Calculating the Cost of a Change

Changes on construction costs are inevitable. That means that often-difficult negotiations of the appropriate price for the change are also inevitable. The objective of this OnDemand Webinar is to help systematically strip away the mystery, the magic, the misconceptions, and the uncertainty surrounding the pricing of changes. Contractors will learn what they must include to be made whole. Owner’s will learn both what they should pay and what they shouldn’t pay. CMs, attorneys, and the consultants and accountants that advise them will learn what is needed to accurately and persuasively price a change. We will focus on the hard topics – the legitimate damages associated with delay, the real costs of inefficiency, the balancing concerns when pricing acceleration. This OnDemand Webinar will also touch on the sometimes controversial areas of unabsorbed home office overhead, interest, and consequential damages.


Learning Objectives:
•You will be able to define methods of calculations.
•You will be able to recognize delay costs.
•You will be able to discuss acceleration costs.
•You will be able to review mitigation of delays and damages.

Authors

Agenda

Methods of Calculations

Direct Labor, Material, and Equipment Costs and Mark Ups

Delay Costs

• Labor, Including Labor Cost Escalation
• Equipment, Including Owned and Idle Equipment
• Material, Including Material Cost Escalation
• Field Overhead Costs
• Taking the Mystery out of Home Office Overhead Costs

- Eichleay Formula, Strengths and Weaknesses

- Canadian Method, an Approach to Use When the Project Is Not Finished

Acceleration Costs

• Labor
• Equipment
• Material
• Overhead

Inefficiency Costs

Other Costs

• Interest
• Consulting and Legal Fees
• Bond
• Consequential Damages

Mitigation Of Delays And Damages

Additional Formats