The Emden and Hudson formulae are two methods for calculating head office overhead contributions in prolongation cost claims. Both attempt to quantify the unrecovered overhead that would have been earned during the period of delay.
The Hudson formula uses the head office overhead percentage applied to the contract sum, divided by the contract period, multiplied by the delay period. The Emden formula is similar but uses the contractor's actual overhead recovery rate from their audited accounts rather than the contract tender allowance.
The Emden formula is generally preferred because it reflects actual costs rather than tender estimates. The SCL Protocol recommends using actual records wherever possible, resorting to formula-based approaches only where actual cost allocation is impracticable.