Every QS who has worked on a delayed JCT job has heard the same line from a site team: “We got the extension of time, so we’ll get paid for it.” It isn’t that simple. An extension of time and a direct loss and expense claim are two separate entitlements, triggered by two separate lists of events, governed by two separate notice regimes. A contractor can win every day of an EOT and still recover nothing for the cost of being on site longer – and since 2024, the courts have given employers a sharper tool for making that happen.
Two clauses, two questions
An extension of time claim answers a question about time: should the Completion Date move, so the contractor isn’t liable for liquidated damages for that period? Under JCT it turns on Relevant Events (clause 2.26 in the Design and Build Contract; the Standard Building Contract has an equivalent list). A loss and expense claim answers a question about money: has the contractor incurred direct loss and/or expense, not recoverable elsewhere in the contract, because regular progress was materially affected by a Relevant Matter?
The two lists overlap but are not the same. Relevant Matters are essentially employer-risk events – variations, instructions on provisional sums and postponement, late information, employer’s persons impeding the works, and so on. Relevant Events include those, but also neutral events such as exceptionally adverse weather, specified perils and strikes. Those neutral events give the contractor time and relief from damages but no money: the risk is shared, not shifted. In the 2024 editions, JCT added epidemics and changes in law or statutory guidance after the base date as new Relevant Events – but they only become Relevant Matters, and so only carry money, if the parties select that option in the Contract Particulars.
There is also an important wording difference. An EOT depends on delay to completion. Loss and expense depends on regular progress being materially affected. That means a contractor can recover disruption costs – lost productivity, resequencing, extra supervision – for an event that never moved the Completion Date at all.
The JCT 2024 mechanism
Using the Design and Build Contract 2024 numbering (the Standard Building Contract carries the same provisions under different clause numbers), the structure is:
- Clause 4.19 – entitlement. The contractor is entitled to direct loss and/or expense caused by a Relevant Matter materially affecting regular progress, “subject to” compliance with clause 4.20.
- Clause 4.20 – notification and ascertainment. The contractor must notify the employer as soon as the likely effect on progress becomes (or should have become) reasonably apparent; give an initial assessment of the loss and expense with supporting information, either with the notice or as soon as reasonably practicable afterwards; and update it monthly. The employer then has 28 days from the initial assessment, and 14 days from each update, to notify its ascertainment.
- Clause 4.21 – the list of Relevant Matters that can found a claim.
- Adding ascertained amounts to the Contract Sum, so they flow through interim payments rather than waiting for the final account.
That monthly cycle is the bit most contractors ignore and most employers’ QSs fail to enforce. It was introduced in 2016 precisely to stop loss and expense being saved up into one enormous claim at the end. A claim that arrives fully formed eighteen months after the event is, by definition, a claim where the notice and update requirements weren’t followed.
Is notice a condition precedent? Scotland says yes
JCT 2011 and earlier editions used the words “provided always that” the contractor gave notice, and were generally read as a condition precedent. The 2016 rewrite swapped this for “subject to… compliance with”, and for years commentators argued about whether the change had softened the time bar.
FES Ltd v HFD Construction Group Ltd settled the point, at least north of the border. The commercial judge in the Outer House ([2024] CSOH 20) held that under a 2016 JCT Standard Building Contract for use in Scotland, no entitlement to loss and expense arose unless the notification provisions were complied with. The Inner House upheld that on appeal ([2024] CSIH 37): the words “subject to” were clear, there was no need for the clause to say “condition precedent” expressly, and JCT’s own guidance couldn’t override plain wording. The English forms, including JCT 2024, use the same phrasing. The decision isn’t binding in England and Wales, but it is persuasive, and no contractor should assume an English court will go the other way.
Contrast that with extensions of time. JCT’s EOT notice provisions are not generally treated as a condition precedent, so a late-notifying contractor will often still get its time. The practical result is the scenario at the top of this article: time granted, money lost.
What counts as “direct” loss and expense
“Direct” broadly means loss that flows naturally from the event, in the sense of the first limb of Hadley v Baxendale, and the courts have treated loss and expense as equivalent to damages for breach. In F.G. Minter Ltd v Welsh Health Technical Services Organisation (1980), the Court of Appeal accepted that finance charges could form part of direct loss and expense. Typical heads in a well-built claim are:
- Time-related preliminaries – site staff, accommodation, plant, welfare and scaffold for the period of prolongation, priced from actual cost records, not the tender preliminaries.
- Head office overheads and lost profit – often calculated by formula; you can test the numbers with our Hudson formula calculator or Emden formula calculator, but formulae only work where the contractor can show it genuinely lost the opportunity to earn that contribution elsewhere.
- Disruption and loss of productivity – best proved by a measured-mile comparison between impacted and unimpacted periods of the same work.
- Finance charges on money tied up because of the event.
- Inflation on labour and materials pushed into a later, more expensive period.
Claim preparation costs are usually not recoverable as loss and expense, and costs already paid through the valuation of a variation can’t be recovered twice – clause 4.19 only covers loss not reimbursed under another provision. Where a variation’s valuation already includes an allowance for its effect on other work, check it before agreeing a separate disruption head.
Cause and effect: proving the link
Because the contractor needs a Relevant Matter that materially affected progress and a loss that flows from it, the evidence has to link each event to each cost. Delay should be demonstrated with a recognised method of delay analysis, and periods of concurrent delay need to be dealt with honestly: an EOT for concurrent delay is common under English law, but money for the same period usually isn’t, because the contractor would have incurred those costs anyway.
A “global” claim – total cost incurred minus tender value, attributed to a basket of events – isn’t automatically doomed. In Walter Lilly & Co Ltd v Mackay [2012] EWHC 1773 (TCC), the court accepted that a global claim can succeed, but the contractor still has to prove, on the balance of probabilities, that the loss was caused by the events relied on and would not have been incurred anyway. Contractor-risk factors in the pot, such as a mispriced tender or a poorly performing subcontractor, will at best reduce the recovery and, if significant, can sink the claim entirely.
A QS checklist
- Contractor’s QS: issue the notice when the effect on progress becomes reasonably apparent, not when the cost is known. Follow it with an initial assessment and monthly updates, even if the numbers are provisional.
- Contractor’s QS: keep a separate cost code for each event from day one. Records made at the time beat reconstructed ones every time.
- Employer’s QS: ascertain within the 28 and 14-day windows. Silence doesn’t help either party, and an unanswered assessment invites a dispute.
- Both: check the Contract Particulars for whether the epidemic and change-in-law options were selected as Relevant Matters, and whether bespoke amendments have tightened the notice regime further.
- Both: keep EOT and loss and expense in separate files. A good time case is necessary for most prolongation claims, but it is never sufficient on its own.
Loss and expense is where a contractor’s margin is often won or lost on a delayed project, and the notice regime is now the first battleground. Get the paperwork in early, link every cost to a cause, and the claim can be agreed in the monthly cycle – well before it becomes the biggest line in the final account, or the subject of an adjudication.