Loss and/or expense - Construction Contracts - page 310

191 The contractor is demanding to be paid 'prelims' on the
extension of time. How is that calculated?
None of the standard forms of contract entitle the contractor to any payment as a conse-
quence of extension of time. The purpose of extension of time clauses is that the period of
time available for carrying out the contract Works can be extended. The contractor will look
in vain for any reference in the contract to money in connection with extension of time. In
short, there is no connection between the contractor's entitlement to an extension of time
and any entitlement to loss and/or expense. 24
There is no provision for the payment of 'prelims' in any of the standard forms. 'Prelims'
is short for'preliminaries' (i.e. the first part ofthe bills ofquantities orspecification). When
a contractor talks about recovering its preliminaries, it means the price for the preliminary
items that has been inserted in the bills or specification as part of the tender price. This pre-
liminaries price is often inserted as a lump sum or as a price per week. Obviously, a lump
sum can easily be converted into a weekly rate by dividing it by the number of contract
weeks.
Itwasonceverycommon,butnowfortunately lessso,forthearchitect togiveacontract-
oranextensionoftimeandthenforthequantitysurveyortoascertaintheamountpayableto
the contractor by multiplying the weekly amount of preliminaries in the specification by the
number of weeks' extension of time. As construction professionals better understand their
responsibilities in dealing with loss and/or expense, this practice is less common. It borders
on negligence unless sanctioned by the employer in the full knowledge of all its implica-
tions.Thecontractorcanneverbeentitledtorecoveritspreliminariesaslossand/orexpense,
muchlessasarateperweekofextensionoftime,becausethecontractorisentitledtorecov-
er only its actual losses or actual expenses - in other words, the amount it can prove it has
actually lost or spent. 25 It is not entitled to recover some notional amount nor the amount
inserted as part of its tender price, which may, but more likely may not, be the same as its
actual costs.
Therefore, the answer to this question is:

1 Thecontractorisnotentitledtoanymoneyasaconsequenceofbeinggivenanextension

of time.
Therefore, there is no need to calculate it.
If the contractor makes a valid application under the claims clause (e.g. clause 4.23 of
SBC or clauses 4.17 and 4.18 of IC), it is entitled to the actual amount of loss and/or ex-
pense it has suffered.

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