A late completion penalty applies when the work is not finished by the agreed date. On Indonesian government projects it is 1/1000 (one per mil) per day of the contract value, or of the unfinished part of the contract, before VAT (Perpres 16/2018 Article 79 and its amendments). Private projects follow the penalty clause in their contract.
Worked example
| Item | Amount |
|---|---|
| Contract value before VAT | Rp1,000,000,000 |
| Penalty per day (1/1000) | Rp1,000,000 |
| Days late | 20 |
| Penalty | 20 × Rp1,000,000 = Rp20,000,000 |
| If charged on the unfinished part, say Rp150 m | 20 × Rp150,000 = Rp3,000,000 |
The contract decides whether the penalty is charged on the whole contract value or on the unfinished part. Read that clause from the start: the difference can be very large.
Grace periods and time extensions
- Grace period: on government projects a late contractor can be given up to 50 calendar days after the contract period ends to finish (LKPP Regulation 9/2018), with the penalty still running.
- Extension without penalty: can be requested when the delay is not the contractor’s fault, for example added work, delays from the client (drawings, land, approvals) or force majeure. It must be requested in writing before the contract period ends, and recorded in an addendum.
- An extension for added work is worked out from that work and its effect on the critical path, not just a request for more days.
How to prevent penalties
- Watch the S-curve deviation every week. Warning signs appear long before the finish date.
- Record every delay caused by others: date, cause, letters or photos. These records are the basis of an extension request.
- Request an extension as soon as the cause happens; do not wait for the end of the project.
- For work falling behind, add crew or equipment, or change the sequence, and write the catch-up plan in the weekly report.
- Include the penalty risk in the project profit forecast once the delay can no longer be recovered.
Common mistakes
- Requesting an extension after the contract period has ended.
- Delays caused by the client not recorded, so they cannot be proved.
- Penalties left out of the project profit and loss, so profit looks higher.
- Thinking a grace period means no penalty.
The full guide is in How to create a weekly construction schedule report in Google Sheets. It has a free template (Excel or Google Sheets) and a checker that reads your own workbook.
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Common questions
What is the late penalty on Indonesian government projects?
1/1000 per day of the contract value or the unfinished part, before VAT, under Perpres 16/2018 Article 79 and its amendments.
Is the penalty charged on the whole contract value?
It depends on the contract: on the whole value or on the unfinished part. Check the clause.
How long is the grace period?
Up to 50 calendar days after the contract period ends on government projects (LKPP Regulation 9/2018), with the penalty still running.
When can I get an extension without penalty?
When the delay is not the contractor’s fault, such as added work or client delays, requested in writing before the contract period ends.
References
- BPK NTB: calculating late penalties (Indonesian): penalty on the value before VAT, Article 79
- BPK West Sulawesi: contractor penalised (Indonesian): grace period of up to 50 days