What is Loss and Expense Under JCT?
“Loss and expense” is a term used under JCT contracts to refer to additional costs incurred by Contractor following the Employer related reasons and have caused delays or disruptions to the project. These additional costs could include delay related costs, increased labour or material costs, extended site overheads, and other related expenses. In this article, we will also explain the roadmap for claiming Loss and Expense Under JCT.
WHAT ARE THE REASONS for Loss and Expense
As mentioned in the definition, Loss and Expense is a term which refers to loss occurred due to the failure of the Employer. In the JCT contracts, these reasons are listed under Relevant Events & Relevant Matters section. These two terms are both referring to the Employer related failures.
What is the Difference between Relevant Event and Relevant Matter?
Both of these terms refer to the Employer’s failure which incurs loss by the Contractor. However, what sets them apart? There is a simple answer for that. When the Employer’s failure leads to a loss of time for the Contractor, it’s termed a “Relevant Event.” On the other hand, if the Employer’s failure materially affects the progress of the works, it’s termed a “Relevant Matter.”
In our article, What is Relevant Events under JCT?, we had explained the relevant events in detail. But just to remember, these were the common relevant events which may cause the Contractor time loss and may entitle an extension of time.
Relevant Event Examples
- Variations
- Instructions
- Deferment of possession of the site
- Suspension
- Works by statutory undertakers
- Exceptionally adverse weather
- Civil commotion
- Terrorism and strikes
- ‘any impediment, prevention, or default … by the employer’
Relevant Matters Examples
- Variations
- Instructions
- Discrepancies in the design
- Discrepancies in the contract documents.
- Disruption caused by works being carried out by the Employer
HOW CAN CONTRACTORS CLAIM Loss and Expense?
A Contractor can follow the below simplified roadmap when they claim loss and expense. But it is always crucial to review the contract’s clauses and specific terms.
NOTIFY the Client:
The Contractor’s first duty is informing the Client about any Loss & Expense. This notification should take place when the Loss & Expense becomes evident to the Contractor or when it is reasonably apparent.
Assess the Loss & Expense:
The Contractor needs to provide details and an initial evaluation along with the notification or shortly after it.
Provide Regular Progress:
The Contractor should continue to update the assessment and information on a monthly basis until all the necessary information required to determine the total Loss & Expense has been provided.
Client’s Responsibility:
The Employer should inform the Contractor of their determination of the incurred Loss & Expense within 14 days of each update.
Incorporate Amount into Applications:
The Contractor should include the determined Loss & Expense amount in the applications.
Resolution of Disagreements:
If there’s a disagreement regarding the amount, the established contractual mechanisms for resolving disputes should be applied.
CONCLUSION
In closing, a comprehensive understanding of claiming Loss and Expense within JCT contracts has been gained. The distinction between “relevant matter” and “relevant event” has been clarified, outlining how contractors become eligible for compensation.
This knowledge simplifies the process of claiming Loss and Expense, underscoring the importance of meticulous record-keeping, prompt notification, and adherence to procedural guidelines.
By following these steps, contractors can confidently pursue due compensation, ensuring the fair resolution of unforeseen disruptions and added costs.
DO YOU NEED PROFESSIONAL ADVISE?
As Liongate, our experts can support you for your claims under JCT contracts. We help our clients for delay assessments and documentations. Contact us for further information and free consultation.