Guidelines for Recovering Home Office Overhead Costs with Emphasis on the Eichleay Formula

摘要

Home office overhead (HOOH) is the cost associated with higher-level management and other related resources needed to indirectly support a construction project. It is often not tracked in direct relationship to a particular project because that type of support is needed to support more than one individual project. Over the past several decades, numerous disputes have led to court trials where the Eichleay formula was applied as the method for calculating unabsorbed HOOH resulting from project delays. Eichleay has been a point of controversy ever since its inception in 1970, so much so that not all courts have accepted the formula and some have created their own. Court cases have a definite theme attributable to when one may apply and what needs to be proven to recover using this formula. This paper develops and discusses those criteria so that parties involved can better influence the outcome of such a dispute. It is based on a case review of court and board decisions rendered over the past 50 years. In addition, general guidelines for measuring and collecting unabsorbed HOOH outside that of Eichleay are presented as developed by analysis of cases reaching back as far as 1873.