Contractor Recovers Delay & Disruption Damages, Including Extended Home Office Overhead, Against State

Kegler Brown Construction Newsletter

In another victory for our firm against the State, the Court of Appeals on May 9th affirmed Judge Crawford’s well-reasoned decision from the Court of Claims in all respects. Wood Electric, Inc. v. OFCC, Case No. 16AP-643.

In this case, the electrical contractor was delayed and disrupted by the failure of the general contractor to achieve promised schedule milestones. Timely notice of potential impacts was given to the State, but a precise amount of damages could not be provided as the recovery schedule and resulting acceleration or delay was not yet known. The electrical contractor later supplemented his claim to a higher amount once the full extent of his damages could be ascertained. Included in those damages were loss of labor efficiency damages and extended home office overhead calculated under ODOT’s HOOP method.

The Court of Appeals ruled that ODOT’s HOOP formula is an acceptable methodology for calculating extended home office overhead damages and that a project suspension/contractor “standby” is not required under that formula.

The Court of Appeals also ruled that a contractor could supplement his claim later after damages are known to a figure higher than in his original certified claim. The Court of Appeals found that the State’s “interpretation of the contract [that a claimant could not modify the claim to a higher amount once known] would create a manifest absurdity for a claimant.”

Finally, the Court of Appeals affirmed the “measured mile” labor inefficiency analysis of Tim Calvey, noting that it is the “industry-preferred method of calculating damages under such circumstances.”