Arbitration: The International Journal of Arbitration, Mediation and Dispute Management
Volume 88, Issue 2 (2022) pp. 286 – 309

https://doi.org/10.54648/amdm2022022

Abstract

Often applied by claiming parties, standard formulae are an easy tool to devise a value for the ‘Unabsorbed Head Office Overhead and Profit’ in a claim for compensation of damages caused by delays and/or by additional works. However, their use may lead to unproportioned results, disconnected from the reality of the contract, as well as lacking contractual and/or legal grounds. Whilst these formulae are cited in the ‘SCL Protocol for Delay and Disruption’ and other literature, giving the impression of entitlement, their hackneyed application regularly overlooks the pertinent caveats from such documents, but also the deficiencies inherent to an unreflective utilization. A deeper look into the facts of the project and the available evidence should take precedence to determine the best approach to quantify the losses related to overhead and profit.

Extract

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