How are head office overheads and loss of profit assessed as part of a contractor's claim for loss and expense?

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Published on: 04 February 2015

What is a claim for Loss and expense?

Under a construction contract, a contractor will usually be entitled to claim loss and expense where it suffers delay or Disruption to the progress of the works, due either to matters within the employer's control or to breaches of contract by the employer. Claims for loss and expense are commonly brought under various different headings (see Practice Notes: Loss and expense and Loss and expense claims—practical tips), two of which will usually be a contractor's claim for overheads (also known as prolongation costs) and for Loss of profit.

On what basis can a claim be brought?

Contractors often believe that an entitlement to claim overheads and loss of profit (as well as other heads of loss and expense) automatically follows from an entitlement to an extension of time. This is not usually the case and each claim must be addressed separately, in accordance with the particular terms of the contract.

Depending on the particular

Jurisdiction(s):

United Kingdom

Key definition:

Head office overheads definition

What does Head office overheads mean?

The incidental costs of running the contractor's business as a whole, which are not incurred directly as a result of the particular project. These overheads are generally administrative expenses and may include items such as rent, rates, directors' salaries, finance charges and auditors' fees.

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