Construction Law/Idle Cost Claim
Please comment, what type of method(s) shall be used for calculation of delay cost claim?
Is it logically not correct to use Day Work Schedule for Labour and Equipments rates, in respect of calculation of idle cost claim? Because these rates are given in the contract.
Is it necessary to use Construction Equipment Ownership and Operating Expense Schedule of U.S. Army Corps of Engineers for idle equipment cost claim?
Thank you for this question.
As is so often the case, the starting point is your contract. Some contracts define the term "cost"; for example, under a FIDIC Red Book contract "Cost" (capitalised C) is defined but "cost" (not capitalised) is not and, therefore, the two have different meanings.
As a general principle and subject to any contractual definition the measure of damages is the actual cost or loss incurred by the claiming. Daywork schedules or the US Army Corps. of Engineers' schedules are not costs; they are generalisations, intended for limited purposes.
Labour costs will be the actual basic cost incurred plus any allowance for necessary additional expenditure, such as but not limited to insurances or taxes. The list of extra costs can be extensive.
Equipment costs will be different if hired than if owned; or if standing rather than working. The cost of hored equipment can be demonstrated easily from purchase invoices, but the cost of owned equipment can be very different depending upon the age of the equipment and its projected usage. For equipment the explanation for calculation is, unfortunately, too extensive for this forum.
The assessment of a cost addition (or reduction, depending upon the starting point) is easier as most manufacturers publish performance data and the extra cost of running equipment can often be assessed from their statistics for fuel usages, and maintenance items.
I hope that this assists you.
Follow me on Twitter: @CernoOrg
For my regular industry newsletter e-mail to firstname.lastname@example.org, stating SUBSCRIBE in the subject line
Training and consulting services are available, bespoke to companies and individuals.
John Dowse can be contacted by e-mail to email@example.com (When e-mailing, please include “AllExperts” in the subject line.)