BESA guide to loss and expense

Published: January 0001

Pages: 3

BESA Product Code: LC 32

Essentially, loss and expense can be defined as additional costs sustained by a contractor as a result of disruption to the regular progress of the works caused by matters either within the employer’s control or by breaches of contract by the employer. For instance, when the works are delayed the contractor may be allowed an extension of time, which may result in additional costs as it will most likely have to maintain its site facilities for longer than anticipated. In the JCT suite of contracts this is known as “loss and/or expense” whereas NEC3 users will be familiar with the term “compensation events”, which deal with both extensions of time and costs consequences.
It is necessary to differentiate between a claim for ‘loss and expense’ and a claim for ‘additional money’ included as part of an application to be remunerated for additional labor. The latter would be categorised as a variation claim and would classify within a different provision of the building contract. Nevertheless, the valuation of a variation can often include certain loss and expense items, particularly where a contractor is asked to submit a quotation for additional work ‘in advance’. The valuation rules should specify which items could be included in the valuation of variations.