Construction Litigation
Construction Analysis
The formula allocates home office overhead to the contract, computes a daily rate, and multiplies by compensable delay days. Recovery requires government-caused delay, uncertain suspension duration, and inability to take on replacement work.
It applies principally in federal contracting.
Alternative Names:
Eichleay|Home Office Overhead Formula
Why it Matters?
The inability to take replacement work element defeats most claims, since a contractor that bid and won other projects during the delay period cannot show its overhead went unabsorbed. Standby status must be genuine, meaning the contractor was required to remain ready to resume on short notice. State courts vary in accepting the formula, with some rejecting it entirely in favor of actual damages proof.
Frequently Confused with
Related terms
Frequently asked questions
Which element defeats most Eichleay claims?
Is the formula accepted in state courts?
