My job overran and I can't split the loss into heads of claim
The costs are real and nobody has separated them into heads the main contractor, or an adjudicator, will recognise.
Updated: . By Jack Butler-Kettle, Construction Claims Consultant.
What's happening?
A job overrun can hold many different costs. There may be prolonged site costs, disruption, financing, unvalued measured work, tender pricing assumptions and supply-chain effects. One total does not show what each sum is for, which period it covers or what proves it. A head of claim is one of those separate parts, with its own basis and evidence.
Sort each cost by the basis it is claimed on, its period and its source. Keep your own-risk, unsupported and unallocated items visible. Check for overlap between time-related costs, disruption, head office overhead and the other heads. Your subcontract's terms, and any specialist input on time, may change the answer.
A single total gives your main contractor nothing to agree and everything to challenge. Good structure shows the evidence and the decisions still needed. A label on its own does not prove you are owed the money.
The solution
Treat the overrun as your starting point, not the value of the claim. Separate out your own causes, tender errors, measured work never valued and loss you can support. Sort each cost by its basis, period and evidence. For every significant item, record the source, the calculation and the next evidence needed.
A heads of claim schedule makes the gaps visible. Delay & Disruption Claim builds the heads from sorted records if you want it done for you. You decide which heads to pursue. The schedule keeps wrong labels, overlap and own-risk items apart from the loss you can recover.
Example
Illustrative example. The scenario and figures are invented.
The facts
A subcontractor's accounts show a £410,000 overrun on a finished package, and the board wants it claimed. Before any head goes forward, a heads of claim schedule is used to sort every cost by its basis, period and evidence.
What happens
- Prolonged preliminaries, the extra site running costs, come to £130,000 from payroll and hire records. The period is awaited from a programming expert.
- Disruption is £95,000. The allocation sheets cover only some of the affected trades, so it is marked conditional.
- Head office overhead of £40,000 and financing of £15,000 are formula figures with no accounts behind them. Both are marked conditional.
- The sorting takes out what was never loss. £60,000 is measured work never valued, 17 instructions that belong in the final account.
- £35,000 is a tender shortfall on the roofing rate and is the subcontractor's own risk. Another £35,000 sits in ledger codes with no link to the job at all.
- One overlap is caught. The supervisor's cost appears in both the preliminaries and the disruption, so it is taken out of the disruption.
- Each remaining head goes on the schedule with its period, resources, allocation sheets and hire invoices. A credit is given for the weeks the plant was used on variations.
- Each item carries its source, its calculation and the next evidence needed.
The overrun sorted
| Item | Amount | Status |
|---|---|---|
| Prolonged preliminaries | £130,000 | Supported, period awaited |
| Disruption | £95,000 | Conditional |
| Head office overhead | £40,000 | Conditional, formula figure |
| Financing | £15,000 | Conditional, formula figure |
| Measured work never valued | £60,000 | To the account |
| Tender shortfall and unallocated cost | £70,000 | Own risk, not a head |
The outcome
The board pursues the preliminaries now and puts the £60,000 into the final account. It holds the disruption until the allocation sheets are complete. The £70,000 of own-risk and unallocated cost stays visible, and is not dressed up as a head.