The utilization of formulae in overhead and profit claims

Head office overheads are recognized as a justifiable head of claim in claims for loss and expense. However a major difficulty arises in their calculation. For tendering purposes head office overheads are frequently expressed as a factor of company turnover. The majority of claims in which head office overheads appear as a head of claim use a formula for their calculation in which overheads are related in some way to turnover. The main aim of this paper is to investigate the hypothesis that the decisions taken in numerous common law cases would appear to favour the use of a formula method in the recovery of additional general overheads and profit in claims for loss and expense. The text supports the hypothesis.