The Claim for Additional Payment - Construction Claims and Responses: Effective Writing and Presentation - page 124

notional calculations involving estimates or assessments. In other words,
the claimant has to prove his case, based upon fact, and this, in turn,
means that quantities, durations, rates and prices must all be demonstra-
ble and substantiated.
In our example, the claim for additional payment will be based upon the
fact that the Contractor has suffered damage due to the extended time
that he has been obliged to remain on site. The conclusions of the cause
and effect from the previous claim section which deals with the extension
of time should therefore be repeated in the section that deals with addi-
tional payment. In this case, however, the effect will need to be related to
the fi nancial damage incurred rather than time. Generally, the claim for
additional payment in the case of prolongation may be categorised as
follows:
1. Site-establishment costs including site staff, site establishment, trans-
port, plant, equipment and the necessary running and maintenance of
such items. A detailed list of such items is given in the form of a check-
list later in this chapter.
2. Contractual costs such as insurances and performance guarantees.
3. Head-offi ce overheads and profi t.
4. Finance costs.
Explanations should be given as to the nature of the additional costs
incurred and the costs applicable to the claim should be demonstrated in
the calculations.
Prolongation costs are mainly related to time, so it is important to
demonstrate the number of days on which the calculations are based -
a simple calculation included within the narrative will usually suffi ce for
this. It is a good idea to ensure that all cost calculations are based upon
a cost per day so that, if, for example, a reduced extension of time is
agreed or determined, it is an easy task to recalculate the claim at a later
date by a simple revision of the number of days upon which the claim is
based. As with most narratives, it is important to describe the logic and
methodology used in the fi nancial calculations in a manner that will enable
the reviewer to understand the process and lead him to a logical
conclusion.
An important point worth mentioning at this juncture is that different
contracts provide for different methods of fi nancial recovery. Where a
contract provides for 'loss and/or expense' to be recovered, this enables
both the Contractor's costs and his losses to be taken into account. Some
contracts do not allow for the claimant to recover fi nancing charges
and some allow for recovery of profi t. As always, the place to check
for the basis of the fi nancial claim is the contract in question. When a
contract refers to 'cost', this should usually be actual costs incurred
by the Contractor and not, as is sometimes assumed, the estimated costs
derived from the General Items or Preliminaries sections of the bills of
quantities. FIDIC includes the following defi nition under Sub-Clause
1.1.4.3: