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.

Learning Objectives:-

• 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.

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.

Who Should Attend?

• Contractors & subcontractors
• Owners
• Design professionals providing services during construction.
• Construction managers
• Attorneys