There are so many different elements to a construction claim. Rarely is it as straightforward as it might initially seem. There are so many variables, and especially at the moment we are seeing very complicated situations given reductive, blanket solutions that sound good on the surface but need much more nuanced and bespoke understanding before raising a claims notice.

To help you better understand, we wanted to share a little information with you on some of the different details that appear in claims. We have previously discussed topics including global and total cost claims, the amount of time a claim can take to resolve, the impact of construction delays, understanding what you might actually be owed in a claim, and of course, the flavour of the month, force majeure. So this week we’re focusing on resource thickening.

As dry as it sounds, understanding such nuances will help you to see where and how a claim may actually be relevant to you. It will also support you in feeling confident in understanding the work of a claims consultant, and trusting the need for their experience in order to resolve claims successfully and, hopefully, amicably.

So what is resource thickening?

It’s not just a question of costs incurred. Thickening is the additional overhead resources which may be required as a result of a compensable delay event. It can be either, or both, on and off-site, and it’s differentiated from unabsorbed head office overheads. You need to be able to demonstrate that the additional resources would not have been required separate to the claim event.

Example:

Fluor Ltd v Shanghai Zhenhua Heavy Industry Co. Ltd. [2018]

In a case where there were six accountants managing the business originally, when Event No. 1 occurred the head accountant spent half his time dealing with it while the other five accountants picked up the regular work.

When Event No. 2 occurred, the head accountant spent all his time dealing with the issues of the delayed project again, and another accountant was engaged to work on the normal business of the company.

“In spite of the fact that Mr Bean-Counter was not involved with the problems caused by the breaches, it seems to me that the cost of employing him would have been a direct consequence of those breaches and would therefore be recoverable as damages… It represents a ‘thickening’ of the head office costs.”

Mr Justice Edwards-Stuart

At Tungsten Capital we always pride ourselves on honest advice and consultancy when recommending whether or not to pursue a claim. If you would like to discuss a dispute and see where you stand or how to resolve it, contact us any time.