What is the difference between a loss and expense claim and a variation order?

A variation order covers changes to the scope of works - additional or changed items instructed by the client. A loss and expense claim covers the cost consequences of delay or disruption caused by matters within the employer's control, such as late design information or access restrictions. Both can arise from the same event: a late instruction may generate a variation order for the changed work and a loss and expense claim for the delay it caused.

What happens if I miss the contractual notice deadline for a loss and expense claim?

Under most standard-form contracts, failure to give timely notice can reduce or extinguish your entitlement to claim, even if the loss was genuine. Under NEC4, a compensation event not notified within the required period is generally lost. JCT contracts are slightly more flexible, but contemporaneous notice is still strongly preferable. Always log notice obligations in your job management system the same day you identify a claim event.

Can a loss and expense claim be made for disruption as well as delay?

Yes. Disruption claims - where work is made less efficient by the employer's actions without necessarily extending the overall programme - are a recognized head of claim under JCT and NEC. They are often harder to quantify than straight delay claims because they require evidence of the actual productivity impact, which is why contemporaneous records are so important.

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Workflow Scenario

Construction - Managing a Loss and Expense Claim

Document every delay. Claim every pound.

Step by step

Confirm entitlementJobs

Check the contract to confirm the event falls within the matters entitling the contractor to claim loss and expense. Review the JCT relevant matters list or NEC4 compensation event schedule.

Give written noticeeForms

Issue written notice to the contract administrator as soon as the impact on progress or cost becomes apparent. Record the notice date in the job file immediately.

Build contemporaneous delay recordeForms App

Maintain a daily or weekly record of how the event affects programme and costs: idle labour, uninstallable materials, standing plant, and any mitigation taken. Photographs and signed instructions are supporting evidence.

Quantify the claimJobs

Set out the direct costs line by line - extended preliminaries, disrupted labour, additional materials and plant, finance charges - with supporting invoices and timesheets for each category.

Submit formal claimJobs

Submit a detailed claim to the contract administrator including a factual narrative, contractual basis, programme analysis, and fully itemized cost build-up. Submit in stages for long-running claims.

Respond to partial certificationJobs

Review any rejection reasons and respond with additional evidence or a revised calculation. Escalate to adjudication if the claim cannot be resolved through negotiation.

Incorporate into final accountInvoices

Include the agreed settlement as a named line item in the final account. Raise the corresponding invoice before project closeout.

What this workflow solves

We do the additional work caused by client delays but never formally claim it - the costs just get absorbed and the job margin disappears.

By the time we try to put together a loss and expense claim, we can't reconstruct what actually happened and when - the records weren't kept.

The contract administrator disputes the claim because we didn't give proper notice at the time. We didn't know notice was a contractual requirement.

Frequently asked questions

Modules used

Jobs eForms eForms App Invoices Purchase Orders

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