Robust and compliant prolongation assessment

We were instructed by a major national and international law firm acting for a main contractor in an adjudication against the employer. A dispute had been referred to adjudication regarding the valuation of an application for payment under a JCT contract. We were asked to provide an expert opinion on the valuation of loss and expense because the employer had submitted an expert report with its response, and we subsequently provided a further report to be included in the surrejoinder.

Our valuation approach

The loss and/or expense valuation was split into four headings: suspension and remobilisation costs; main contractor prolongation costs; subcontractor prolongation costs; and main contractor staff thickening.

The main contractor prolongation costs represented around 70% of the loss and/or expense valuation and was a challenging valuation to make because of the numerous competing approaches, none of which was technically correct. The main contractor, contract administrator and employer’s expert multiplied contract rates by their own EoT assessment (each being different).

The employer raised complaints in the response about the use of contract rates where actual losses and/or expenditure should be used. We considered these complaints were valid and raised concerns about the valuation reflecting the costs of the extended period rather than the loss and/or expense at the time the delay occurred.

We reviewed the delay report to establish the relevant delay period and obtained the main contractor’s costs incurred in that duration. Using that information, we established the time-related costs that were caused by the delay event and made a solid loss and/or expense valuation that was compliant with the main contract and industry guidance https://www.rics.org/profession-standards/rics-standards-and-guidance/sector-standards/construction-standards/black-book/ascertaining-loss-and-expense.

Whilst that was submitted as our primary valuation, for completeness, we also made a valuation using the contract rates and the staff allocations for the period of delay. The valuations were within 5-10% of each other so this would not have a significant impact on the outcome, however it was necessary because both parties were using contract rates in their valuations so the adjudicator may have determined that these were agreed rates.

We concluded our assessment by making a valuation of the other loss and/or expense elements using information we requested from the main contractor which agreed with the main contractor’s valuation in some, but not all, areas.

The outcome

From a standing start, and in a very limited reply period, we managed to make a solid and accurate valuation of loss and/or expense that stood up to scrutiny. We were clear about the weaknesses in the valuation and gave independent opinion on the correct valuation approach. We quickly identified and communicated the documents required which we included with our report to assist the responding party and the adjudicator.