Exploring Global / Total Loss Claims

Claims for prolongation costs are challenging because entitlement and quantification are rarely the sole matters in dispute.

They are typically linked with requests for extensions of time and disputes about when delays occurred, which often complicates both proving and evaluating losses. While multiple evaluation methodologies exist, each is subject to criticism, and no approach provides a definitive solution for delay analysis and cost quantification. 

Global Claims

The term “global claim” is commonly used in Commonwealth jurisdictions, while the equivalent concept in the United States is described as a “total cost claim,” with a recognised subcategory of “modified total cost claim.” A total cost claim attributes all additional costs to employer responsible events, whereas a modified total cost claim limits recovery to identified components of those costs. 

This distinction underscores that a “global” methodology need not be applied to an entire claim. Loss and expense may be divided into discrete components, with global assessment used only where causation cannot be disentangled and conventional proof adopted elsewhere.  

Delay Analysis

This approach is particularly useful in relation to delay, as opposed to disruption. Delay typically results in extended site establishment and prolonged engagement of supervisory personnel, costs that are attributable to time alone. Because delay is measured temporally, it is generally possible to distinguish employer‑caused delay from delay arising from other causes. 

Global claims are permissible only in limited circumstances, where the complexity of the project and the number of relevant events make precise quantification impracticable. While the claimant must, in principle, establish that it bears no responsibility for the overrun, this will rarely be achievable. The contractor must instead demonstrate that the overrun is contractually attributable to the principal to the extent it arises from compensable events. 

Although global claims may obscure a weak case and are therefore treated with scepticism, poor record‑keeping should not confer an advantage. Where appropriate, a global claim may nonetheless provide a cost‑effective means of advancing a claim where individual losses cannot be practicably particularised. 

Regardless of whether a claim is characterised as a “global claim,” where the evidence supports a finding that the plaintiff has suffered a quantifiable loss, the tribunal may award such sum as it considers appropriate. Australian courts have, depending on the facts and pleadings, accepted global claims.  

Case Law Examples

In John Holland Pty Ltd v Hunter Valley Earthmoving Co Pty Ltd (2002), the Supreme Court of New South Wales held that an application to strike out a claim pleaded as a global claim turns on whether the plaintiff has provided adequate particulars. The Court decided that a plaintiff should not lose the chance to bring a claim just because it is hard to pinpoint every single detail exactly. 

In John Holland Construction & Engineering Pty Ltd v Kvaerner RJ Brown Pty Ltd(1996), the Court held that global claims are permissible in principle but are inherently weak and susceptible to challenge unless pleaded with care. Byrne J ordered that substantial partsof the statement of claim be struck out and re‑pleaded, holding that the pleadings were deficient in multiple respects. 

Although the SCL Protocol advises against their use on the basis that they are rarely upheld, that position may not fully reflect the authorities. Contractors should nevertheless be mindful of the risks involved. A global claim is based on the idea that it is impossible to separate individual reasons for delay. However, if the principal can show that some of the alleged causes are irrelevant to the claim, then the claim might fail because the reasons presented cannot be isolated. 

Contractors should be aware of the risks associated with pleading a global claim. The contractor is relying on being unable to disentangle the separate causes; however, if the principal can demonstrate that any of the causes of delay did not in fact support the claim, then the contractor's claim will fail as the contractor has pleaded that the causes cannot be severed. As Lord MacFadyen stated in John Doyle Construction Ltd. v. Laing Management (2002):  

“...proof that an event played a material part in causing the global loss, combined with failure to prove that that event was one for which the defender was responsible, will undermine the logic of the global claim. Moreover, the defender may set out to prove that, in addition to the factors for which he is liable founded on by the pursuer, a material contribution to the causation of the global loss has been made by another factor or other factors for which he has no liability.”

A modified total cost claim allows separating parts of the claim so that specific cost overruns are tied to certain delay events. However, where delay arises from multiple overlapping causes, and the impacts and durations cannot be reliably isolated, individual costs cannot readily be attributed. The modified total cost approach requires that the contractor establish that it has accounted for the portion of the total costs for which it is responsible.  

Key Takeaways

• Delay and disruption are factual outcomes, not labels 

• Each cost must be traced back to an identifiable cause  

• Courts will not accept global claims that mask causation deficiencies 

• Global claims are permissible, but only where justified by complexity and supported by common-sense evidence 

• global claims are a last‑resort methodology, not a shortcut 

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At Accura Consulting, our team of experts work with clients to create a tailored solution to problems. If you have an issue and want expert support, get in touch.

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