In a construction dispute, a Court ruled that a contractor making a delay claim for home office overhead needs to meet the following criteria. Absent the delay, the contractor would have performed alternative work representing a profit and contribution to home office overhead.
A contractor can recover head office overheads and profit lost as a result of delay on a construction project caused by factors that entitle it to loss and expense. It is necessary for the contractor to prove on a balance of probabilities that if the delay had not occurred it would have secured work that would have produced a return (over and above costs) representing a profit and/or a contribution to head office overheads. A contractor could also legitimately claim additional monies where his head office overheads have been “thickened” during the period of the contract. This may arise where it was necessary to employ additional personnel and resources to deal with the consequences of a breach of contract.