Direct Answer
A liquidated damages (LD) clause specifies a predetermined daily penalty for each day the contractor fails to achieve a defined milestone (typically substantial completion). Steel fabricators can be subject to LD provisions if late steel delivery causes the GC to miss their own LD-exposed completion date. Protect yourself by ensuring your subcontract LD exposure is proportional to your scope and includes schedule float provisions.
Full Explanation
LD analysis for steel subcontracts: (1) What is the milestone triggering LDs? (Substantial completion, steel erection complete, first floor complete?) (2) What is the LD rate? ($1,000/day? $10,000/day?) (3) Is the milestone on the critical path for your scope? If the GC's critical path is concrete, not steel, late steel delivery doesn't trigger LDs. (4) Is there schedule float that protects you from minor delays? (5) Are LDs capped at a maximum (typically 10–20% of contract value)? Negotiate the milestone, the rate, and the cap before signing.
What This Means for Your Shop
Never accept LD exposure for delays you cannot control — material shortages, design changes, engineer review delays. Ensure your subcontract includes an excusable delay provision listing: design change, force majeure, material non-availability, and engineer-caused delays as LD-excusing events.
Common Mistakes
Signing a subcontract with LD exposure for a 'steel delivery complete' milestone without verifying that the IFC package will be available early enough to make that milestone achievable. If detailing is delayed, your LD clock starts ticking.
Recommended Process
Before signing any LD-exposed subcontract, build your fabrication schedule from the IFC milestone and verify it's achievable. Negotiate a contract provision that the LD clock is tolled for any day that IFC approval is delayed beyond the agreed schedule.