Construction contracts have a variety of different damage components.
Damages arising out of the breach of construction contracts are often separated into the categories of direct costs and indirect costs. Direct costs are due to the performance of a contract and indirect costs are due to the operations of the contractor. In order for a direct or indirect cost to be allowable, it must be justifiable. The Federal Acquisition Regulation is often used by many jurisdictions to determine what costs are justifiable. This video reviews the different elements of damages occurring from a construction contract breach, including allowable costs, direct labor, site overhead, insurance and bond premiums and taxes; and discusses damages for defective or incomplete work.
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