You should provide a report to the client which should include a narrative of the heads of damages claimable and why

Assessment Criteria and Grading Sheet

ASSIGNMENT

Professional Diploma in Forensic Quantum Analysis

FQ510 Quantum Determination

Scenario

The Competition Tribunal has found the contractor, Dodgee Builders Ltd, guilty of collusion with Tricky Contractors and Slimey Contracts on the price fixing of their bids for the new stadium in the Rugby World Cup 2007 and a claim has been brought against all three entities by the French government to have the damages paid.

You are commissioned as an expert for the French government to quantify the damages to an evidential burden that is capable of satisfying the balance of probabilities.

Please provide, with due consideration of foreseeability, reasonableness and proximate cause a strategy for your quantification.

The strategy will consider the staged approach you will take, the heads of damages and the information you require in order to quantify the damages.

The collusion resulted in the three contractors securing a head office overhead and profit return on their costs of 25%.

Having regard to the following facts please provide your brief for the French government to determine the likelihood of success of your commission as expert.

There are 3 new stadiums:

• Stadium 1 is close to Dodgee’s office

• Stadium 2 is close to Tricky’s office

• Stadium 4 is close to Slimey’s office

The collusion resulted in the contractor’s securing the stadiums closest to their offices.

You are to determine the damages recoverable due to collusion for stadium 1 from all three contractors.

• Stadium 1 cost:

  • € 950,000,000.00 for the contract works

  • € 150,000,000.00 in variations

  • € 250,000,000.00 in provisional sums

• Design team estimated:

  • € 835,000,000.00

  • € 125,000,000.00 for provisional sums

  • They do not comment on HO&P as they had no choice.

The contract included a provision for the professional team to be paid 10% on the costs of the construction.

Dodgee added 25% to all costs incurred including provisional sums.

Dodgee accept the findings but allege that 25% was a reasonable return for the risk of completion in time for the world cup opening match.

Tasks

You should provide a report to the client which should include:

• A narrative of the heads of damages claimable and why. (500 words max)

• You should establish the principles of damages with consideration to case law

• You should consider the number of limbs of damage

• Identification of the applicable heads for quantification. (700 words max)

• What the market price should have been

• Provide reference to case law or authorities in establishing your principles for items such as:

  • Head office overheads

  • Profit

• Consider the quantification of risk and the addition to the tender price by applying risk quantification methods

• Consider how provisional sums are to be assessed in the tender stage

• Follow on damages in the construction stage

• The merits of each of the damages you assess and the likelihood of an award in dispute proceedings. (400 words max)

• Please refer to relevant case law in your answers and consider the carecraft procedure in competition tribunal matters. (400 words max)

• Provide a concluding narrative that determines the balance of probabilities for your client. (500 words max)

• Your answer should include supporting quantum calculations.

Sample Answer

Report on Quantum Determination of Damages for Stadium 1

Prepared for: French Government
Prepared by: Forensic Expert – Quantum Analysis
Subject: Dodgee Builders Ltd – Damages Due to Collusion

Heads of Damages Claimable and Rationale

In this case, the French government seeks damages arising from unlawful collusion between Dodgee Builders Ltd, Tricky Contractors, and Slimey Contracts. The damages are a result of price fixing, where the contractor added an inflated 25% head office overhead (HO) and profit (P) to all costs, including provisional sums.

The primary heads of damages claimable are:

1. Overpayment due to collusion: The difference between the contract value (inflated by collusion) and the fair market value.

2. Excessive HO&P charges: The 25% uplift is arguably unreasonable. Any excess over a reasonable HO&P should be recoverable.

3. Professional fees: Professional team fees were calculated as 10% of inflated costs. Overpaid fees due to inflated construction costs are also recoverable.

4. Follow-on damages: Any consequential financial losses to the French government caused by overpayment or delays.

Legal Principles: According to Hadley v Baxendale (1854), damages are recoverable if they are foreseeable, not too remote, and directly linked to the breach. The court must also consider the Carecraft Procedure, used in competition law cases to resolve complex disputes without trial.

Limb One Damages (direct and foreseeable): Overpaid construction costs, excessive HO&P, and increased professional fees.
Limb Two Damages (indirect/consequential): Delay-related costs or opportunity costs.

Conclusion: The overpayment due to price fixing is a direct consequence of collusion and should be fully recoverable. The courts have historically supported recovery in cases of proven fraud or anti-competitive behaviour.

Identification of Heads for Quantification 

Market Price vs. Contract Price

Design Estimate (before HO&P):

• Contract Works: €835 million

• Provisional Sums: €125 million
  Total Estimate: €960 million

Actual Costs Claimed by Dodgee:

• Contract Works: €950 million

• Variations: €150 million

• Provisional Sums: €250 million
  Total Cost before HO&P: €1.35 billion

HO&P Added (25%):

€1.35 billion × 25% = €337.5 million

Total Charged by Dodgee:

€1.35 billion + €337.5 million = €1.6875 billion

Professional Fees (10%):

€1.6875 billion × 10% = €168.75 million

Continued...