Damages Calculation

Facts & Figures:

Contract Sum 108 Cr Exclusive of Tax

Contract Period 12 Months 13 months for 2nd & 3rd
Boiler Erection &
Commission
Contract Date 12.08.2009
Due Date of Project
completion 12.08.2010
Period of delay Till May-2015 57 Months

This % is calculated using

Contract HO Overhead & figures of audited financial
Profit % 9.91% statements of year 2010

1. Hudson Formula:
Contract Profit % x [Contract Sum/ Contract Period] x Period of Delay
= NIL
(This would be applicable only in case of Cost plus contracts type contract where
some % of profit margin has already defined by the contractor in contract itself in
overall execution of the project which is over & above the actual project cost
incurred by the contractor)

2. Emden Formula:
Profit % x [Contract Sum/ Contract Period] x Period of Delay
= 9.91% x [108/12] x 57 Months
= 50.83 Cr ……This is the amount of Damages

3. Eichleay Formula:
Step 1:
Contract Billings Actual / Total Billing for Contract Period x Total OH for Contract
Period

= 91.48 Cr / 16.44 Cr (Billing during Contract Period 12.08.09 to 12.08.10) x 17.19 Cr

= 95.65 Cr ….This is Overhead Allocable to Contract

Step 2:

Allocable OH / Total Days of Contract

= 95.65 Cr / 365 = 0.26 Cr ……This is Daily Overhead Rate

Step 3:

Daily OH Rate x Number of days of delay

= 0.26 Cr x 1710 days = 444.60 Cr ………This is amount of Unabsorbed Overhead