Loss and expense is the money a contractor can claim when the Client, or someone for whom the client is responsible, disrupts the progress of the works and the contractor spends more than it would otherwise have done.
In JCT contracts it covers direct loss and expense caused by specified matters, and it is claimed separately from the time the contractor is given to finish. Time and money are different questions: an Extension of Time (EOT) does not by itself pay for anything.
Worked example
A client's late instruction holds up a fit-out for four weeks. The Main Contractor has an extension of time, but it also carried site costs during the delay. The claim is built from records, not estimates:
| Item | Basis | Amount |
|---|---|---|
| Site staff | 4 weeks at £3,200 | £12,800 |
| Welfare, hoarding and plant hire | 4 weeks at £1,150 | £4,600 |
| Head office overheads | Agreed formula or evidence | £2,300 |
| Finance charges | Interest on the extra cost | £400 |
| Total claimed | £20,100 |
What the contract needs from you
Under JCT, the contractor must apply in writing as soon as it becomes, or should reasonably have become, aware that regular progress is, or is likely to be, materially affected by a relevant matter. It must then give the information the contract asks for so the QS can ascertain the amount. Late or thin applications are the usual reason claims fail.
Under NEC4 there is no separate loss and expense: the same cause is dealt with as a Compensation Event, with the cost assessed together with the time.
Loss and expense in the cost report
Prolongation cost is easy to lose inside the general cost to date. Code delay-related costs to a separate Cost Code from the start, so staff, plant and preliminaries spend during the delay can be separated from normal running costs.
In the CVR, show the claim as a separate line and value it only to the extent it has been agreed or certified. Counting an unagreed claim as income overstates margin and is a common cause of a profit write-down at Final Account.
The same applies to your own subcontractors. If a delay on your site holds up a Subcontractor, their claim against you is a cost, and your recovery from the client is income. Keep the two lines separate so you can see whether you are out of pocket.
Related terms
Extension of Time (EOT), Variation, Preliminary Costs, Final Account, Liquidated Damages.
Planyard's cost value reconciliation keeps delay costs on their own lines against budget, so a loss and expense claim is backed by the commitments and invoices behind it.
