Section 12.24 Proving the Fact of Damage: Extended and Unabsorbed Home Office Overhead

• Library: Construction Law 2016 Supp

a. (§12.24) Proving the Fact of Damage: Extended and Unabsorbed Home Office Overhead

If commencement of another project is postponed because of compensable delay on the project in question, it is commonly said that the general overhead chargeable to the extended performance period was “unabsorbed” because it generated no additional revenues. Because overhead is usually allocated to concurrent projects based on relative billings, if performance time on one of the projects is extended, with no corresponding increase in billings, the general overhead attributed to the delayed project does not generate corresponding billings and is thus considered “unabsorbed.”

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