1. A familiar scenario
"Let's get an extension of time and then we can recover all our time-related costs. We can adopt our tender rates for preliminaries items and multiply the rates by the period of over-run."
If this sounds familiar, alarm bells should be ringing. Despite a wealth of available guidance, prolongation cost claims are all too often calculated on this flawed basis — and frequently rejected as a result.
2. What is a prolongation cost claim?
A prolongation cost claim is the contractual mechanism for recovering additional time-related costs properly incurred due to compensable delays to completion. Each case turns on its own facts, evidence, complexity and circumstances — assessed under the contract and governing law. The burden of proof rests with the claimant: he who asserts must prove.
3. Three questions before you claim
What method? Tender rates are usually too simplistic — base the claim on actual cost and loss incurred.
What do the contract rules say? Check for prescribed valuation rules, or whether this is a damages claim for actual loss and expense.
4. Three types of delay
| Type | EOT? | Money? |
|---|---|---|
| Compensable — employer-caused (e.g. late access, late approvals) | Yes | Yes |
| Excusable — e.g. force majeure | Yes (relief from LAD) | Not necessarily |
| Disruption — productivity loss on non-critical work | No | No (separate claim) |
5. When is delay compensable?
The delay must be compensable, affect the critical path, and delay completion. Typical compensable events: employer instructions and variations, denied access, late design approvals, late employer documentation or free-issue plant, and acts of prevention or breach affecting regular progress.
6. What gets rejected
- Contractor culpable delays — caused by the contractor's own actions.
- Concurrent delays — culpable delay overlapping compensable delay.
- Neutral events — force majeure or contractor-risk events where each party bears its own costs.
7. The valuation rule: actual cost, not tender rates
Compensation for prolongation should not be paid for anything other than work actually done, time actually taken up, or loss and expense actually suffered — based on the actual additional cost incurred.
— Society of Construction Law, Delay and Disruption Protocol
Claims built solely on the over-run period between original and actual completion are incorrect — they do not represent actual loss suffered when the project was delayed.
8. When did the delay actually occur?
Identify the root cause, when it occurred, and its effect. Example: a project due 1 August finishes 29 August (4 weeks late) because of a critical delay in March — quantify the loss suffered in March, not the costs sitting in the August over-run.
9. Concurrent delay — the key issue
Two or more delay events in the same period, each independently affecting completion. The rule:
- Culpable delay longer than compensable delay → no entitlement to prolongation costs.
- Compensable delay longer → recovery for the non-concurrent period only.
A contractor cannot be reimbursed for losses it caused itself during concurrent delay.
10. Worked example: entitlement summary (calendar days)
| Period | Critical delay | Float | Culpable | Concurrent | EOT | L&E |
|---|---|---|---|---|---|---|
| Period 1 | 10 | 10 | 0 | 0 | 0 | 0 |
| Period 2 | 10 | 0 | 10 | 0 | 0 | 0 |
| Period 3 | 42 | 0 | 12 | 12 | 42 | 30 |
| Period 4 | 32 | 0 | 0 | 0 | 32 | 32 |
| Total | 94 | 10 | 22 | 12 | 74 | 62 |
11. How to value: the 4-step method
- Identify the cost pool — analyse accounts, cost reports, payroll, invoices.
- Strip out direct costs — remove fixed, volume-related and one-off costs (e.g. mobilisation).
- Identify indirect time-related costs — including unabsorbed head-office costs linked to duration.
- Apply adjustments — abate costs already recovered in dayworks or variations (no double dipping).
No profit mark-up: profit is not a "cost" of delay — recovery of cost-only vs cost-plus-profit depends on the contract. Demonstrate mitigation (off-hiring plant, redeploying resources). Evidence is everything — records, records, records.
12. Worked example: the calculation
| Period | L&E days | Total actual cost | Avg / day | Recovery |
|---|---|---|---|---|
| Period 1 | 0 | £20,150 | £1,439.29 | — |
| Period 2 | 0 | £30,225 | £1,439.29 | — |
| Period 3 | 30 | £72,250 | £1,720.24 | £51,607.20 |
| Period 4 | 32 | £96,175 | £1,373.93 | £43,965.76 |
| Sub-total (62 days) | £95,572.86 | |||
| Abatement (dayworks/variations) | −£24,580.00 | |||
| Grand total | £70,992.86 |
Despite a 74-day EOT, prolongation costs recover only 62 days — time does not automatically equal money.
13. Key takeaways
- Compensable delay only — must affect the critical path and completion.
- Actual cost, not tender rates — evidence from records, not preliminaries BQ.
- Timing matters — quantify when the delay occurred, not the over-run tail.
- Concurrency reduces entitlement — overlapping culpable delay cuts or kills recovery.
Each case turns on its own facts. Demonstrate cause, effect and entitlement with robust evidence — he who asserts must prove. This Short presents general guidance for educational purposes and does not constitute professional advice.