Extended Field Overhead (sometimes called site overhead) is one of the most well-known and well-understood types of delay damages and only results from a critical project delay, or when the project’s duration is extended.
Field overhead costs consist of indirect costs that are necessary to support the work in the field and that are directly chargeable to the project. Field overhead costs include, but are not limited to:
- Field office rental,
- Salaries of field office staff,
- Field office staff vehicles,
- Field office utilities and telephone, and
- Field office consumables.
Extended field overhead costs (also called field office or jobsite overhead costs) are, by definition, costs that increase due a critical and compensable delay. For example, if the project is delayed a month by a compensable delay, then the contractor would be entitled to recover the time-dependent field overhead costs such as the rental cost of the field office, the salaries of field office staff, and similar time-dependent costs incurred to support the contractor’s operations in the field for the project’s additional month of duration.
The contractor’s entitlement to payment for extended field overhead costs is based upon the presumption that its original contract price only included field office overhead costs needed to support the project during the original project duration. So, when the project duration is extended, the contractor would incur additional field overhead costs to support the project and, if the extended project duration was caused by a compensable delay, then the contractor may be entitled recovery of those costs.
Note that the executed change orders need to be evaluated, because if the change order work caused critical project delay, then they may address or affect the contractor’s entitlement to recovery of extended field overhead costs.