Hudsons Revisited

Some Quantum practitioners put a Hudson Formula at the end of their heads of claim just to have it negotiated away.

In my opinion this is bad practice and I never do it until recently.

I am advising a mid range sub contractor who became involved with a Main Contractor that completely screwed up his business for 6 months on one mismanaged contract.

I sorted out his EoT entitlement and was starting on the money which was three heads:

Prolongation Supervision - the visiting supervisor was engaged daily rather that his usual weekly visit. This was a simple deduction of the Tender allowance from the actual cost.

Labour Disruption - They employ a series of labour gangs that work on a price but because of the disruption could only be employed on a daywork basis. I was given the tender labour content and the daywork sheets for the operatives. It was a simple process to calculate the net difference.

Loss of Overheads - As a passing remark I asked the MD if all this disruption had affected his turnover. "Yes by more than 50%". It turned out that the reason for declining tenders was that his key staff were locked up in this rogue project. He then produced his tender log showing the number of tenders that were withdrawn through the 6 month period. Bingo - for the first time in my career I had a real Hudson's on my hands.

But it wasn't a true Hudson because it wasn't based on a large contractor where on one of the many jobs made a reduced contribution. No this was where one job alone had reduced the overhead income by over 50% so a pure Hudson was quite inadequate.

So the simple calculation was:

Predicted turnover if nothing had happened showing the anticipated overheads - based on averages from the previous three years

Less the reduced overhead contribution from the actual turnover.

It came to a considerable amount and it will most likely go to Adjudication.