1. What is prolongation cost?
The extra, time-related cost a contractor incurs when a project finishes late because of a delay the employer is responsible for. It is claimed on top of an Extension of Time (EOT) — time alone does not automatically mean money. Read Short #1 first for the entitlement principles.
| Delay type | Example | EOT? | Money? |
|---|---|---|---|
| Excusable & compensable | Late site access, late design info, employer variations | Yes | Yes |
| Excusable, non-compensable | Adverse weather, force majeure (contract dependent) | Yes | No |
| Non-excusable | Late mobilisation, low productivity, rework | No | No |
| Concurrent | Employer and contractor delays overlap | Usually | Depends on contract |
2. What costs can be claimed?
| Category | Typical items | How measured |
|---|---|---|
| Site overheads | Staff, offices, utilities, security, plant, cranes | Actual cost/day × compensable days |
| Head-office overheads | Management, accounts, rent, IT | Hudson, Emden or Eichleay (where allowed) |
| Extended securities | Bond, insurance premiums, guarantee fees | Invoices for the extended period |
| Escalation & finance | Price rises, finance charges | Indices or actuals; interest per contract |
Keep disruption and productivity loss separate — including them here creates double counting.
3. The 5-step calculation process
Link the delay to a specific clause and confirm it is compensable. No entitlement, no claim.
Prove critical delay (e.g. Time Impact Analysis) and fix the compensable period in days.
Build a daily rate from actual records — timesheets, invoices, hire logs.
Apply Hudson, Emden or Eichleay only where contract and law allow, with evidence.
Assemble records, kill double counting, meet notice time bars.
4. Site overheads: the daily rate
The most straightforward element: daily rate from actual records × compensable days. Include supervision staff, offices and welfare, utilities, security, standing plant and cranes, consumables. Use actuals, not tender rates, wherever the contract requires it.
5. Head-office formulas compared
| Formula | Basis | Watch out |
|---|---|---|
| Hudson | Tender HO % | Simple but estimated — courts have criticised tender assumptions |
| Emden | Actual HO ÷ turnover | Widely accepted (UK, Middle East); needs audited accounts |
| Eichleay | Standby + unable to take other work | US federal standard; most jurisdictionally specific |
6. Worked example
| Item | Calculation | Amount |
|---|---|---|
| Site overheads | $3,000 × 60 days | $180,000 |
| Head office (Emden) | 10% × ($10M ÷ 500) × 60 | $120,000 |
| Bonds & insurance | Invoices, extended period | $12,000 |
| Total | 3.12% of contract sum | $312,000 |
7. Evidence checklist
- Programmes & analysis — baseline + updates, TIA or Windows Analysis proving critical-path effect.
- Notices & correspondence — all notices, instructions, minutes recording the delay and impact.
- Cost records — timesheets, payroll, staff schedules, invoices, plant hire logs for the delay period.
- Audited accounts — to substantiate the head-office percentage.
8. Pitfalls that kill claims
- Ignoring concurrent delay — expect apportionment or denial.
- Double counting variation/disruption costs.
- Missing notice time bars — can extinguish a valid claim.
- Using tender rates where actuals are required.
- No mitigation shown; claiming redeployed staff.
Always verify the contract clauses and governing law before submitting. This Short presents general guidance for educational purposes and does not constitute professional advice.