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FAQs

The following FAQs have been addressed below:

- Can a formula be used to calculate loss of overheads and profit?

- Do contractors have to prove actual loss of overheads and profit?
- What are the problems with claiming for disruption?
- What happens if contractors fail to give proper notices?
- Can I apply for loss and expense due to COVID-19?

Can a formula be used to calculate loss of overheads and profit?

Once the contractor has passed the hurdle of proving that there has in fact been an actual loss
there is precedent to support the use of formulae to calculate the extent of loss suffered.

Do contractors have to prove actual loss of overheads and profit?

Yes. Contractors who are claiming for loss of overheads and profit have to prove that there
has been an actual loss as a direct result of the relevant matter.

What are the problems with claiming for disruption?

Proving loss of productivity arising as a direct result of a relevant matter is notoriously difficult.
Rarely are there reliable and complete records of productivity levels before and after the
relevant matter and rarely does the relevant matter arise in isolation of other confounding
influences.

What happens if contractors fail to give proper notices?

Many standard forms of contract require the contractor to give notice of events that might give
rise to a claim for loss and expense. Only if the contract makes it clear that the provision of
such notices is a condition precedent to the recovery of loss and expense will the failure to
provide such notices act to preclude such a claim.

In other cases the failure to provide such notices may be a breach of contract for which the
client may be able to recover damages if it is possible to demonstrate an actual loss resulting

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from the breach.

Can I apply for loss and expense due to COVID-19?

While construction sites were not formally shut under COVID-19 restrictions, many contractors
have found that government guidance and other restrictions have impacted on the cost of the
delivery of their works.

The general industry approach to COVID-19 related losses has been to use force majeure
clauses. Each contract may have a differently worded clause for these ?acts of God? (or not
have one at all). The potential recovery of loss and expense is, therefore, very much
established on a case-by-case basis.

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