The meaning of prolongation is the ‘extension of the duration of something’. In the construction contract, when the original duration of the contract elapses, the project is said to be in a ‘prolonged period’.
    Delays are common in the construction industry as the construction projects are complex and involve various variables and stakeholders. The assessment of the prolongation costs becomes crucial in construction claims when delays in the overall project result substantial extension of the project duration. The additional expenses due to the delays by project prolongation are referred to as “prolongation costs” and precise estimation of these costs is necessary for both efficient project management and fair dispute resolution.
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    These expenses represent the actual costs incurred as a result of an extended stay at the site. The following steps are followed to assess such prolonged on-site expenses:

    Identify actual costs: Gather all actual costs incurred during the project by reviewing sources such as the project cost ledger, invoices, bank statements, timesheets, and ERP systems.

    Categorize costs: Classify the costs based on the standard or existing accounting practices typically followed in construction projects.

    Segregate costs: From the categorized costs, distinguish between direct and indirect costs (time-related and non-time-related). Further, exclude all direct costs from this analysis.

    Calculate time-related indirect costs: Identify time-related indirect costs over the entire project period and compute the per-day time-related costs for each month or defined delay window period.

    Determine extended stay costs: Multiply the calculated per-day time-related indirect costs by the number of delay days for each delay window to determine the extended on-site expenses.

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    What is meant by 'prolongation' in construction contracts?

    Prolongation refers to the extension of the project duration beyond the originally agreed timeline, typically due to delays. When this happens, the project is in a “prolonged period,” and associated additional costs are known as prolongation costs.

    What are prolongation costs?

    Prolongation costs are additional expenses incurred by a contractor due to delays that extend the project duration. These can include site overheads, head office overheads, insurance extensions, loss of profit, and financing charges.

    What are the types of delays in construction projects?
    • Excusable Delays: Beyond the contractor’s control and may entitle them to time and cost relief.
    • Non-Excusable Delays: Caused by the contractor and do not entitle any relief.
    • Concurrent Delays: Simultaneous delays caused by both the employer and contractor.
    How are on-site expenses due to prolongation assessed?

    Assessment includes:

    • Identifying actual costs from ledgers and records.
    • Categorizing and segregating time-related indirect costs.
    • Calculating per-day time-related costs and multiplying by delay days.
    How are head office overheads (un-absorbed overheads) calculated?

    They are typically assessed using formulas like Hudson, Emden, or Eichleay, as recommended by the SCL Protocol 2017.

    Can contractors claim loss of profits due to prolongation?

    Yes. If the delay ties up contractor resources and prevents them from pursuing other work, they may claim for the loss of opportunity to make profits. The claim is calculated based on expected daily profits and the number of days the project was extended.

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