Construction Law/HO & Site Overheads

Advertisement


Question
Dear Sir

If the Engineer instruct a variation and leading to EOT, then the contractor separately submitted the variation claim (prepared by QS) and prolongation cost claim (prepared by claim expert in-house).

In the variation claim HO overhead required to compensate during the EOT period will be covered, and in the prolongation cost claim only site overhead will be covered.

Therefore we not require Hudson formula or any other formula to derive HO overhead, because already covered by the variation claim.

Sometimes the Engineer require actual cost for the prolongation cost and then based on actual data it will be prepared.

Please give your comment.

Br

Sudantha

Answer
Dear Sir,
Thank you for your question
If i correctly understood your question, the prolongation cost claim is based on time related expanses which the contractor has incurred due to longer stay at site for reasons not attributable to him. It means it is basically preliminaries or general cost item which are related to time for example bonds which may have to be extended due to extension of time and as such extra cost incurred in this account has to be compensated. Regarding head office overheads, normally only extra over head expanses required for employment of resources are compensated which are not covered otherwise.
The idea of compensation to contractor is normally based on proving the extra cost incurred by him through the contemporary record such as daily progress report. Please note that concurrent delay is also not considered in prolongation cost along with grounds such as inclement weather. The FIDIC contracts define cost without consideration of profit and so this is also to be considered.
I hope this clarify the matter.

Regards
Liaqat Hayat  

Construction Law

All Answers


Answers by Expert:


Ask Experts

Volunteer


Liaqat Hayat

Expertise

I can answer questions based on FIDIC 4 and FIDIC 1999 [design-build] with particular reference to time extension , price adjustment and disputes. I am in particular more inclined for response to points pertaining to how claims should be framed and put up in case of technical or other contractual shortcomings. Regarding procurement matters I have spent over 5 years as procurement specialist for highway authority and dealt with numerous claims and disputes in the capacity of "The Engineer" .

©2016 About.com. All rights reserved.