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Calculating Home Office Overhead – Problems When Using the Eichleay Formula
- Typical cost 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.
Overview of the webinar
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 examines the traditional Eichleay Formula from all three viewpoints to identify the problems and offers some recommendations on how to alleviate them.
Who should attend?
- Contractors & subcontractors
- Owners
- Design professionals providing services during construction.
- Construction managers
- Attorneys
Why should you attend?
- The webinar provides 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.
- The webinar also offers attendees some different alternatives to the Eichleay Formula that may be employed through incorporation in the contract documents prior to bidding.
Faculty - Mr.James G. Zack
Jim is the Senior Advisor, Ankura Construction Forum™. The Forum strives to be the construction industry’s resource for thought leadership and best practices on avoidance and resolution of construction project disputes globally. Jim was eh founder and Executive Director of the Navigant Construction Forum™. Formerly he was the Executive Director, Corporate Claims Management Group, Fluor Corporation, one of the world’s largest EPCM contractors. Mr. Zack was previously Vice President of PinnacleOne and the Executive Director of the PinnacleOne Institute and a Senior Construction Claims Consultant for CH2M HILL, Inc. Mr. Zack has, for 47 years, worked on both private and public projects throughout the U.S. and in 28 countries abroad. Mr. Zack is a Fellow of AACE International, the Royal Institution of Chartered Surveyors, and the Guild of Project Controls. In the construction claims field, he is a recognized and published expert in mitigation, analysis and resolution or defense of construction claims and disputes. Mr. Zack is a Certified Construction Manager (CCM), a Certified Forensic Claims Consultant (CFCC) and a Project Management Professional (PMP). Mr. Zack is an internationally recognized author and speaker in the construction claims and disputes arena.