Loss and expense in the context of construction contracts refer to additional costs incurred by the contractor as a result of events or circumstances that are not attributable to the contractor but are covered under the contractual provisions. These additional costs may arise due to delays, disruptions, or changes in the scope of work that impact the contractor's ability to complete the project within the original budget.

Key points regarding loss and expense in construction contracts include:

1. Contractual Entitlement:
   Construction contracts often include provisions that entitle the contractor to claim for loss and expense when specific events occur. These events may include variations to the scope of work, delays caused by the employer or other parties, unforeseen site conditions, or other relevant factors.
2. Notice Requirements:
   Contractors are typically required to provide formal notice to the employer or contract administrator when they encounter events that may entitle them to claim for loss and expense. Failure to adhere to notice requirements may impact the contractor's ability to make a valid claim.
3. Evaluation and Approval:
   The employer, contract administrator, or an appointed party is responsible for evaluating the contractor's claim for loss and expense. The assessment involves determining the validity of the claim and the extent of the additional costs incurred.
4. Documentation:
   Contractors are generally required to provide detailed documentation supporting their claim for loss and expense. This may include records of additional hours worked, extra material costs, extended site overheads, and other related expenses.
5. Extension of Time and Loss and Expense:
   The concepts of extension of time and loss and expense are often linked. When an event leads to a valid claim for an extension of time, it may also result in additional costs for the contractor, and the two elements are considered together in assessing the overall impact on the project.
6. Calculation of Costs:
   The calculation of loss and expense may involve assessing the actual costs incurred by the contractor, including direct costs and associated overheads. The contract may provide specific formulas or methodologies for determining the compensation due.
7. Compensation for Loss of Profit:
   In addition to covering direct costs, loss and expense provisions may include compensation for the contractor's loss of profit resulting from the events or delays.

Loss and expense provisions are designed to provide a fair mechanism for compensating the contractor when the project experiences disruptions or changes that were not initially anticipated. These provisions help allocate the financial impact of unforeseen events in a transparent and contractual manner.