Application of Proportion Method to the Calculation of Overhead Associated with Owner-caused Delay

During the completion of public construction projects, deadlines are often delayed due to unfavorable weather, design changes, delayed site delivery by the owner, or other unpredictable circumstances. Contractors can declare delays that are not attributable to themselves as owner-caused delays, for which they can demand compensation for the additional costs they incur. However, current construction contracts often lack specifications regarding compensable items and reasonable overhead associated with owner-caused delay. Vague clauses in this aspect are often the cause of construction disputes [1]. This study focused on current issues related to overhead compensation associated with owner-caused delay. We calculated the amount of compensation in an empirical case study using the proportion method and the expenditure method, respectively, to identify the superior model. The expenditure method requires transaction records, and although it is currently the most common approach to resolving disputes, verifying transaction records is difficult. In comparison, the proportion method is simpler and follows accepted practices in the construction industry. In our case study, the expenditure method was more time-consuming compared to the proportion method, and the resulting compensation amounts differed only minutely (0.035 %). Therefore, the proportion method is considered a preferable approach. The structured calculation model proposed in this study follows current practices and can be used as a reference for future contracts.