Practical Problems Pricing Delay Using Eichleay

Instructor: Jim Zack
Product ID: 704590
  • Duration: 90 Min
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This training program will deal directly with the issues and problems with using the Eichleay Formula. The presentation will offer multiple alternatives concerning the pricing of home office overhead which owners may employ in their contract documents. The session will provide attendees with a better understanding of the Eichleay Formula including its weaknesses and flaws from the perspectives of the accountant/auditor, the contractor and the owner.

Why Should You Attend:

Since 1960 the Eichleay Formula has been used to price extended and/or unabsorbed home office overhead. Most in the construction industry treat the Eichleay Formula as an accounting mechanism – seldom understanding that the Armed Services Board of Contract Appeals created this formula as an estimating tool, not an accounting method. There are some practical problems with the Eichleay Formula. From the accounting perspective there are several major flaws built into the formula. From the project owner’s perspective, there is a risk of overcompensation unless certain contractual defenses are employed. And, from the contractor’s perspective, there are issues with the applicability and the use of the formula.

This webinar training will examine the traditional Eichleay Formula from all three viewpoints to identify the problems and offer some recommendations on how to alleviate them. The session will offer attendees 19 different alternatives to the Eichleay Formula which may be employed through incorporation in the contract documents prior to bidding.

Areas Covered in the Webinar:

  • The elements of home office overhead (HOOH)
  • How HOOH is typically recovered
  • What is the Eichleay Formula?
  • How the Eichleay Formula operates
  • History of the formula
  • Potential problems with using the Eichleay Formula to price delay from the viewpoint of the accountant/auditor, the owner and the contractor
  • Potential remedies including some ways to prohibit recovery
    • Ways to change the rules concerning HOOH recovery
    • Creation of a mid-course HOOH recovery method
    • Bid daily delay cost

Who Will Benefit:

  • Project owners about to embark on a new project
  • Legal counsel for owners looking for alternatives to the Eichleay Formula
  • Design professionals involved in preparation of bidding documents
  • Construction managers involved in the preparation and administration of contract documents

Instructor Profile:

James G. Zack, Jr., CCM, CFCC, FAACE, FFA, FRICS, PMP, is executive director of Navigant Construction Forum™. He was formerly executive director of Corporate Claims Management, Fluor Corporation; vice president, PinnacleOne; and senior construction claims consultant, CH2M HILL, Inc.

For more than 40 years Mr. Zack has worked on both private and public projects. In the construction claims arena, he is a recognized and published expert in mitigation, analysis and resolution or defense of construction claims and disputes. He has worked on claims and disputes throughout the United States and has presented and worked on claims in Canada, Egypt, The People’s Republic of China, Germany, Kazakhstan, Saudi Arabia, The Russian Federation, Chile, Peru, Guatemala, Mexico, Venezuela, Jamaica, Kuwait, South Africa, The United Kingdom, The Netherlands, Slovenia, Poland, Australia, The Philippines, India, and Trinidad & Tobago.

Mr. Zack has been involved in thousands of claims throughout his career and has been designated as an expert witness in mediation, arbitration and litigation. He is a Fellow of the Association for the Advancement of Cost Engineering, International (FAACE), the Royal Institution of Chartered Surveyors (FRICS) and a Fellow of Forensic Analysis (FFA) from the International Guild of Project Controls. He is also a member of the Construction Management Association of America (CMAA) and the Project Management Institute (PMI). He is a Certified Construction Manager (CCM); a Certified Forensic Claims Consultant (CFCC); and a Project Management Professional (PMP). Mr. Zack is a former President of the Association for the Advancement of Cost Engineering, International (AACE). He is a nationally known author, speaker and trainer concerning the management, mitigation and resolution of construction claims and disputes.

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