What is the purpose of liquidated damages stipulated in BHEL contracts?

The purpose of liquidated damages in BHEL contracts is primarily to provide a predetermined compensation mechanism for breach of contract, particularly in cases where delays in project delivery occur. Liquidated damages are assessed to quantify losses incurred due to a contractor's failure to meet agreed timelines.

In this context, the correct answer corresponds to the company's need to recover losses that may arise from the unavailability of resources, including trained personnel. When a trained employee leaves or is not performed as expected, this can result in operational inefficiencies and financial loss for the company. The stipulated liquidated damages help in compensating BHEL for such losses as it provides a clear framework for accountability and establishes financial repercussions for contract breaches.

The other options do not align with the nature and purpose of liquidated damages as they pertain more to performance rewards or training aspects rather than addressing the losses incurred from contractual violations.