An Alternative Approach to Contractors’ Formulae Claims for Head Office Overheads

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Abstract

This paper adds support to the notion that Contractors’ head office overheads are, as a general rule (particularly where lost opportunity for turnover can be demonstrated), recoverable as a head of claim in construction contract claims for prolongation, using a formula-based calculation; the decision in Walter Lilly v. Mackay has brought further clarity to Contractors’ entitlement to these claims. This paper also sets out an alternative approach to the ascertainment of head office overhead costs where, it is submitted, the traditional formulae exaggerate the costs actually incurred by a Contractor as a result of a compensable Employer Risk Event.

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