Delay Damages: What Is Extended Field Office Overhead?
Field office overhead is perhaps the most well-known and well-understood type of delay damage. A contractor only incurs extended field office overhead costs when the project is critically delayed and when the project’s duration is extended.
Field office overhead costs consist of indirect costs that are incurred and necessary to support the project work at the field level and that are directly chargeable to the project. Field overhead costs include, but are not limited to:
- Field office rental
- Salaries of field office staff
- Field office staff vehicles
- Field office utilities and telephone
- Field office consumables
Extended field office overhead costs (also called jobsite overhead costs) are, by definition, costs that increase due to a critical delay. For example, if the project is delayed a month, then the contractor would incur additional time-dependent field office overhead costs such as the rental cost of the field office, the salaries of field office staff, and similar time-dependent costs incurred to support the contractor’s operations in the field for the project’s additional month of duration.
The contractor’s entitlement to payment for extended field office overhead costs is based upon the presumption that its original contract price only included field office overhead costs needed to support the project during the original project duration. So, when the project duration is extended, the contractor would incur additional field overhead costs to support the project. If the extended project duration was caused by an excusable and compensable delay, then the contractor may be entitled to recovery of those costs.
Note that the executed change orders need to be evaluated because if the change order work caused critical project delay, then it may address or affect the contractor’s entitlement to recovery of extended field office overhead costs.
For more on this or any other topic, please call me at 215-814-6400 or email me at mark.nagata@traunerconsulting.com.
