The Eichleay Formula Calculator is use primarily in construction and project management to determine the amount of damages a contractor can claim due to delays caused by reasons beyond their control. This formula helps calculate the contractor’s entitlement to recover overhead costs during periods of delay on a project. It is commonly applied in cases where a project faces unexpect delays that extend beyond the contractor’s control. Such as changes in regulations, client delays, or unforeseen environmental factors.
By using this calculator, businesses can determine the financial impact of delays and ensure they are compensated for their ongoing overhead expenses during the period of delay. The Eichleay formula is an important tool for accurately assessing damages, especially in long-term contracts where fixed overhead costs play a major role in maintaining profitability.
Formula of Eichleay Formula Calculator
Damages = (Total Overhead Costs × (Number of Days of Delay / Total Contract Duration))
Where:
- Total Overhead Costs is the total indirect costs of the project (typically fixed costs like administration, project management, office rent, etc.)
- Number of Days of Delay is the total duration the project is delayed (due to reasons not caused by the contractor)
- Total Contract Duration is the total agreed-upon length of the project (in days)
This formula provides a simple way to calculate the amount of overhead costs that can be recover due to delays in a project.
Common Overhead Costs Breakdown
To make it easier for users, the following table shows some typical categories of overhead costs, helping you understand how these figures apply when using the Eichleay formula.
| Overhead Cost Category | Example Costs |
|---|---|
| Administrative Expenses | Salaries, office supplies, equipment |
| Project Management Costs | Project manager’s salary, staff costs |
| Office Rent | Rent payments for office space |
| Utilities | Electricity, water, internet |
| Insurance | Project liability insurance |
| Legal and Compliance Fees | Legal services, licenses |
This table helps clarify what kinds of expenses are include as "overhead costs" and how they contribute to calculating damages.
Example of Eichleay Formula Calculator
Let’s assume the following for a construction project:
- Total Overhead Costs = $100,000
- Number of Days of Delay = 30 days
- Total Contract Duration = 360 days
Using the formula:
Damages = (100,000 × (30 / 360))
Damages = (100,000 × 0.0833) = $8,333.33
In this case, the contractor would be entitle to claim $8,333.33 as damages for overhead costs due to the 30-day delay in the project.
Most Common FAQs
The Eichleay formula is use to calculate the amount of overhead costs that can be claim by a contractor when a project faces delays that are not their fault. This helps contractors recover costs that continue to accrue during the period of delay.
Total Overhead Costs include all the indirect costs associated with running the project that are not tie directly to the project work itself. These can include administrative costs, project management costs, office rent, utilities, insurance, and other fixed costs that are incur regardless of the progress of the project.
The Eichleay formula is most commonly apply to construction and long-term projects with significant overhead costs. However, it can be adapt to other industries that face delays due to reasons beyond the contractor’s control. It’s important to check with legal or financial experts to determine if it is applicable to your specific situation.