadline overrun! That would be over €900 for us!!!

This association once again impressively confirms why I view it rather controversially.

Specifically, the Federal Court of Justice ruling concerned the purchase of a condominium: "The BGH has decided that a buyer is entitled to compensation for loss of use during the delay of the developer in handing over the condominium, if the buyer does not have access to housing of approximately equivalent value to the acquired living space. With this, the BGH confirms its case law from 1986 (BGH, decision of July 9, 1986 – NJW 1987, 50)." Thus, the plaintiff has a claim under §§ 280 para. 1, 2, 286 para. 1 of the Building Code.

I would really wish that the Bauherren-Schutzbund would maintain its website more carefully

Source: Judgment of February 20, 2014, file no. VII ZR 172/13

Best regards from the Rhineland