Loss and expense claims: how to recover construction project costs

Your construction project has been disrupted. Costs are mounting. Someone else caused the delay, but you’re paying for it. Under JCT contracts, you can recover these loss and expense costs, but only if you know how to claim them properly. The process is technical, the deadlines are strict, and mistakes can cost you thousands. Whether you’re a contractor facing unexpected site conditions or dealing with late instructions, construction and building disputes over financial recovery require specialist legal support.

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What is loss and expense under JCT contracts?

Loss and expense is your contractual right to recover additional costs when your construction work is disrupted by matters beyond your control, as defined in JCT contracts:

• Contractual compensation: Loss and expense represents direct financial losses incurred when the regular progress of works is materially affected; you’re claiming what you’re owed under the contract, not pursuing damages for breach.
• JCT standard provisions: Loss and expense JCT clauses appear across Design and Build, Standard Building Contract, and Intermediate forms, establishing your entitlement to financial recovery.
• Direct losses only: The loss and expense definition covers actual costs directly caused by specified disruptions; not speculative losses, not consequences of your own defaults.

When can you claim loss and expense? Relevant matters explained

Your right to claim loss and expense depends on proving that relevant matters have disrupted your work; not just any delay or inconvenience triggers compensation:

• Relevant matters defined: These are specific contractual events caused by the employer or contract administrator that materially affect the regular progress of works; relevant events and relevant matters often overlap but serve different purposes.
• Late instructions or information: When the architect or contract administrator fails to provide necessary instructions, drawings, or details on time, causing your team to wait or work inefficiently.
• Variations and changes: Employer-instructed variations that disrupt your planned work sequence, require remobilisation, or force you to execute work out of sequence.
• Postponement of work: Instructions to delay or suspend any part of the works create immediate construction loss and expense entitlements.
• Failure to give access: When the employer doesn’t provide site access as stipulated in the contract documents, preventing you from maintaining progress.
• Late supply of materials: If the employer is responsible for supplying materials, goods, or work and delays their provision beyond agreed dates.

Loss and expense claims vs Extension of time: Why you need both

Loss and expense claims and extension of time applications are separate contractual remedies; pursuing one without the other can leave you either out of pocket or liable for liquidated damages:

• Different contractual mechanisms: Extension of time protects you from liquidated damages by extending the completion date, while loss and expense claim provisions compensate you financially for additional costs incurred.
• Overlapping but distinct triggers: Relevant events entitle you to time extensions, whereas relevant matters trigger financial recovery; some circumstances qualify as both, giving you dual entitlements under JCT extension of time loss and expense provisions.
• Time alone doesn’t pay bills: Gaining extra weeks to complete means nothing if you’re bleeding money on extended site overheads, prolonged supervision costs, and idle plant; construction loss and expense claims recover these expenses.
• Money without time creates liability: Recovering costs but failing to secure a time extension leaves you contractually late, exposing you to liquidated damages that could exceed your recovered loss and expense.

How to submit your loss and expense claim

Submitting a loss and expense claim requires precise adherence to contractual procedures; missing steps or deadlines can invalidate even the most legitimate claim:

• Immediate written notice: As soon as you become aware that regular progress is being materially affected by a relevant matter, notify the contract administrator in writing; oral warnings or informal emails don’t satisfy contractual requirements.
• State your intention to claim: Your notice must explicitly state that you’ve incurred or are likely to incur loss and expense as a result; vague references to delays or disruptions aren’t sufficient for a valid loss and expense claim JCT application.
• Identify the relevant matter: Specify which contractual relevant matter has caused the disruption; generic complaints about delays won’t trigger the contract administrator’s duty to ascertain your losses.
• Provide supporting information: Submit details the contract administrator reasonably requires to ascertain your claim. This includes cost breakdowns, programme analysis, labour records, and plant hire invoices.
• Quantify your losses: Present a detailed loss and expense claim construction calculation showing each cost element; prolongation costs, additional supervision, extended preliminaries, and other direct financial consequences.

Real loss and expense claim examples: What actually gets recovered

Loss and expense claim example scenarios demonstrate what contractors can realistically recover when relevant matters disrupt their projects:

• Prolongation costs: In Walter Lilly & Co Ltd v Mackay [2012], the contractor successfully recovered extended preliminaries after employer-caused design delays.
• Labour inefficiency: London Borough of Merton v Leach (1985) confirmed that disruption and inefficient sequencing caused by the employer can justify recovery of additional labour time and reduced productivity.
• Plant standing time: In Amey Birmingham Highways Ltd v Birmingham City Council [2018], the court recognised entitlement to wasted or idle plant costs arising from employer-related interruptions.
• Head office overheads: JDM Accord Ltd v Secretary of State for Defence [2021] reaffirmed contractors’ entitlement to recover head office overheads caused by employer-driven delay, using recognised formulae such as Hudson or Emden.
• Increased material costs: In Henry Boot Construction Ltd v Alstom Combined Cycles Ltd [2005], the contractor recovered increased material costs resulting from instructed variations valued at current market rates.

Building your case: Essential evidence and documentation

Your loss and expense claim succeeds or fails based on the quality and completeness of your supporting evidence; assertions without documentation are worthless in construction and building disputes:

• Contemporaneous site records: Daily site diaries, progress photographs, labour allocation sheets, and plant records created at the time events occurred provide irrefutable evidence of disruption and its impact on your works.
• Programme and delay analysis: Baseline programmes, regular updates showing actual progress, and critical path analysis demonstrating how relevant matters affected completion dates establish the disruption period during which costs accumulated.
• Cost records and invoices: Payroll records, plant hire invoices, subcontractor accounts, material purchase orders, and site overhead expenses with clear date stamps prove the actual costs you incurred during disruption periods.
• Expert reports: Quantity surveyor analyses, delay expert assessments, and programming specialist reports provide professional validation of your construction loss and expense claim calculations and causation arguments.

FAQs

• How do I assess a loss and expense claim? Identify the relevant matter, calculate direct costs incurred (prolongation, labour inefficiency, plant standing time), gather contemporaneous evidence (invoices, site records, programme analysis), and demonstrate clear causation between disruption and losses.
• What is a loss and expense claim in construction? A loss and expense claim in construction is your contractual right to recover additional costs when the employer or contract administrator causes disruptions that materially affect the regular progress of your works.
• Where does depreciation expense appear on a profit and loss statement? Depreciation expense profit and loss statement entries appear in operating expenses, reducing gross profit to calculate net profit; this reflects the declining value of fixed assets over time.
• What is loss and loss adjustment expense? Loss and loss adjustment expense is insurance terminology for claim payouts plus investigation costs; distinct from construction loss and expense, which relates to contractual cost recovery for project disruptions.

Loss and expense claims protect contractors from bearing costs they shouldn’t pay. Success requires prompt notification, detailed evidence, and precise adherence to JCT contractual procedures. When relevant matters disrupt your project, act promptly; delays in claiming mean money left on the table.

Don’t lose money you’re entitled to recover!

Qredible’s network of specialist construction solicitors ensures your loss and expense claims are submitted correctly, supported with robust evidence, and pursued to maximum recovery.

KEY TAKEAWAYS:

• Loss and expense is your contractual right to recover additional costs when relevant matters like late instructions, variations, or postponement disrupt your construction works under JCT contracts.
• These financial claims are separate from extension of time applications; you need both to protect yourself from costs and liquidated damages when disruptions occur.
• Successful claims require immediate written notice, detailed cost quantification, and comprehensive contemporaneous evidence including site records, invoices, and programme analysis.