Liquidated Damages
A pre-agreed daily (or otherwise periodic) dollar amount a contractor owes the owner for each day the project finishes late past the contract completion date, set in advance in the contract, rather than requiring the owner to prove actual damages after the fact.
Why it matters
Proving an owner's actual financial loss from a late project can be difficult and expensive to litigate. Liquidated damages sidestep that by agreeing on a reasonable daily rate upfront, giving both sides certainty about what a late finish will actually cost, as long as the rate reflects a genuine, reasonable estimate rather than a punitive penalty.
On a real project
A contract sets liquidated damages at $2,500 per day for late completion. If the project finishes three weeks (21 days) late, the contractor owes the owner $52,500, regardless of what the owner's actual measured losses from the delay turn out to be.
Who this matters most to
A Project Manager tracks schedule performance against the completion date closely, since liquidated damages come directly out of the project's profit. A Scheduler models excusable versus non-excusable delay carefully, since only delay the contractor is actually responsible for exposes them to liquidated damages.
Where this goes wrong
A project runs three weeks late, and the contractor assumes the delay was clearly caused by an owner-approved design change, so liquidated damages shouldn't apply. Without solid documentation tying the delay specifically to that change, the owner successfully assesses liquidated damages for the full delay anyway, since the burden was on the contractor to prove the delay wasn't their fault.