The quantification of damages in construction disputes is governed by principles that have been developed over centuries by the common law, and which are reflected in modified form in the civil law systems of the UAE and the wider GCC. The fundamental principle is that the innocent party to a breach of contract should, so far as money can do it, be placed in the position it would have been in had the contract been performed. The damages awarded are intended to compensate for the loss caused by the breach — neither more nor less.
Three principles control the assessment of damages: causation, remoteness and mitigation. Causation requires the claimant to prove that the loss was in fact caused by the breach. Remoteness limits recoverable loss to that which was within the reasonable contemplation of the parties at the time the contract was made. Mitigation requires the claimant to take reasonable steps to minimise its loss and prevents recovery of any loss that could reasonably have been avoided. A quantum expert must keep these principles in mind when quantifying any head of damages.
On a construction dispute, the principal heads of damages typically include the cost of remedial works (where the breach concerns defective work), prolongation cost (where the breach has caused critical delay), disruption and loss of productivity (where the breach has caused inefficient working), wasted expenditure, lost revenue or profit, finance charges and consequential losses. Each of these heads requires a separate analysis and a separate evidential basis.
The cost of remedial works is in principle the most straightforward head: the claimant is entitled to recover the cost of putting right the defective work to the standard required by the contract. In practice, however, disputes frequently arise over the appropriate remedial scheme, the reasonableness of the cost incurred, the extent to which the claimant has procured the remedial works on a sole-source basis at premium rates, and the proper allowance for betterment where the remedial works leave the claimant with an asset of greater value than that originally bargained for.
Lost revenue and lost profit are often the largest heads of damage on commercial and industrial projects, but they are also the most contested. The claimant must prove not merely that revenue or profit has been lost, but that it would have been earned but for the breach, and that the loss was within the reasonable contemplation of the parties at the time of contract. Expert evidence from accountants, valuers and market specialists is frequently required to support these heads of claim.
The quantum expert's role in the assessment of damages is to identify the proper measure of loss for each head, to apply appropriate methodologies, to test the underlying data, and to present the analysis in a transparent and well-supported form. The expert must explain not only what the calculated loss is, but why that figure represents the proper measure of damages on the facts of the case and the law applicable to the contract.
At Construction Expert Witness, our quantum experts have provided damages evidence in disputes ranging from defective concrete in luxury residential towers to multi-billion-dirham loss-of-profit claims on stalled commercial developments. We bring rigour, independence and clarity to the quantification of damages in even the most complex disputes.