Construction Industry/Head Office overhead


Dear Sir,

under Fidic 1987 4th edition;

EOT has been awarded for the delay due to variation and unforeseen rock

In order to entitle for the ''head office overhead'' as a part of prolongation cost,

Is it essential to prove certain things other than the actual cost??

For an example, do we need to prove that we could not undertake any other new projects due to the delay in current project and accordingly, do we need to prove with any tender correspondence for new projects[tender decline, etc] in this regards.

I believe we do not need to prove anything[other than the allocable actual cost] as we do not need to prove even for additional site overhead for prolonged period other than the Actual Cost incurred.

Your valuable opinion is appreciated.



Dear Miyuru,

In actual sense, there are so many cost-related claims that granting of EoT to a Contractor for delay events which the Employer is responsible, could trigger. One of it is prolongation cost claim and another is recovery of the head office overheads. These are two different separate claims. HOOH (head office overheads) is not a part of the prolongation cost claim. However, for a good claim on recovery of HOOH to be successful, the Contractor must be able to show the contribution of the project to the HOOH inserted at during the tender stage within the contractor's organization. There are so many ways to demonstrate this, one of it is either by balance sheet of the company as at the period closest to the tender period. The balance sheet will show the total turnover versus the total tender sum. This therefore means the only prove needed is to show the turnover and the overhead component as being a credible figure to be used to establish the overhead contribution proportionate to the project upon which the HOOH is being sought.

In the alternative, if the overheads is in doubt; the actual head office expenses could be submitted provided they are credible and with credible back ups. like the statutory bills, salaries, etc.

Hope this is okay?

Construction Industry

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Femi Alofe


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