The document discusses contractor claims for loss and expense in construction contracts. It addresses two questions: 1) There is no automatic right to recover loss and expense just because an extension of time is granted. Claims for time extensions and loss/expense are evaluated separately. 2) For a loss and expense claim, the contractor must demonstrate how the regular work progress was materially affected based on reasons stated in the contract. The contractor provides initial notice within 28 days and full particulars within another 28 days, otherwise the claim is waived. The document also lists six common reasons for claims, such as late instructions, work postponements, and variations. It describes six typical claim types like standing time for plants/labor

1. PROFESSIONAL
PRACTICE 1
TUTORIAL 7
FARAH SHAM | TAM ZHAO WEI | TAN JIA SAN

2. Contractor’s claims for loss and expense have long been a
contentious issue in many building contracts. These
claims are usually resolved during the final accounting
process but where negotiation fails, they usually become
disputes with the parties adopting legal route to resolve
their differences.
Discuss the matters below based on the PAM Form of
Contract 2006 (With Quantities):

3. Question a
The Contractor is granted an
Extension of Time. Is there an
automatic right to the recovery of loss
and expense?

4. “
NO
■ The claim for Extension of Time falls under Clause
23.0 and is deemed to refer to the relevant events
as stated in Clause 23.8
■ However, the claim for Loss and Expenses falls
under Clause 24.0 and is deemed to refer to the
matters materially affecting the regular progress
of the Works as stated in Clause 24.3

5. Question b
Explain the grounds for Claim of Loss
and Expense and describe how the
Contractor can register their claims.

6. “
Where the regular progress of the Works or any
section of the Works has been or is likely to be
materially affected by any of the matter expressly
referred to in Clause 24.3, and the Contractor has
incurred or is likely to incur loss and/or expense which
could not be reimbursed by a payment made under
any other provision in the Contract, the Contractor
may make a claim for such loss and/or expense.
- Clause 24.1 -

7. “
Matter materially affecting the regular progress of
the Works.
- Clause 24.3 -

8. Clause 24.1 (a)
Contractor Architect
with an initial estimate of his
claim duly supported with all
necessary calculations
Written notice
Within 28 days from the date of
AI, CAI or the start of the
occurrence of the matters
referred to in Clause 24.3

9. Clause 24.1 (b)
Contractor Architect &
Quantity Surveyor
Complete particulars of his
claim of loss and/or expense
together with all necessary
calculations to substantiate
his claims.
* If the contractor fails to submit the required particulars within the
stated time
(or within such longer period as may be agreed in writing by the
Architect), it shall be deemed that the contractor has waived his
rights for loss and/or expense.
Within 28 days after the matters referred to in Clause 24.3 have ended.

10. Question c
Claims are invariably initiated by the Contractor.
Contractual claims, Extra contractual claims and
Exgratia claims are the 3 types of claims in a
contract.
Give SIX (6) main reasons for claims and SIX (6)
common types of claims. How does the Quantity
Surveyor assess such claims?

11. REASONS
F O R
CLAIM

12. When instruction issued by architect or engineer is too
late because contractor already carried out the portion
of work so contractor entitled to claim for the
demolition or modification of work done, as well as the
cost needed for the new instruction.
1. LATE INSTRUCTIONS

13. 2. POSTPONEMENT OF WORKS
When architect instruct that a part of the work is to be
postponed the contractor is entitled to claim additional
cost.
Postponement after the contract date
● Mobilization and demobilization of labour, plants
and tools.
Within the contract date
● Reduced output of work

14. Example :
Different floor finishes in BQ and Architectural Drawings.
3. LATE ISSUE OF MATERIALS

15. 4. FAILURE OF EMPLOYER TO CARRY OUT
WORKS
Example :
Employer did not carry out the works, which affect
Contractor’s work.
- Time implication
- Clause 23 - EOT
- Clause 23.8 -Relevant Events

16. 5. DIVERGENCE BETWEEN CONTRACT DOCUMENTS
Clause 3.1 Contract Documents
When discrepancies arise, the priority in the interpretation of such
documents shall be in the following descending order :
3.1 (a) the Letter of Award
3.1 (b) the Articles of Agreement
3.1 (c) the Conditions of Contract
3.1 (d) the Contract Drawings
3.1 (e) the Contract Bills
3.1 (f) other documents incorporated in the Contract Documents,
unless expressly stated to be excluded in any of the Contract
Document

17. 6. VARIATIONS
Clause 11.7 Additional Expense caused by Variation
Clause 11.7 (a)
Contractor Architect
with an initial estimate of his
claim duly supported with all
necessary calculations
Written notice
Within 28 days from the date of
AI or CAI giving rise to his claim.

18. * If the contractor fails to submit the required particulars within the
stated time
(or within such longer period as may be agreed in writing by the
Architect), it shall be deemed that the contractor has waived his
rights to any such additional expenses.
6. VARIATIONS (cont’d)
Clause 11.7 Additional Expense caused by Variation
Clause 11.7 (b)
Contractor Architect &
Quantity Surveyor
Complete particulars of his
claim for additional expenses
together with all necessary
calculations to substantiate
his claims.

19. COMMON
TYPES OF
CLAIM

20. 1. STANDING TIME OF PLANT & LABOUR
In the case where contractor is ready to start work
and has mobilize the plant and labor to the work
site, and the contractor is not allowed to start work
due to some circumstances.
The contractor in this case are entitled to claim for
the cost of the plant and labor which is idling for the
whole duration.

21. 2. ADDITIONAL CONTRACT OVERHEAD COST
Contractor is instructed to carry out additional
work, normally in form of variation order and the
contract period is extended.
The contractor is entitled to claim for the overhead
cost which is the contract manager, site supervisor,
site quantity surveyor and some preliminaries
items (telephone, electricity bill, rent portable
toilets etc)

22. ● Must be some obstruction
● Cannot carry out the works smoothly
● Time & cost implication
● How to justify it ?
( Photos and Job Measurement)
3. DISRUPTION OF WORK DUE TO VARIATION
Example :
Employer wants to change the door after installed.

23. ● Based on initial plan
● Due to technical issue (not caused by Contractor)
● Must be under Clause 24.3
4. CONDITION DIFFERENT FROM PLANNED

24. 5. CARRYING OUT WORK LATER THAN
ANTICIPATED
A head of claim that is often made by contractors
against employers for prolongation costs.
Example,
The costs sought by a contractor for having to remain on
site longer than its originally anticipated due to the
actions of the employer such as late handover of site
possession.

25. 6. UNECONOMIC WORKING FOR PLANT AND
LABOUR
- Aka Loss of Productivity
This is a head of claim sometimes made where there has
been a delay in completion or disturbance of the
contractor’s regular and economic progress even
though, on occasion, the ultimate delay in completion is
small or does not occur.

26. HOW DOES QUANTITY
SURVEYOR ASSESS
SUCH CLAIMS?

27. Based on contractor’s disrupted output
- The qs have to look at the delay or disruption that took place.
- For example; due to late instruction by the architect the work is
delayed for a week. So the qs have to evaluate the idling of labours and
machineries.
Based on contract overheads
- When the contractor is granted an extension of time, they can claim for
the additional costs for the overheads.
- Example of overhead costs are; the staffs in charge of the project ie
project manager, site supervisor, qs, office rentals, telephone bills,
electricity bills.
- The claim is evaluated based on the salaries of the staff, for the
duration of the extension of time and also the cost incurred for the
office rental and associated bills.
Based on formula : - Hudson’s Formula.
Head Office % Contract Sum
Period of Delay
100 Contract Period
x x

28. THANK YOU!