Head office overhead calculator. Hudson, Emden and Eichleay, side by side.

A head office overhead claim answers a narrow question. It measures the contribution to the cost of running the company that your resources failed to earn elsewhere while a delayed project held them. The three formulas in this calculator are three ways of estimating that contribution when it cannot be traced invoice by invoice.

The Hudson formula takes the head office overhead and profit percentage priced in your tender, applies it to the contract sum, spreads the result across the original contract period to give a daily figure, and multiplies that figure by the days of compensable delay. It is quick, and it uses a figure already sitting in your tender. That is also its weakness. The SCL Delay and Disruption Protocol does not support Hudson, because the answer depends on how well the tender was priced and because the contract sum already contains overhead and profit, so the calculation double counts.

The Emden formula keeps the same arithmetic but swaps the tender percentage for the company's actual head office overhead and profit as a share of total turnover, taken from its accounts. Enter the totals and the calculator derives the percentage for you. The Protocol rejects Hudson as dependent on the adequacy of the tender and prefers Emden, whose percentage comes from the accounts rather than a pricing decision.

The Eichleay formula comes from United States federal contract practice and works in three steps. It allocates the company's total head office overhead for the actual contract period to the project in proportion to the project's share of total billings. It divides that allocation by the days of actual performance to give a daily rate, and multiplies the daily rate by the days of compensable delay. It recovers overhead only, never profit. In US federal practice it applies only where a government-caused delay of uncertain duration left the contractor on standby and unable to take on other work.

Not a rounding difference. A difference in what each formula assumes. Hudson inherits whatever margin the estimator chose at tender. Emden reflects the whole company's cost structure in the accounting period you select. Eichleay leaves profit out and spreads its allocation across every day the project actually ran, including the delay itself, which pulls the daily rate down on a project that overran. Where variations make up more than about 10 percent of the final contract value, the Protocol says the Eichleay input needs adjusting, because variations carry their own contribution to overhead and profit. The calculator flags it when contract billings exceed the original contract sum by more than 10 percent of the final value, a proxy for variations. Check the actual variation value before relying on the flag.

The Protocol also suggests cross-checking one formula against another, because a single unusual input can produce an anomalous answer. A wide spread is not something to hide. It shows you which assumption the other side will test first.

A formula quantifies a loss. It does not prove one. In Walter Lilly & Company Ltd v Mackay [2012] EWHC 1773 (TCC) the court accepted that a formula such as Emden or Hudson is a legitimate way to calculate lost head office overhead and profit, but only once the contractor shows, on the balance of probabilities, that without the delay it would have secured other work producing that return. The contractor in that case succeeded on evidence: directors who reviewed tender opportunities and staff availability every week, a detailed schedule of the opportunities it declined, and a tender success rate it could demonstrate. The court allowed the Emden figure only after giving credit for the overhead and profit already recovered on the works against the tender allowance, so the formula result should be net of overhead and profit already recovered through the contract and its variations.

The Protocol takes the same line. The contractor must show it was unable to take on other available work because of the employer's delay, and formulas are to be used with caution, only where the loss cannot be quantified from records. Tribunals usually require proof that the overhead was actually lost, which means proof that the delay stopped the company taking on other work, and they prefer actual cost evidence wherever it exists. A claim can be valid and unrecoverable. For a contractor, that makes the overhead claim a records exercise that starts long before the claim is drafted: tender registers, minutes recording work turned down for lack of staff, and timesheets showing who was tied up on the delayed site.

Use the calculator to see the range before you commit to a method, then choose the formula your evidence can actually support. The reasoning behind that choice is set out in how to calculate prolongation costs with Hudson, Emden and the actual cost approach. Head office overhead is only one head of loss. Site based time-related costs are usually easier to prove, as which preliminaries and time-related overheads you can recover explains, and whether the delay is compensable at all is the first question, covered in what a prolongation claim is and what actually qualifies.

In CALIM's experience across dozens of engagements, the problem is rarely the formula. It is the missing proof that other work was lost. CALIM's delay analysis consultants fix the compensable period first, then build the evidence file that lets an overhead claim survive scrutiny.

The formula prices the delay. The evidence gets it paid.