Potential heads of claim - Building Contract Claims - page 101

turnover of his business. But he continues to incur expenditure on over-
heads which he cannot materially reduce or, in respect of the site, can
only reduce, if at all, to a limited extent. But for the delay, the workforce
would have had the opportunity of being employed on another contract
which would have had the effect of contributing to the overheads during
the overrun period.' 298
Where a contractor was kept on site longer than the contract period, it used
to be taken for granted that he would be able to recover his overhead costs
for the period of delay. That is no longer the presumption and recovery of
head office overheads is becoming far more difficult.
It is usually argued that the contractor must be able to show that he had
other work which he could have done during the delay period, otherwise, in
the absence of any delay, there would have been no contribution during the
period and, therefore, no loss 299 . An exception has been made where a
contractor was able to show that he carried out one project at a time 300 .
Essentially, it seems that on any contract, delay or disruption may lead to
some increase in direct head office administrative costs, relating not only to
any period of delay but also to the involvement of staff in dealing with the
problems caused by disruption, e.g. contract managers spending more time
in organising additional labour, recasting programmes, etc., buying staff in,
ordering additional materials, arranging plant hire and the like. If, however,
they would not have been gainfully employed, but for the delay, the con-
tractor may face difficulties in recovering such costs which, it will be
argued, he would have incurred as part of his head office expenditure in
any event. It has been said:
' . . . it is for [the contractor] to demonstrate that he has suffered the loss
which he is seeking to recover . . . it is for [the contractor] to demonstrate,
in respect of the individuals whose time is claimed, that they spent extra
time allocated to a particular contract. This proof must include the keep-
ing of some form of record that the time was excessive, and that their
attention was diverted in such a way that loss was incurred. It is import-
ant, in my view, that [the contractor] places some evidence before the
court that there was other work available which, but for the delay, he
would have secured, but which, in fact, he did not secure because of the
delay; thus he is able to demonstrate that he would have recouped his
overheads from those other contracts and thus, is entitled to an
extra payment in respect of any delay period awarded in the instant
contract.' 301
298 Stephen Furst and Vivian Ramsey, Keating on Building Contracts , 7th edition, 2001, Sweet &
Maxwell at 267.
299 Finnegan v. Sheffield City Council (1988) 43 BLR 124.
300 Alfred McAlpine Homes North Ltd v. Property & Land Contractors Ltd (1995) 76 BLR 65.
301 AMEC Building Ltd v. Cadmus Investments Co Ltd (1997) 13 Const LJ 50 at 56 per Mr Recorder
Kallipetis. See also City Axis Ltd v. Daniel P. Jackson (1998) CILL 1382, Norwest Holst Construction Ltd v.
Co-operative Wholesale Society Ltd , 17 February 1998, unreported, and Beechwood Development Company
(Scotland) Ltd v. Stuart Mitchell (t/a Discovery Land Surveys) (2001) CILL 1727 where the criteria for head
office overheads are set out. The importance of the availability of other work is common to all.