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Sample Loss and Expense Claim

This document summarizes the heads of claim a contractor can make due to loss and expense from delays on a construction project. It outlines six legitimate heads of claim: [1] on-site establishment costs, [2] head office overheads, [3] loss of profit, [4] inefficient or increased use of labor and plant, [5] increased costs due to inflation, and [6] finance charges and interest. Case law has established each of these as allowable claims. The contractor provides calculations for the claimed amounts under each head and concludes with a total claim amount.

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Ifeanyi Obieje
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11K views2 pages

Sample Loss and Expense Claim

This document summarizes the heads of claim a contractor can make due to loss and expense from delays on a construction project. It outlines six legitimate heads of claim: [1] on-site establishment costs, [2] head office overheads, [3] loss of profit, [4] inefficient or increased use of labor and plant, [5] increased costs due to inflation, and [6] finance charges and interest. Case law has established each of these as allowable claims. The contractor provides calculations for the claimed amounts under each head and concludes with a total claim amount.

Uploaded by

Ifeanyi Obieje
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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[put project title here]

Contractor’s Loss and Expense Claims

1.1 Introduction.

[Put brief introduction of the project and the circumstances leading to the claim. Remember to
quote the authorising contract clause]

1.2 Heads of Claim.

The following have been established through time, precedent or case law to be legitimate heads of
claim.

A. On-Site Establishment Costs


These are cost associated with keeping the site operational during the extended period caused
by delay and disruption of contractors regular. They are easily ascertained and generally relate
to preliminary items such as supervision, plant and equipment, accommodation, etc. directly
engaged upon the site.

B. Head Office Overheads


Head office overhead cost is often expressed as a percentage of a Contractor’s turnover and
forms part of the rates inserted in the Contract Bills. During period of delay, there is reduced
volume of work compared to planed activities. Losses thereby results due to the shortfall in
income generated from the site for contribution towards the cost of head office overheads.

Delays in completion of a contract may also mean that the contractor does not have the
opportunity of being employed on another contract that would have contributed to the
overheads.

C. Loss of Profit
Loss of profit for delay or disruption is an allowable head of claim and this was established as far
back as 1854 in the case of Hadley v Baxendale [9 Exch. 341, 156 Eng. Rep. 145 (1854)].

D. Inefficient or increased use of Labour and Plant


Delay and disruption can lead to the loss of productivity or inefficient use of labour and plant.
This is also an established head of claim and relates to disturbance of the contractor's regular

1
and economic progress as in Croudace Construction Ltd v Cawoods Concrete Products Ltd
[(1978) 8 BLR 20]

E. Increased Costs due to Inflation


Delay caused by the Employer results in increased costs to the contractor due to inflation.
Additional expenditure on labour and materials due to these increases is an allowable head of
claim as in Croudace Construction Ltd v Cawoods Concrete Products Ltd [(1978) 8 BLR 20]. the
contractor may claim these costs15 by reference to published inflation indices. and can be ..

F. Finance Charges and Interest


It is now settled under the JCT Contract that finance charges by way of interest expended are
allowable heads of claims as is the loss of interest that might have been earned from money
diverted from investment; compensation for the loss of use money. This principle was
established in the case of F.G. Minter Ltd. v Welsh Tech. Services Authority [(1980) 13 BLR 1].

2.0 Statement of Claim

[provide here the statement of claim on each head you wish to make claim for showing your
calculations clearly and making reference to supporting documents]

3.0 Summary and conclusion

[Conclude here and show total claim]

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