Reimbursement (or loss-and-expense) claims seek additional costs actually incurred; loss-of-profit claims seek the net gain the claimant says it would have earned but for a breach. The evidence differs accordingly. A reimbursement claim normally needs the contractual entitlement, a causal link to the compensable event, and a traceable calculation supported by project and accounting records. A loss-of-profit claim must additionally prove that the profit opportunity was real, that the breach caused it to disappear, and that the projected net amount is sufficiently reliable rather than speculative.
The governing contract, law, forum and procedural stage control the result. RICS guidance, the England and Wales pre-action protocol, Philippine Supreme Court decisions and the UNIDROIT Principles illustrate different parts of the analysis; none creates a single worldwide evidentiary test.
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The two claims answer different questions
Start by identifying what the claimant is asking the tribunal to award. The labels are not interchangeable, and a well-supported cost ledger cannot automatically prove lost profit.
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| Issue | Reimbursement / loss and expense | Loss of profit |
|---|---|---|
| Economic subject | Additional cost or loss incurred beyond the contract price, subject to the contract and applicable law. | Net gain allegedly prevented by nonperformance or breach. |
| Core entitlement question | Does a clause, variation, delay mechanism, breach or other legal rule make the other party responsible for this extra cost? | Was there a contractual or other profit opportunity, and did the defendant’s breach legally deprive the claimant of it? |
| Causation question | Did the responsible event cause the particular labour, plant, material, time or overhead cost? | Did the breach cause the opportunity and profit to be lost, rather than merely occurring at the same time? |
| Quantification | Build up the actual additional cost with contemporaneous records and a transparent calculation. | Estimate expected revenue less the costs that would have been required to earn it, including costs avoided after the work was not performed. |
| Main evidentiary risk | Receipts may prove expenditure but not entitlement or causation. | A plausible margin may prove neither that the work would have been won and completed nor the amount of net profit. |
RICS describes loss-and-expense ascertainment as work intended to calculate, as precisely as possible and in accordance with the contract, additional costs or losses incurred directly because of the other party’s default. IAS 11 used the phrase “reimbursement for costs not included in the contract price” as an accounting definition of a construction-contract claim; that accounting description is not itself a damages entitlement.
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Prove entitlement, causation and amount separately
The strongest claim presentation has three separate chapters: entitlement, causation and quantification. Each requires different evidence.
Entitlement
Identify the precise clause or legal basis: for example, a variation instruction, compensable delay, suspension, disruption, employer default, termination consequence or a general breach remedy. Show the notice requirements, contractual time limits, thresholds and exclusions. A cost can be genuine and still unrecoverable if the contract allocates that risk to the claimant or a required notice was not given.
Causation
Map the event to the consequence. A contemporaneous programme, daily report or instruction should explain when the event occurred, what resource or activity it affected and why the claimed cost followed. Separate independent causes, contractor-responsible inefficiency and concurrent delay where the governing law requires that analysis. A global claim that aggregates many events without a workable cause-and-effect explanation is harder to test, even where some expenditure is undisputed.
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Show the arithmetic from source record to claimed total. Explain the baseline, the period, rates, quantities, credits, avoided costs, mitigation and any allocation between projects. An expert can organize the calculation, but the underlying data still needs to be identifiable and capable of verification.
Evidence for reimbursement and loss-and-expense claims
Contract and entitlement records
- Executed contract, amendments, incorporated drawings, specifications and schedules of rates.
- Variation orders, instructions, requests for information, approvals and valuation records.
- Delay, suspension, access, payment or other notices, with proof of service and compliance with contractual deadlines.
- Relevant meeting minutes and correspondence showing the responsible party’s act or omission and the parties’ contemporaneous understanding.
Organize these records by event and clause. A spreadsheet that lists costs without tying each line to an entitlement event leaves the central legal question unanswered.
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Labour, plant and material proof
- Daily reports, timesheets, allocation sheets, gate records and labour payroll showing who worked, where and for how long.
- Plant logs, utilization records, hire agreements, delivery and return tickets, fuel records and depreciation or ownership-rate calculations.
- Purchase orders, delivery notes, invoices, subcontractor accounts, approved applications and proof of payment for materials and services.
- Site photographs, progress records and programme updates that corroborate the claimed activity and period.
Invoices and official receipts are useful, but they are not universally the only acceptable proof. In MRT Development Corporation v. Gammon Philippines, Inc., the Philippine Supreme Court recorded documentary support including invoices, debit notes and official receipts while noting that official receipts were not the sole possible documentary evidence. Whether a particular record is admissible or sufficient depends on the applicable rules.
Accounting and project controls
- Job-cost ledgers by cost code, cost-to-complete reports, committed-cost schedules and monthly valuations.
- Payroll summaries, equipment ledgers, subcontract accounts and general-ledger reconciliations.
- Cash disbursement records and bank evidence where payment, rather than merely invoicing, is disputed.
- Overhead schedules showing the allocation method, period affected and any credits or savings.
Reconcile the claim schedule to the financial accounts. If a cost is estimated, label it as an estimate, explain the method and replace it with actual data when available. Do not present a gross invoice total as the loss if the claimant recovered a credit, reused the material or avoided another expense.
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Delay, disruption and extended-overhead analysis
For time-related loss, establish the contractual completion baseline, the critical path or relevant activity, the period of compensable impact and the resources held during that period. Link extended supervision, site accommodation, temporary facilities, insurance, security and equipment standing time to the proven extension. In Filipinas (Pre-Fab Bldg.) Systems, Inc. v. MRT Development Corporation, the Philippine Supreme Court treated extended overhead as actual damages while stressing that actual damages must be proved with reasonable certainty. That is an illustration of Philippine law, not a universal rule about every overhead category.
Global claims
RICS addresses global claims and the strengths and weaknesses of different analysis methods. A global claim may be unavoidable where records cannot isolate every event, but it should still identify the events, explain why individual allocation is impracticable, show that the claimed costs are not caused by unrelated matters and disclose assumptions. A global total is not a substitute for entitlement and causation evidence.
Evidence for loss-of-profit claims
Prove a real opportunity
Collect the contract, notice of award, executed work order or other document showing that the claimant had a legally meaningful opportunity to earn the revenue. A tender invitation or internal bid alone may not establish that the claimant would have received the work. Show the status of negotiations, competing bids, approvals, conditions precedent, financing, permits and termination or cancellation events.
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National Power Corporation v. Philipp Brothers Oceanic, Inc. illustrates the risk: the Philippine Supreme Court recounted rejection of a profit claim based on an unawarded contract still subject to bidding, treating the prospective profit on those facts as a mere expectancy. The result turns on the evidence and Philippine law; it should not be converted into a universal rule that every unawarded opportunity is unrecoverable.
Build the revenue case
- Signed contract, award letter, purchase order or enforceable option, if one exists.
- Bid submission, scope, pricing workbook, correspondence on acceptance and evidence of the customer’s ability and intention to proceed.
- Comparable completed projects and contemporaneous market or tender evidence, used carefully to show expected volume or pricing.
- Capacity records demonstrating that the claimant had labour, plant, financing and management resources to perform during the relevant period.
Revenue is not profit. If the claimed figure starts with the contract value, deduct direct labour, materials, subcontractors, plant, financing, insurance, project-specific overhead and other costs that would have been incurred to earn it.
Support the margin and cost forecast
Use the bid build-up, approved budget, cost-to-complete forecast, historic accounts, job-cost data and margins on comparable completed work. Explain why the selected comparator is comparable in scope, location, duration, market conditions and risk. Account for costs avoided because the work did not proceed and for replacement work or other mitigation.
In the Gammon decision, Planning and Estimating Engineer Francisco Delos Santos testified that, in Gammon’s experience, the average competitive construction profit percentage was 5%. That 5% was evidence from that witness in that case, not a current or universal industry margin. A claimant cannot adopt it as a benchmark without proving that it fits the particular project and governing law.
Address uncertainty and alternative causes
Test whether the project would have produced the forecast result. Consider likely redesign, delay, escalation, financing, labour shortages, customer default, permit problems, competing work and the claimant’s own performance history. State assumptions and provide sensitivity ranges where appropriate. An accountant or damages expert may model scenarios, but the model must be anchored in contemporaneous facts rather than a percentage selected after the event.
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The certainty and causation threshold
The UNIDROIT Principles 2010, Chapter 7, Section 4, provide a comparative framework: compensation includes profits deprived as a consequence of nonperformance, but compensation is due only for harm, including future harm, established with a reasonable degree of certainty. The Principles also recognize compensation for loss of a chance in proportion to its probability, allow judicial discretion where the amount cannot be established with sufficient certainty and require a sufficient causal link. Foreseeability is addressed separately.
These are comparative commercial-contract principles, not a replacement for national law. They nevertheless explain why an incurred-cost schedule and a projected-profit model are scrutinized differently. The first can often be checked against actual transactions; the second depends on a counterfactual world and must show why that counterfactual is reliable.
A practical evidence-assembly workflow
- Confirm the governing framework. Record the contract form, governing law, dispute forum, claim clause, notice provisions and procedural stage. Do not assume that a rule from England and Wales or the Philippines applies elsewhere.
- Create an event register. Give each instruction, delay, suspension or breach a unique reference, date, responsible party, affected activity and contractual provision.
- Build the baseline. Preserve the accepted programme, estimate, resource plan, cash flow and budget that existed before the event. Identify later revisions and why they changed.
- Collect contemporaneous records. Gather daily reports, correspondence, programmes, timesheets, plant logs, delivery tickets, invoices, payroll, ledgers and payment evidence before memories and files deteriorate.
- Trace each cost or profit component. For reimbursement, link every line to an event and period. For lost profit, link revenue, required costs, avoided costs and mitigation to the opportunity.
- Separate actual, estimated and contingent amounts. Mark each category clearly and explain the estimating method. Do not mix paid costs, accruals and hypothetical costs without reconciliation.
- Test alternative causes. Identify concurrent delay, contractor inefficiency, market changes, customer decisions, capacity limits and replacement work. Quantify only the portion attributable under the governing rules.
- Reconcile and review. Tie schedules to the general ledger and project accounts, check arithmetic, remove double recovery and document credits. Obtain independent legal, quantum or accounting review where the value or complexity warrants it.
- Present a proportionate claim. Lead with entitlement, then causation, then quantum. Explain gaps instead of hiding them, and preserve the underlying records in an indexed bundle.
Evidence comparison at a glance
| Evidence category | Reimbursement claim | Loss-of-profit claim |
|---|---|---|
| Contract / opportunity | Executed contract, amendments, clause, instruction and notices. | Executed contract, award or reliable evidence of a real opportunity; tender-only evidence may be insufficient. |
| Contemporaneous project records | Daily reports, programmes, timesheets, plant and delivery records. | Bid build-up, capacity records, programme and evidence the project would have proceeded. |
| Financial records | Invoices, payroll, subcontract accounts, ledgers and proof of payment. | Budgets, cost-to-complete, historic accounts, comparable margins and avoided-cost analysis. |
| Expert input | Delay, disruption, planning or quantum analysis where the calculation is complex. | Accountant, economist or quantum expert to test the counterfactual, costs, probability and sensitivity. |
| Central vulnerability | Actual spending unrelated to the compensable event, or unsupported allocation. | Speculative opportunity, unsupported margin, failure to deduct costs or failure to address other causes. |
Common failure modes and corrections
“We have receipts, so the claim is proved.”
Receipts establish a transaction, not contractual responsibility or causation. Add the instruction, event chronology, affected activity and calculation showing why the cost is incremental.
“The contract value is our lost profit.”
Contract value is revenue. Deduct the costs required to perform, then account for avoided costs, mitigation and any replacement work.
“A standard industry margin proves the forecast.”
Margins vary by project, market and risk. Use contemporaneous bid data and comparable completed jobs. The 5% figure mentioned in the Gammon litigation is case-specific testimony, not a general benchmark.
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“A global total is simpler.”
A global presentation can obscure unrelated causes. Explain why allocation is impracticable, identify the event groups and demonstrate that the total excludes costs attributable to other causes.
“The protocol requires the full trial bundle immediately.”
For a pre-action dispute in England and Wales, the Construction and Engineering Disputes Protocol calls for a brief, proportionate summary and enough information for each side to understand the outline case. It expressly does not require parties at that stage to marshal every detail and item of evidence ultimately needed in litigation. The protocol’s scope should not be extended to other jurisdictions or procedural stages.
Choosing the claim or combining claims
A single event can generate both types of loss, but the components must remain distinct. For example, a compensable suspension might produce documented site-security and equipment-standing costs (reimbursement) and, separately, profit lost on a cancelled follow-on package (loss of profit). Claiming both requires proof that the amounts are different economic losses and that awarding both would not compensate the same item twice.
Where the contract provides a specific loss-and-expense mechanism, use it first and follow its notice, records and valuation requirements. A general lost-profit remedy may be restricted by exclusion, limitation, remoteness or foreseeability rules. The answer cannot be determined from the label alone.
Quick Recap
What the authorities establish—and what they do not
| Authority | Useful point | Limit |
|---|---|---|
| RICS, Ascertaining loss and expense, 2nd edition, published 22 July 2024 | Contract-focused calculation of additional costs or losses directly due to default; coverage includes standard forms, global claims and analysis methods. | Professional practice information, not a universal damages statute. |
| IAS 11 terminology | “Reimbursement for costs not included in the contract price” describes an accounting claim concept. | Accounting terminology does not create a legal cause of action or entitlement. |
| MRT Development Corporation v. Gammon Philippines, Inc. | Illustrates documentary reimbursement evidence and testimony about a project profit estimate. | Philippine decision and case-specific factual findings; the 5% testimony is not an industry statistic. |
| Filipinas (Pre-Fab Bldg.) Systems, Inc. v. MRT Development Corporation | Illustrates treatment of extended overhead as actual damages requiring reasonable proof. | Philippine law and facts. |
| National Power Corporation v. Philipp Brothers Oceanic, Inc. | Emphasizes competent proof and reasonable certainty for actual damages and rejects an expectancy based on an unawarded bid on those facts. | Philippine law and a particular evidentiary record. |
| UNIDROIT Principles 2010, Articles 7.4.2–7.4.4 | Comparative principles on profit, reasonable certainty, causation, loss of chance and foreseeability. | Not a substitute for applicable national law or contract terms. |
Before submitting a claim
- Have you identified the exact contractual or legal entitlement?
- Can each claimed cost or profit component be traced to a dated event and affected work?
- Does the baseline pre-date the alleged breach, and are later changes explained?
- Are actual costs reconciled to project accounts and separated from estimates?
- For profit, have you proved the opportunity, capacity to perform, expected revenue, required costs, avoided costs and mitigation?
- Have you addressed concurrent causes, uncertainty, foreseeability and any exclusion or limitation clause?
- Are notices, records and calculations compliant with the governing contract and procedure?
- Is the evidence proportionate to the claim while preserving the underlying documents?
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