Eichleay Formula Calculator
When an owner or government delay leaves a contractor on standby, the project stops billing but the home office does not stop spending. Rent, executive salaries, insurance and accounting keep running, and the delayed contract is no longer absorbing its share of them. The Eichleay formula is the case-law method for pricing that unabsorbed home office overhead: it allocates overhead to the contract by billings, converts it to a daily rate, and multiplies by the days of compensable delay.
This calculator runs all three steps and then sizes the result, showing the claim as a share of contract value with the documentation strategy that size of claim calls for. It does the arithmetic only. Whether a delay is legally compensable is an entitlement question the numbers cannot answer, and the sections below are explicit about where the formula stops and the legal test begins.
Quick Answer
For a $1,000,000 contract inside $5,000,000 of total billings, with $750,000 of home office overhead, 365 performance days and a 60-day compensable delay, the Eichleay formula gives $150,000 of allocable overhead, a daily rate of $410.96, and total delay damages of $24,657.53. That is 2.5% of contract value, which this tool bands as a moderate claim. The figure prices the delay; it does not by itself establish that the delay is legally recoverable.
Key takeaways
- The formula has exactly three steps: allocate overhead by the billings ratio, divide by days of contract performance, multiply by days of delay. Any version that divides by 30 days is not Eichleay.
- All five inputs must cover the same period. Billings, overhead and performance days pulled from different periods produce a precise-looking number with no defensible meaning.
- Entitlement comes first and is a legal question: owner-caused delay of uncertain duration, standby, and an inability to absorb overhead with replacement work. The calculator assumes those tests; it cannot pass them for you.
- Profit is never part of the output. Eichleay prices home office overhead only.
- Quick Answer
- How to use the Eichleay calculator
- The three Eichleay steps, exactly as coded
- Worked example: a 60-day delay on a $1M contract
- Entitlement is a legal question this calculator does not decide
- What counts as home office overhead
- Claim size bands: what the analysis panel is telling you
- Alternatives and close relatives
- What competing calculators miss
- Frequently asked questions
How to use the Eichleay calculator
Pull all five inputs from the same contract period, then click Calculate. Results stay hidden until you do, and the analysis panel appears with the numbers.
- Contract billings: what the delayed contract billed during the period, from your billing records for that contract.
- Total company billings: billings across every contract in the same period. The ratio of the two is the contract’s share of the business that was carrying the home office.
- Total home office overhead: the full indirect cost pool for the period. Build it from the general ledger, and check it against how your firm normally spreads indirect costs; the same thinking behind a burden rate calculator applies when you decide which costs sit in the pool.
- Contract performance days: the days of performance the overhead covers. This is the divisor for the daily rate, taken from the actual contract period.
- Days of delay: the compensable delay days only. If part of the overrun was concurrent or contractor-caused, those days do not belong here, and a schedule analysis, often tracked alongside an earned value analysis, is what separates them.
The three Eichleay steps, exactly as coded
The formula comes from the Armed Services Board of Contract Appeals decision in the Eichleay Corporation appeal, and the Federal Circuit later described it as the exclusive method for unabsorbed home office overhead on federal work. The Cohen Seglias government contracting summary of the Eichleay formula states the steps in the same form this calculator implements them, and the case-law summary of the Eichleay decision traces how the Board approved the allocation as a realistic way to spread continuing home office expenses over a suspension.
Step 2: Daily contract overhead = Allocable overhead ÷ Contract performance days
Step 3: Delay damages = Daily contract overhead × Days of delay
Step 1 says a contract that produced 20% of the period’s billings was carrying 20% of the home office. Step 2 spreads that share evenly across the performance period, which is the formula’s central simplification: overhead is treated as absorbed at a constant daily rate. Step 3 then prices the delay as if the contract had kept absorbing overhead at that rate for each delay day. Because the daily rate is an average, the method is an allocation, not a measurement of what any single delay day actually cost, and both sides in a dispute know it.
Worked example: a 60-day delay on a $1M contract
A contractor bills $1,000,000 on the delayed contract out of $5,000,000 in total company billings. Home office overhead for the period is $750,000, the contract ran 365 performance days, and the compensable delay is 60 days. These are the values pre-filled in the calculator, and every figure below is the tool’s own output for them.
| Output | Value | Reading |
|---|---|---|
| Allocable contract overhead | $150,000.00 | 20.0% of overhead follows the contract’s billings share |
| Daily contract overhead | $410.96 | The rate at which the contract absorbed overhead per day |
| Total delay damages | $24,657.53 | 2.5% of contract value: a moderate claim in this tool’s bands |
| Overhead share of billings | 15.0% | $750,000 of overhead against $5,000,000 of billings |
| Delay impact | 16.4% | 60 delay days against 365 performance days |
How the three headline percentages relate in this example:
The same three steps at other scales, all verified against the calculator:
| Scenario | Allocable | Daily rate | Damages | Band |
|---|---|---|---|---|
| $2M contract, $20M billings, $1M overhead, 400 days, 50 delay days | $100,000 | $250.00 | $12,500 | Minimal, 0.63% of contract |
| $1M contract, $5M billings, $750K overhead, 365 days, 60 delay days | $150,000 | $410.96 | $24,657.53 | Moderate, 2.5% of contract |
| $1M contract, $2M billings, $900K overhead, 200 days, 100 delay days | $450,000 | $2,250.00 | $225,000 | Substantial, 22.5% of contract |
Entitlement is a legal question this calculator does not decide
A correct Eichleay number is recoverable only if the legal tests behind it are met, and no calculator can test them. Say this plainly before using the output anywhere: the tool prices a delay you tell it was compensable. It does not decide that it was.
The case law, summarised in the VERTEX overview of the Eichleay formula and delay claims and in the Construction Management Association of America paper on practical problems with using Eichleay to price delay, expects a claimant to show that the owner or government caused the delay, that the suspension was of uncertain duration, that the contractor was on standby and had to be ready to resume on short notice, and that the standby prevented it from taking replacement work that would have absorbed the overhead anyway. Fail any one of those and the formula output is a number without a claim behind it.
Contract machinery matters as much as the tests. On federal construction work the FAR 52.242-14 Suspension of Work clause is the usual route to an adjustment for an unreasonable suspension, and it excludes profit and sets notice and claim deadlines that can forfeit recovery if they are missed. The practical sequence in the guide to FAR stop-work orders, claims and deadlines is worth following from the first day of a suspension: written notice, segregated cost codes, and a schedule analysis tying the stoppage to the completion date. Keep billings records, overhead ledgers and daily reports for the whole period, because the formula is only ever as strong as the records fed into it.
What counts as home office overhead
Home office overhead is the indirect cost of running the company that no single project owns: the costs that continued while the delayed contract was not billing. Field overhead, the cost of the site trailer, supervision and temporary facilities, is a different bucket with different proof, and mixing the two is a common way to get a claim cut down.
- Administrative costs: salaries and benefits for executives, estimators, accounting and support staff.
- Facility expenses: head office rent, utilities, maintenance and insurance.
- Professional services: legal, accounting and consulting fees that support the whole business.
- Business operations: communications, software licences, office supplies, bonding and general insurance.
Two discipline points decide whether the pool survives scrutiny. First, some costs are unallowable on federal work under the FAR cost principles, so the pool used in a federal claim is not automatically the pool in your management accounts. Second, the pool must be consistent with how the business actually allocates overhead the rest of the time; an allocation invented for the claim invites the response that it proves nothing. Tracking how the pool moves period to period, the job of a controllable overhead variance calculator, gives you the contemporaneous record that consistency is judged against.
Claim size bands: what the analysis panel is telling you
The verdict badge and analysis under the results use this tool’s own bands, set by damages as a share of contract billings. They are presentation guidance for how much process a claim of that size justifies, not thresholds from case law.
| Damages as % of contract value | Band | What it usually means in practice |
|---|---|---|
| 10% or more | Substantial | Full documentation package, construction counsel, expect a vigorous defence on causation and proportionality. |
| 5% to under 10% | Significant | Detailed standby and notice records decide the outcome; strengthen causation evidence early. |
| 2% to under 5% | Moderate | Weigh the cost of formal proceedings against a negotiated settlement. |
| 1% to under 2% | Small | Often better folded into a broader claim package than pursued alone. |
| Under 1% | Minimal | Check that legal and administrative costs of pursuing it do not exceed the recovery. |
Alternatives and close relatives
Eichleay is the required method for unabsorbed home office overhead on United States federal contracts, which is why it dominates. The alternatives exist for other situations. The Hudson formula, used mainly in the United Kingdom, builds the daily rate from the overhead percentage in the original tender rather than from actual period overhead, which makes it sensitive to how competitive the bid was. The actual cost method skips allocation entirely and documents specific overhead costs caused by the delay; it is cleaner in theory and far harder to evidence. Modified Eichleay variants adjust the classic steps for contracts that were partly performed or billed unevenly, and Canadian courts use their own allocation approach. Extended field overhead and other prolongation costs are priced separately from all of these, which is the territory of a cost of delay calculator rather than this page.
What competing calculators miss
Standalone Eichleay calculators are rare, and the most visible one gets the formula’s defining step wrong in its own worked example, dividing allocable overhead by 30 on the reasoning that the formula assumes a standard monthly accounting period. It does not. Step 2 divides by the days of contract performance for the period the overhead covers, and on any period longer than a month the 30-day shortcut inflates the daily rate several times over. The detailed guidance from law firms and forensic consultants gets the law right but ships no calculator at all, so readers are left doing a three-step allocation by hand.
- The wrong divisor: a daily rate built on 30 days instead of actual performance days overstates every day of the claim. Here the divisor is your contract performance days, as the case law states it.
- No claim sizing: a bare damages figure does not tell you whether the claim justifies counsel, an expert and a formal filing, or a phone call. The analysis panel bands the result from minimal to substantial and matches the strategy guidance to the band.
- Prerequisites treated as footnotes: tools that present the output as a claim amount skip the standby, uncertain duration and replacement work tests. This page states up front that entitlement is a legal question the calculator does not decide.
- No input discipline: nothing in most tools stops you mixing billings from one period with overhead from another, or entering contract billings above total billings. This calculator rejects the impossible case and the guide above fixes the same-period rule before you type.
Frequently asked questions
It calculates unabsorbed home office overhead when an owner-caused or government-caused delay or suspension leaves a contractor on standby. While work is stopped, the contract stops absorbing its share of head office costs such as rent, executive salaries and insurance. Eichleay allocates those costs to the delayed contract by billings and prices each compensable delay day at a daily overhead rate.
First, allocable overhead equals contract billings divided by total company billings, multiplied by total home office overhead. Second, the daily rate equals allocable overhead divided by the days of contract performance. Third, damages equal the daily rate multiplied by the days of compensable delay. On the worked example that is $150,000, then $410.96 per day, then $24,657.53 for 60 days.
No. Entitlement is a legal question the calculator does not decide. Recovery generally requires an owner-caused or government-caused delay of uncertain duration, a standby position where you had to be ready to resume on short notice, and proof that the standby kept you from taking replacement work that would have absorbed the overhead. The calculator only prices a delay once those tests are assumed to be met.
The indirect costs of running the whole company during the contract period: administrative and executive salaries and benefits, head office rent, utilities, insurance, professional fees for legal and accounting work, communications, software and office supplies. Site-specific costs are field overhead, not home office overhead, and are proved and priced separately. Some costs are also unallowable under the FAR cost principles on federal work.
Because the allocable overhead covers the whole contract performance period, so it is spread over that period’s actual days. Dividing by 30 assumes the overhead belongs to a single month, which is not what the formula says. On a 365-day period, a 30-day divisor would inflate the daily rate roughly twelve times and overstate the claim by the same factor.
No. The Eichleay output is home office overhead only, with no profit element. The FAR Suspension of Work clause, the usual route for these adjustments on federal construction contracts, also states that the adjustment excludes profit. Profit on other parts of a claim, such as changed work, is a separate question handled under different clauses.
Only compensable delay days belong in the calculation. Where contractor-caused delay runs at the same time as owner-caused delay, the concurrent days generally do not support Eichleay recovery, because the contractor cannot show the standby was forced by the owner for those days. Enter only the compensable days as the days of delay, and expect the split to be tested against the project schedule.
Billings records for the delayed contract and for the whole company over the same period, the home office overhead ledger for that period, the contract schedule showing performance days, and delay documentation: suspension or stop-work notices, correspondence, daily reports and a schedule analysis tying the delay to the completion date. Notice deadlines in the contract also matter, since a late claim can be barred even when the arithmetic is right.
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References
- Cohen Seglias. Eichleay Formula, Government Contracting Database. Accessed October 21, 2026.
- Cornell Legal Information Institute. 48 CFR 52.242-14, Suspension of Work. Accessed October 21, 2026.
- VERTEX. The Eichleay Formula and Delay Claims: What You Need to Know. Accessed October 21, 2026.
- Construction Management Association of America. Practical Problems with Using Eichleay to Price Delay. Accessed October 21, 2026.
- LawPipe. What Is the Eichleay Formula? Case Law Summary. Accessed October 21, 2026.
- LegalClarity. FAR Stop Work Order: Rights, Claims, and Deadlines. Accessed October 21, 2026.