What is finishing on time actually worth?
With liquidated damages, the payoff is kinked: finishing early is worth zero, finishing late is expensive. The expected fee depends on the tail of the duration, which is exactly what an average hides.
Construction Starter Monte Carlo Pro engine
After you install, this is the model to open.
What Do Late Days Really Cost?
- In your spreadsheet, click the Sortia icon in the strip of icons down the right-hand edge. No strip? Click the arrow at the bottom-right to open it. You can also use Extensions, then Sortia, then Open Sortia.
- Click Start from a template and put that name in the search box.
- Pick the card with that name and click Load this template. It arrives on a new tab with real numbers already in it.
This one runs on a Pro engine, and every free install includes five full-quality runs on your own numbers, shared across all five Pro engines rather than five for each. After that, Pro is $199/year.
The answer
Twenty thousand simulated projects:
- Expected fee
- $394.9K
- Expected damages
- ~$5.1K
- Days late, P95
- 4.4
The most likely outcome is on time and full fee, and the expected damages are still about $5,100, all of it living in the tail. Now the acceleration decision is arithmetic: crashing the schedule is worth up to that number in expectation, and the P95 tells you what a genuinely bad project costs before you sign the clause.
The model
A $400K fee, a 50-day contract deadline, damages of $8,000 per late day, and a PERT duration of 38-45-62 days: most likely early, with a real tail.
| Contract fee | $400,000 |
| Deadline | 50 days |
| Damages | $8,000 per late day |
| Duration | PERT 38-45-62 |
| Fee after damages | simulated |
Once it is in your sheet
- The model arrives with real numbers in it and runs as it stands, so you can press the button first and understand it second.
- Change the numbers to yours. The sheet marks which cells are inputs and which hold formulas, and most labels carry a note explaining the row.
- Press the run button at the bottom of the panel. It is labeled for the tool you are in, and the result lands on its own tab, with a written reading of it beside the figures.
Never used Google Sheets? Start here goes the whole way, in seven steps, and assumes nothing.
Next question
- When does the punch list actually finish?Is Closeout on Track?
- What do the lean, normal and cautious bids each look like?Three Ways to Price This Bid
- Cheapest crew per site, or cheapest week?Which Crew Goes to Which Site?
- The rate says 90 a day. What do the site records say?What Does a Normal Crew Day Produce?
- Are you paying for cement the spec does not need?Which Concrete Mix Meets Spec for the Least Money?
- Crew B is 16% ahead. Is that the crew, or the fortnight?Do the Three Crews Work at the Same Rate?
Every model like this one, and the method behind them: Monte Carlo simulation.