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Late Completion Penalties on Construction Projects: How to Calculate and Avoid Them

How to calculate late completion penalties (1/1000 per day of the contract value before VAT on Indonesian government projects), grace periods, valid time extensions, and how to prevent penalties with progress reporting.

Komander.ai Panduan team · 3 min read · Updated 9 October 2026

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.

010203040500102030405020 days: Rp20 mDays late (penalty in Rp million)
A 1/1000 per day penalty on a Rp1 billion contract: Rp1 m a day; 20 days late = Rp20 m; a grace period of up to 50 days, with the penalty still running.

Worked example

ItemAmount
Contract value before VATRp1,000,000,000
Penalty per day (1/1000)Rp1,000,000
Days late20
Penalty20 × Rp1,000,000 = Rp20,000,000
If charged on the unfinished part, say Rp150 m20 × 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

How to prevent penalties

  1. Watch the S-curve deviation every week. Warning signs appear long before the finish date.
  2. Record every delay caused by others: date, cause, letters or photos. These records are the basis of an extension request.
  3. Request an extension as soon as the cause happens; do not wait for the end of the project.
  4. For work falling behind, add crew or equipment, or change the sequence, and write the catch-up plan in the weekly report.
  5. Include the penalty risk in the project profit forecast once the delay can no longer be recovered.

Common mistakes

Start from a template

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.

Get the templateCheck my workbook

Ready to use the Komander agents on your projects?

When your workbook is complete, apply for a pilot: we help connect your project data to the Finance, Cost and Scheduler agents and review the first reports with you.

Send with GmailEmail app

Send to melwani@komander.ai. Your workbook check result is included when there is one; the workbook itself is not sent.

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

  1. BPK NTB: calculating late penalties (Indonesian): penalty on the value before VAT, Article 79
  2. BPK West Sulawesi: contractor penalised (Indonesian): grace period of up to 50 days