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(CDR-2769) Daily Effect in Extension of Time Claims

The economic impact of extension of time (“EOT”) claims is usually focused, among others, in the economic impact of each day of extension. That is what is called the “daily effect” in a clear reference to the impact each day of extension has on a project’s economic results.

The aim of this paper is to describe a recommended method which could be profitable to determine which costs could be included in this “daily effect”, as well as a proper way these costs could be proved and quantified in a none controversial way.

This methodology is based on the personal experience of the authors in claims quantification, in addition of success cases on international arbitration and legal processes worldwide.

This paper proposes inclusion of the “daily effect” for fixed EPC project costs proportional to time and not proportional to production. Further, it tackles cases where each type of cost should or should not be included in the “daily effect”. Finally, a technical description of a validation method for proper documentation used in cost calculations depicted to minimize controversy during dispute resolution. The methodology also tackles potential risks of double counting.