Had Correia Construction Ltd. not finished the second cruise ship dock project at Dockyard by the agreed completion date the company would have had to pay just $150 a day in damages despite the fact that missing the deadline might have cost the Island's economy millions of dollars in lost cruise ship tourism revenue.

The figure was revealed in the company's contract with Government to build the dock, bridge, terminal and ground transportation area at the West End.

As it was, the dock was completed by April 29 this year, within the deadline.

The contract, signed with the Ministry of Works and Engineering, also allowed for 23 percent of the project cost almost $9 million to be paid up front to Correia.

On May 4, 2007, just over three weeks after the contract was signed, oversight of the project was transferred to Premier Ewart Brown's Ministry of Transport and Tourism.

Delay damages, or liquidated damages, are commonplace in construction contracts. They allow owners to withhold monies from the contract price, usually on a per day rate.

One of the factors taken into account when determining the amount of delay damages is loss of revenue.

The Premier's then Press Secretary Glenn Jones said in January this year that the pier project was one of "urgent national importance" and any delay preventing it opening before April 29 the date the first "mega-ship" of the season was due to arrive would cost the local economy $16 million.

He added that the dock was vital to the Island's tourism industry and the lack of one in 2009 would cause "significant losses" to Government coffers.

At the time, Government was seeking retroactive planning permission for the second phase of the project.

The advance payment to Correia Construction was $8,967,586.73, out of the total $38,906,715.75 contract.

Correia Construction boss Dennis Correia said: "It was an upfront mobilisation fee that had to be paid back against the job at a rate of $820,000 a month. By the time we got to the end of the job, it was all paid back to Government."

Effectively, he added, it was an interest-free loan to help Correia, as a relatively small firm, to buy the materials and equipment it needed to get the project under way.

Louis (Skip) Gardella, of Norwalk Marine International, who has 20 years' experience of the US marine construction industry, said while some advance payment was not unusual, to receive nearly a quarter of the contract value up front would be "very generous" in the US.

"The Government is effectively acting as a banker," Mr. Gardella said. "Normally in construction you get paid for what you put in place."

And an experienced Bermuda-based construction management expert told The Royal Gazette that $9 million up front on a $39 million project was "out of the ordinary". "That sounds very high," he said. "Advance payments can be written into construction contracts, because even the biggest companies need some help with the substantial cost of materials like steel."

Advance payments might also cover initial costs of specialist equipment, if it were needed, he added.

The Ministry of Tourism and Transport declined to comment on either the size of the advance payment, nor did it offer an explanation as to why the delay damages figure was so apparently low.

When Proactive was working on the new Berkeley Institute building six years ago, the then Shadow Works and Engineering Minister Erwin Adderley said Government had not paid a sufficient amount up front to help the small Bermudian firm to start on the project.

This newspaper was unable to confirm the details of the Berkeley contract, or whether large advance payments were normal with Government contracts.

When purchasing goods and services from outside entities, civil servants are bound by the Accountant General's Financial Instructions, a copy of which was obtained by this newspaper.

The Instructions state that accounting officers in each department usually the Permanent Secretary or Director "must be concerned not only with the regularity and lawfulness of accounts but also with the economy, efficiency and effectiveness in the use of resources".

Generally, advance payments for goods and services are not allowed. However, there are separate rules for construction contracts.