Consequential Damages Provisions in Construction Contracts: Legal Issues (2022)

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20 NCHRP LRD 88 APPENDIX B: TERMS FROM CONSEQUENTIAL DAMAGES PROVISIONS Entity Transportation Mode Contract Summary of Consequential Damages Clause Alabama DOT (ALDOT) Highway Standard Specications for Highway Construction 2018 Edition e Department will have no liability for consequential damages, including but not limited to, loss of bonding capacity, loss of bidding opportunities, and insolvency. In addition, the Department’s liability is limited so that it excludes prot, loss of prot, indirect costs or expenses of any nature, and interest prior to the nal resolution of the claim. Alaska Department of Transportation and Public Facilities (DOT&PF) Highway Standard Specications for Highway Construction 2020 Edition Consequential damages are not payable under a termination settlement. In addition, anticipated prots are excluded. Arizona Department of Transportation (ADOT) Highway Standard Specications for Road and Bridge Construction 2021 e Department will have no liability for consequential damages, including but not limited to, loss of bonding capacity, loss of bidding opportunities, and insolvency. In addition, the Department’s liability is limited so that it excludes prot, loss of prot, indirect costs or expenses of any nature, and interest prior to the nal resolution of the claim. Arkansas DOT (ArDOT) Highway Standard Specications for Highway Construction, 2014 Edition No claim for loss of anticipated prots will be considered. California DOT (Caltrans) Highway Caltrans Revised Standard Specications, 11- 19-20 Allowance for prot not to exceed 4% of the cost of the work performed where a likelihood of having made a prot had the contract not been terminated is shown. Chicago Transit Authority (CTA) Transit Red Purple Line Modernization Mutual limitation of liability for punitive, special, indirect, incidental, or consequential damages (including lost fare revenue), with a carve out for: losses covered by insurance proceeds, losses arising out of fraud, criminal conduct, recklessness or gross negligence, and liability to pay liquidated damages. In no circumstances is the contractor entitled to anticipatory, unearned prots, or consequential damages as a result of termination or partial termination.

NCHRP LRD 88 21 Entity Transportation Mode Contract Summary of Consequential Damages Clause Colorado DOT (CDOT) Highway Standard Specications for Construction, 2019 e Department will have no liability for consequential damages, including but not limited to, loss of bonding capacity, loss of bidding opportunities, and insolvency. In addition, the Department’s liability is limited so that it excludes prot in excess of that provided for in compensable damages, loss of prot, and indirect costs or expenses of any nature in excess of that set out in compensable damages. Highway Concession Agreement for US 36 and the I-24 Managed Lanes96 Mutual waiver of punitive and consequential damages of any nature (including arising out of negligence). Highway C70 Project Agreement 97 Mutual waiver of punitive, indirect, incidental. or consequential damages of any nature, including toll revenue (including arising out of negligence), with a carve out for losses covered by insurance proceeds, nes, and losses arising out of fraud, criminal conduct, recklessness, or gross negligence. Connecticut DOT (CONNDOT) Highway Standard Specications for Roads, Bridges and Incidental Construction Not addressed. Delaware DOT (DelDOT) Highway Standard Specications for Road and Bridge Construction, August 2020 e Department will have no liability for consequential damages, including but not limited to, loss of bonding capacity, loss of bidding opportunities, and insolvency. e Department will have no liability for indirect costs. In addition, the Department’s liability is limited so that it excludes prot on costs of suspensions or delays. Florida DOT (FDOT) Highway Standard Specications for Road and Bridge Construction, January 2021 e Department will have no liability for consequential damages, including but not limited to, loss of bonding capacity, loss of bidding opportunities, loss of credit standing, loss of nancing, interest paid, loss of other work, and insolvency. Highway I-4 Concession Agreement Mutual limitation of liability on special, indirect, incidental, or consequential damages, with a carve out for: losses covered by insurance proceeds, losses arising out of fraud, criminal conduct, recklessness or gross negligence, liability to pay liquidated damages, and losses arising from the release of contaminated materials. Georgia DOT (GDOT) Highway Standard Specications Construction of Transportation Systems, 2013 e Department will have no liability for consequential damages, including but not limited to, loss of bonding capacity, loss of bidding opportunities, and insolvency. e Department will have no liability for indirect costs or expenses of any nature. In addition, the Department’s liability is limited so that it excludes prot in excess of that provided for in compensable damages. 96 Note that Colorado High Performance Transportation Enterprise (HPTE) is the contracting entity and has been categorized as CDOT as it is an independent, government owned business within CDOT. 97 Note that Colorado High Performance Transportation Enterprise (HPTE) is the contracting entity and has been categorized as CDOT as it is an independent, government owned business within CDOT.

22 NCHRP LRD 88 Entity Transportation Mode Contract Summary of Consequential Damages Clause Hawaii DOT (HDOT) Highway 2005 Standard Specications for Road and Bridge Construction In the event of termination for convenience, no anticipated prots or consequential damages will be due or paid. Idaho DOT (ITD) Highway 2018 Standard Specications for Highway Construction e Department will not pay for consequential damages, including loss of bonding capacity, loss of bidding opportunities, insolvency, and the eects of force account work on other projects, contracts, or business interruption. In addition, the Department’s liability is limited so that it excludes prot in excess of that provided for in compensable damages. Illinois DOT (IDOT) Highway Standard Specications for Road and Bridge Construction, April 2016 Adjustments in costs will not be made for interest charges, loss of anticipated prot, undocumented loss of eciency, pro rata home oce overhead, unabsorbed overhead and lost opportunity, preparation of claim expenses, or other consequential indirect costs regardless of method of calculation. Indiana DOT (INDOT) Highway 2020 INDOT Standard Specications e Department will not pay for consequential damages, including loss of bonding capacity, loss of bidding opportunities, and insolvency. Indiana Finance Authority Highway I-69 Section 5 Project Mutual limitation of liability on special, indirect, incidental, or consequential damages, with a carve out for: losses covered by insurance proceeds, losses arising out of fraud, criminal conduct, recklessness or gross negligence, liability to pay liquidated damages, and losses arising from the release of contaminated materials. Iowa Department of Transportation (Iowa DOT) Highway Standard Specications for Highway and Bridge Construction Not addressed. Kansas Department of Transportation (KDOT) Highway Standard Specications for State Road and Bridge Construction – 2015 e Department will not pay for loss of anticipated prots. e Department will not pay for loss of bonding capacity, loss of credit, loss of business, or similar items of consequential damages not specically allowed in the compensable costs. Kentucky Transportation Cabinet (KYTC) Highway 2019 KYTC Standard Specications e Department will not pay for loss of anticipated prots. e Department will not pay for loss of bonding capacity, loss of credit, or insolvency. e Department will not pay for indirect costs or expenses of any nature except for those outlined in compensable damages. Louisiana Department of Transportation and Development (DOTD) Highway Louisiana Standard Specications for Roads and Bridges 2016 Not addressed.

NCHRP LRD 88 23 Entity Transportation Mode Contract Summary of Consequential Damages Clause Maine Department of Transportation (MaineDOT) Highway Maine Standard Specications March 2020 Edition e Department will not pay for lost prots or lost opportunity costs. e Department will not pay for consequential damages, including but not limited to, loss of bonding capacity, loss of bidding opportunities, and insolvency. e Department will not pay for indirect costs or expenses of any nature. Maryland DOT (MDOT) Highway 2020 Standard Specications for Construction and Materials e specication refers to the cost principles set out in Title 21 State Procurement Regulations Subtitle 9 Contract Cost Principles and Procedures which does not mention consequential damages. Transit P3 Agreement Purple Line Project98 Mutual waiver of consequential damages, including those brought in tort (including negligence). Carve out of: losses arising out of fraud, criminal conduct, recklessness, or gross negligence, the owner’s right to enforce the concessionaire’s indemnity under the contract, and the owner’s right to reduce availability payments. Massachusetts DOT (MassDOT) Highway 2020 Standard Specications for Highway and Bridges e Department will not pay any claim for loss of anticipated prots or for any costs or prot in addition to those listed in the contract. e Department will not pay for loss of expected reimbursement or for any increased expenses resulting directly or indirectly from the discontinuance of any or all work. Michigan DOT (MDOT) Highway 2012 Standard Specications for Construction e Department will not pay for loss of anticipated prots. e Department will not pay for consequential damages, including loss of bonding capacity, loss of bidding opportunities, insolvency, and the eects of force account work on other projects, or business interruption. e Department will not pay for indirect costs or expenses of any nature. Minnesota Department of Transportation (Mn/DOT) Highway MnDOT Standard Specications for Construction, 2018 Edition e Department will not pay for loss of anticipated prots. e Department will not pay for loss of bonding capacity, loss of credit, or insolvency. e Department will not pay for indirect costs. Mississippi Department of Transportation (MDOT) Highway Standard Specications for Road and Bridge Construction, 2017 Edition e compensation constitutes full payment to the contractor for the complete work and for any and all claims of any type, including but not limited to, all loss or damage of any kind arising out of the work, all loss from any action of the elements, all risks connected with the prosecution of the work, and all expenses incurred by or in consequence of suspension or discontinuance of the work. Any adjustment for diering site conditions will exclude anticipated prots. e Department will not pay for loss of overhead or anticipated prots, including anticipated earnings on usage of owned equipment or impacts, delay, or other direct or indirect costs resulting from termination. 98 Maryland Transit Administration is also a party to this Agreement.

24 NCHRP LRD 88 Entity Transportation Mode Contract Summary of Consequential Damages Clause Missouri DOT (MoDOT) Highway Standard Specications for Highway Construction, 2020 e Department will not pay for prot in excess of that provided in the contract or for loss of prot. e Department will not pay for consequential damages, including but not limited to, loss of bonding capacity, loss of bidding opportunities, and insolvency. e Department will not pay for indirect costs or expenses of any nature. Any delay in utility relocation shall not be compensable as consequential damages. No contract adjustment will be made for direct or indirect costs, or incidental or consequential costs of any overrun or underrun. Montana DOT (MDT) Highway Standard and Supplemental Specications for Road and Bridge Construction, 2020 Edition No claim for loss of anticipated prots on deleted or uncompleted work or consequential damages of any kind is allowed. Nebraska DOT (NDOT) Highway Standard Specications for Highway Construction, 2017 Edition Any cost adjustment or payment for termination will exclude loss of anticipated prots. e contractor shall accept the Department’s compensation as full payment for loss or damage arising from the nature of the work, or from the actions of the elements, or from any unforeseen diculties that may be encountered, for all risks of every description connected with the prosecution of the work, for all expenses incurred in consequence of the suspension or discontinuance of the work. Nevada DOT (NDOT) Highway Standard Specications for Road and Bridge Construction, 2014 Any cost adjustment will exclude loss of anticipated prots. New Hampshire DOT (NHDOT) Highway Standard Specications for Road and Bridge Construction, 2016 e Department will not pay for loss of anticipated prots. e Department will not pay for consequential damages, including loss of bonding capacity, loss of credit, and insolvency. e Department will not pay for indirect costs. New Jersey DOT (NJDOT) Highway 2019 Standard Specications for Road and Bridge Construction e Department will not make payment or modify contract time for loss of anticipated prots or consequential damages. Regarding any claim arising from a breach of contract, tort (including negligence), or otherwise, the State will not be liable to the contractor for any special, consequential, incidental, or penal damages, including but not limited to, loss of prot or revenues, loss of rental value for contractor-owned equipment, damages to associated equipment, cost of capital, or interest. New Jersey Transit Corporation (NJ Transit) Transit General Provisions for Construction In no event shall NJ Transit be liable for special, consequential, incidental, or penal damages, including but not limited to, loss of prot or revenues, loss of rental value for contractor-owned equipment, damages to equipment, additional risk, cost of capital, or interest of any nature.

NCHRP LRD 88 25 Entity Transportation Mode Contract Summary of Consequential Damages Clause New Mexico DOT (NMDOT) Highway Standard Specications for Highway and Bridge Construction e contractor shall not be entitled to any consequential, indirect, punitive, exemplary, special, or incidental damages. Regardless of the basis or cause of the claim, the contractor shall not recover, and is not entitled to recover, loss of anticipated prots, any damages, costs, or expenses that are indirect, special, incidental, or consequential, including but not limited to, lost or impaired bonding capacity, loss of bidding and contracting opportunities, loss of credit standing, cost of nancing, interest paid, lost material discounts, economic loss, loss of reputation, loss of other work, loss of use, loss of business opportunity, loss of product or output, income, loss of prot or revenue, cost of capital, nancing, and for loss of management or bankruptcy or insolvency. e Department waives any entitlement to consequential damages from the contractor but not general damages, including but not limited to, liquidated damages as provided in the contract. New York State DOT (NYSDOT) Highway Standard Specications, Construction and Materials, 2021 e Department will not pay for loss of anticipated or unanticipated prots. e Department will not pay for consequential damages, including but not limited to, interest on monies in dispute including interest which is paid on such monies, loss of bonding capacity, loss of bidding opportunities, or interest on investment or any resultant insolvency. e Department will not pay for indirect costs or expenses of any nature. New York Metropolitan Transit Authority (MTA) Transit General Provisions of Design Build Contract In no event will the Authority be liable for sums which are in the nature of consequential damages, decreased productivity or eciency, prots, or indirect costs that are not expressly listed in the contract. North Carolina DOT (NCDOT) Highway Standard Specications for Roads and Structures Any cost adjustment will exclude loss of anticipated prots. Highway I-77 HOT Lanes Project Mutual limitation of liability on punitive, special, indirect, incidental, or consequential damages, with a carve out for: losses covered by insurance proceeds, losses arising out of fraud, criminal conduct, recklessness or gross negligence, liability to pay liquidated damages, and losses arising from release of hazardous materials. North Dakota DOT (NDDOT) Highway 2020 Standard Specications for Road and Bridge Construction e Department will not pay for loss of anticipated prots. e Department will not pay for consequential damages, or other damages associated with loss of bonding capacity, loss of credit, and insolvency, even if the contractor noties the Department of such damages. e Department will not pay for indirect costs. Ohio DOT (ODOT) Highway Construction and Material Specications, 2019 e Department will not pay for loss of anticipated prots. e Department will not pay for consequential damages, including loss of bonding capacity, loss of bidding opportunities, insolvency, and the eects of force account work on other projects, or business interruption. e Department will not pay for indirect costs.

26 NCHRP LRD 88 Entity Transportation Mode Contract Summary of Consequential Damages Clause Oklahoma DOT (ODOT) Highway 2009 ODOT Standard Specications In any adjustment for delay costs, the Department will have no liability for loss of prot, indirect costs or expenses of any nature, or consequential damages, including loss of bonding capacity, loss of bidding opportunities, and insolvency. Oregon DOT (ODOT) Highway Oregon Standard Specications for Construction, 2021 Any contract adjustment will exclude any loss of anticipated prots. Pennsylvania DOT (PennDOT) Highway Publication 408/2020 Specications e following items of damage cannot be included in any delay claim against the Department: prot, loss of prot, or consequential damages, including loss of bonding capacity, loss of bidding opportunities, and insolvency. Regional Transportation District (Denver) (RTD) Transit Eagle P3 Concession Agreement Mutual waiver of consequential, indirect, punitive, exemplary, special, or incidental damages, lost prots, lost revenues, or otherwise. Rhode Island DOT (RIDOT) Highway Standard Specications for Road and Bridge Construction 2004, amended March 2018 In any adjustment for delay costs, the Department will have no liability for prot in excess of that provided in the contract, loss of prot, indirect costs or expenses of any nature, or consequential damages, including loss of bonding capacity, loss of bidding opportunities, and insolvency. South Carolina DOT (SCDOT) Highway 2007 Standard Specications for Highway Construction In any claim for damages, the Department will have no liability for prot in excess of that set out in the contract, loss of prot, indirect costs or expenses of any nature, or consequential damages, including loss of bonding capacity, loss of bidding opportunities, and insolvency. South Dakota DOT (SDDOT) Highway Standard Specications for Roads and Bridges, 2015 Any contract adjustment or claim for damages will exclude any loss of anticipated prots. Tennessee DOT (TDOT) Highway 2021 Standard Specications for Road and Bridge Construction e Department will not provide additional compensation for the following items and the contractor agrees that it shall not claim for the following items of cost: prot in excess of that provided in the contract, loss of anticipated prots, consequential damages, including but not limited to, any indirect costs or expenses, interest on investment, or any resultant insolvency. Texas DOT (TxDOT) Highway Standard Specications for Construction and Maintenance of Highway, Streets and Bridges, 2014 Any contract adjustment or claim for damages will exclude any loss of anticipated prots. Damages occur when impacts that are the responsibility of the Department result in additional costs to the contractor that could have been reasonably anticipated at the time of letting. For contractor damages, the intent is to reimburse the contractor for actual expenses arising out of a compensable impact. Highway Comprehensive Development Agreement State Highway 288 Toll Lanes in Harris County Mutual limitation of liability on special, indirect, incidental, or consequential damages, with a carve out for: losses covered by insurance proceeds, losses arising out of fraud, criminal conduct, recklessness, or gross negligence, liability to pay liquidated damages, and losses arising from the release of contaminated materials.

NCHRP LRD 88 27 Entity Transportation Mode Contract Summary of Consequential Damages Clause Utah DOT (UDOT) Highway 2020 Standard Specication Book e Department will not compensate for consequential damages including, but not limited to, loss of bonding capacity, loss of bidding opportunities and insolvency. Vermont Agency of Transportation (VTrans) Highway 2018 Standard Specications for Construction Consequential damages, loss of overhead, loss of overhead contribution of any kind, and/or loss of anticipated prots on work not performed shall not be included in any contractor claim and will not be considered, allowed, or included as part of any settlement. Non-recoverable costs include loss of prot in excess of that provided for in the contract and consequential damages, such as loss of interest or investment with respect to funds at issue in the dispute. Virginia DOT (VDOT) Highway 2020 Road and Bridge Specications Any contract adjustment will exclude prots and consequential damages. Highway I-66 Comprehensive Agreement Mutual limitation of liability on special, indirect, incidental, or consequential damages, with a carve out for: losses covered by insurance proceeds and liability to pay liquidated damages. Washington State DOT (WSDOT) Highway Standard Specications for Road, Bridge and Municipal Construction, 2021 No payment for consequential damages or loss of anticipated prots will be allowed because of any variance in quantities from those originally shown in the proposal form and contract plans. No claim for consequential damages of any kind will be allowed. West Virginia DOT (WVDOT) Highway 2017 Standard Specications Roads and Bridges Any contract adjustment will exclude prots. Anticipated prots will not be considered as part of any settlement. Wisconsin DOT (WisDOT) Highway Standard Specications for Highway and Structure Construction 2021 Edition e Department will not reimburse the contractor for prot in excess of that provided in the contract, indirect costs, or consequential damages, including loss of bonding capacity, loss of bidding opportunities, and insolvency. Wyoming DOT (WYDOT) Highway 2021 Standard Specications for Road and Bridge Construction e commission agrees not to assert sovereign immunity as a defense to resolve a dispute provided none of the following are included in the dispute: (1) pre-judgment interest on the amount of the dispute, (2) exemplary or punitive damages, (3) attorney’s fees, consultant fees or other costs of litigation, (4) damages exceeding the actual costs as supported by the documentation presented, or (5) consequential damages (meaning those not part of items 1, 2, and 3) exceeding 10% of the calculated amount in item 4.