The Eichleay Formula - Is Standby the Standard?

摘要

The Eichleay formula is probably one of the most often used formulas to calculate damages in a construction delay claim. The Eichleay formula (from a case dating back to the early 1960's [3]) computes a daily rate of home office overhead which is applied to the number of calendar days of compensable delay. The formula provides a means to recover home office overhead costs due to delays. The underlying data for the formula is derived from a contractor's corporate financial statements. In spite of its widespread use (and sometimes mis-use), the Eichleay formula is still one of the most controversial aspects of damages associated with a construction dispute involving delay. It is also probably one of the most misunderstood areas of damages evaluation in delay situations. Through the last 20 years there have been several landmark cases, mostly in the US federal jurisdiction, which have established that certain conditions be met before the Eichleay formula is accepted. Most prominent of these conditions is that the project must be in a "stand-by" mode, (i.e., the performance period of the project is suspended rather than simply stretched out because of a variety of causes.) This paper will provide a brief history of the Eichleay formula and describe the recent rulings by the courts that establish conditions which must be met before acceptance of the formula as an element of damages. The paper will examine and discuss how standby situations affect a contractor on a project and whether, if there is no standby encountered on a project that is delayed, the use of the formula to compute claims for home office overhead is compromised or rejected. The information in this paper is provided for information purposes only and is not intended as legal advice. For specific applications or discussion regarding the use of the Eichleay formula, one should seek the advice of counsel.