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Last edited 24 Sep 2019
At its simplest, thickening is a contribution to a claimant’s increased overheads resulting from a client-culpable delay. Thickening is a legal term used in claims when claimants are legally entitled to claim extra costs – over and above the direct costs they may be already claiming – as a result of a delay which is outside their control.
For example, where an extension of time is granted to a contractor, they may also be entitled to claim for time-related costs for the delay period, in other words, in addition to the claim for direct costs, they may also be able to claim for ‘thickened’ overheads resulting from client/employer culpable delay or disruption.
A celebrated case of thickening from October 2016 was that between contractor Flour, which had been engaged to construct an offshore wind farm, and steel fabricator ZPMC. Cracking had occurred in the welding of the steel monopoles and the transition pieces of the turbines for which the court held ZPMC to be in breach of contract. Damages of £15m and €7m were awarded to Fluor as part of direct costs caused by the breach and included costs of additional project management staff, consultants’ costs for the remedial works and costs for extra plant and equipment, as well as for providing extra storage space.
However, in addition, Fluor also claimed for ‘thickening’ costs amounting to 4% of the award – comprising overheads to reflect the increased head-office costs that were necessitated as a result of dealing with the breach of contract. Fluor argued that the thickening costs were just as much a result of the breach as were the direct costs.
The landmark case introduced the concept that certain overhead costs can be linked to a breach of duty just as if they were ordinary losses, i.e. direct losses that include items such as new materials, extra labour and consultant costs necessitated by the breach.
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