## Facts

- A county redevelopment and housing authority (the Authority) awarded a public construction contract to Worcester Brothers Company, Inc. for site renovations at Washington Plaza in Reston, Virginia.
- Bid documents projected a July 1995 start with substantial completion within 150 days; the award was not made until September 14, 1995, moving completion to mid-February 1996.
- When work began, the Authority had not secured required clearances from an adjoining property owner for part of the site.
- The necessary clearances were not obtained until March 6, 1996, delaying work Worcester Brothers could perform as scheduled.
- Worcester Brothers asserted 98 days of owner-caused delay and claimed it had to maintain a site presence and keep resources available, placing its forces on “standby.”
- Worcester Brothers sought delay damages for (a) additional field office expenses supported by proof of actual costs and (b) unabsorbed home office overhead calculated using the Eichleay formula.
- The Authority disputed liability for unabsorbed home office overhead, arguing Worcester Brothers failed to show its workforce was actually idle and that overhead was not traceable to the delay.
- The trial court found a “manifest and inexcusable” owner-caused delay, found standby, and awarded both field office expenses and unabsorbed home office overhead computed by the Eichleay method.

## Issues

1. Whether the contractor presented sufficient proof, with reasonable certainty, that it incurred unabsorbed home office overhead caused by the public owner’s unreasonable delay.
2. Whether the Eichleay formula was a sufficiently reliable method to prove the amount of unabsorbed home office overhead under the circumstances.

## Decision

- The Supreme Court of Virginia affirmed the judgment for Worcester Brothers.
- The court held the evidence supported the findings of owner-caused unreasonable delay and standby conditions.
- The court held Worcester Brothers proved the existence of unabsorbed home office overhead during the delay period.
- The court held the Eichleay formula, supported by company financial records, provided adequate proof of the amount of unabsorbed home office overhead.

## Legal Principles

- Home office overhead consists of general business expenses incurred for the contractor’s enterprise as a whole (e.g., executive and administrative costs) that continue during performance disruptions.
- A contractor may recover unabsorbed home office overhead as delay damages when the owner causes an unreasonable delay and the contractor is effectively held on standby so resources cannot be efficiently reassigned.
- Contract damages must be proven with reasonable certainty, not mathematical precision.
- Where project-specific home office overhead is not directly accounted for, a recognized allocation method such as the Eichleay formula may be used to estimate unabsorbed home office overhead if supported by underlying financial data and delay/standby proof.
- Appellate review defers to supported factual findings on causation and standby, and such findings can sustain an overhead award.

## Conclusion

The court upheld delay damages for unabsorbed home office overhead on a public project because the owner’s failure to obtain required site clearances caused an unreasonable delay that placed the contractor on standby, and the contractor supported its Eichleay-based overhead calculation with company financial records sufficient to meet the reasonable-certainty standard.


Fairfax Cnty. Redev. & Hous. Auth. v. Worcester Bros. Co., 257 Va. 382 (1999)