IS TEXAS AN “EICHLEAY” STATE? Extended Home Office Overhead Claims

Abstract

This paper examines Texas and federal cases involving “extended home office overhead” claims arising from owner-caused delays. In such situations, the contractor seeks to recover home office overhead damages arising from the fact that the owner-caused delay resulted in home office overhead being “extended” past the original completion date or, alternatively “unabsorbed” because of the decrease in the overhead allocation base (usually contract billings) during the delay period. The case law in the federal arena is very well developed and contains numerous decisions applying the so-called “Eichleay” formula to calculate extended (or unabsorbed) home office overhead recoveries. The Texas case law, however, is sparse and seemingly inconsistent with the federal treatment of both the concept behind the Eichleay formula and the prerequisites for its use.

• Introduction
• The “Eichleay” Formula
• Federal Cases
• Texas Cases
• Conclusion

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