Most in the construction industry treat the eichleay formula as an.
Extended home office overhead. The eichleay formula is one of the most used calculations when computing home office extended overhead costs or damages in construction delay claims construction delay claims about extended overhead are among the most complicated claims and almost always require the services of an expert to both determine damages and how those costs can be recovered. Field overhead costs consist of indirect costs that are necessary to support the work in the field and that are directly chargeable to the project. 16167 72 2 bca 9689. Unabsorbed home office overhead based on current court rulings at the federal level there is now a clear distinction between extended and unabsorbed hooh as follows.
55197 55248 october 4 2007. Total overhead for performance period overhead allocable. Kemmons wilson inc asbca no. For a discussion on the eichleay formula and the recovery of unabsorbed home office overhead see our earlier article.
Under this theory a contractor may recover all or some portion. Abstract since 1960 the eichleay formula has been used to price extended and or unabsorbed home office overhead. Fru con construction corporation asbca no. Job site overhead a well recognized method of proving extended job site overhead is to derive a daily rate by dividing the total job site overhead costs by the total number of days of performance and then multiplying the daily rate by the number of days of delay.
Extended home office overhead is calculated as a fixed percentage markup of costs incurred during the contract time extension. Practical problems with pricing delay using eichleay1 james g. Shirley contracting corp asbca no. Schrader extended home office overhead claims seek recovery for unabsorbed or underabsorbed overhead that occurs when a contractor s direct labor is less than planned during a particular period so that overhead costs are not absorbed by the anticipated amount of work.
Halligan phd p e 3 navigant consulting inc. Extended hooh stands for the proposition that for every day of owner caused delay the owner owes the contractor hooh based on a rate derived from one of the. Unabsorbed home office overhead is also a well known but not well understood delay damage and like extended field overhead is only caused by a critical project delay. Recovering extended home office overhead.
Home office overhead costs are costs that are incurred to support the work but are not directly chargeable to a specific project. Jones is a senior associate at smith currie hancock llp in atlanta georgia. His practice focuses on commercial litigation with an emphasis on construction and government contract law. What is the state of eichleay.