Potential heads of claim - Building Contract Claims - page 117

Hudson's Building and Engineering Contracts sets out the position succinctly
as follows:
'Where plant is delayed in the sense of being delayed on site for too long
because of owner breaches, claims may be validly advanced in a number
of ways which will vary according to whether it is hired or owned by the
contractor. Thus where there is a disturbance but no overall delay, there
may be a loss of productivity claim based on standing or idle time and
driver's wages thrown away if hired, or on an interest and depreciation
basis if owned. If there is overall delay (or extension of the period during
which particular plant is programmed to be on site) hire payments will be
extended in the one case (as, for example, hired site accommodation) or
interest or depreciation or maintenance if the plant is owned.' 344
As noted earlier, there are intermediate positions between the two extremes
of hired in and contractor's own plant. Each of these positions must be
examined carefully, it being remembered that the key point is that a con-
tractor can only recover, as direct loss and/or expense, what he has actually
lost or spent.
6.5.7 Increased costs
Additional expenditure on labour, materials or plant due to increases in cost
during a period of delay is an allowable head of claim. Claims may also be
sustainable where disruption has resulted in labour-intensive work being
delayed and carried out during a period after an increased wage award. It
should be noted that, where a claim of this kind is being made in respect of a
delay in completion, it is not only the period of delay that should be
considered. The correct measure would be the difference between what
the contractor would have spent on labour, materials and plant and what
he has actually had to spend over the whole period of the work as a result of
the delay and disruption concerned. In making this calculation, of course,
due allowance must be made for any recovery of increased costs under the
appropriate fluctuations clauses in the contract.
Contractors may often seek to make such calculations easier by using
some kind of formula or notional percentage to produce a result. That
approach is not acceptable. The contractor must show that the increases in
costs have been the inevitable consequence of the cited occurrence. This
can be quite complicated in the case of materials, because the contractor
must demonstrate that he could not reasonably have placed his order
earlier to avoid the increases. Above all, it must not be assumed that all
work and all materials after the period of delay or during a prolongation
period after the contract completion date, will automatically suffer a price
increase.
344 I. N. Duncan Wallace, Hudsons Building and Engineering Contracts , 11th edition, 1995, Sweet &
Maxwell, para 8.195.