Incentive Payments for Early Completion

In addition to including liquidated damages in your bidding documents for a public works project, you may find it beneficial to include an incentive clause in your documents for early completion of the project, especially if early completion will earn you more revenue or inconvenience the public less, or for other good reasons.

If you do this, it's really important to manage the project in the field effectively. Downsides of including an incentive clause include the following:

• The contractor may cut corners in an effort to complete the work early. You'll need to watch to ensure this doesn't occur and that the contractor meets the requirements of the specifications.
• The contractor may allege that the owner has delayed the project and that without such delays, the contractor would have received the incentive.
• The contractor may have bid the project and been the low bidder based on his/her assumption that they would earn the incentive payment.

If you've been reading the newspapers, you'll see that the contractor on the I-5 project in downtown Seattle is, at this point, scheduled to finish about five days early, earning $100,000 a day for every day they finish the work before the deadline.