Two numbers decide whether your harm passage holds up: how much, and compared with what. Everything else here is bookkeeping around those two. The worksheet below covers the six kinds of harm that show up most often, with a formula, a sample figure and the paper that backs it. Two worked examples follow, in prose, so the arithmetic is laid out the way an examiner will read it. Last, what to write when you do not have an exact figure, because most owners do not.
The worksheet
| Type of harm | How to compute | Example figure | Document that proves it |
|---|---|---|---|
| Lost bid margin | Bids you could not submit, or were pulled from, times your typical gross margin on that work. | 3 bids × $240,000 × 9% = $64,800 | The solicitations; the bond or capacity letter that kept you out; a job-cost report showing your margin on comparable work. |
| Higher cost of capital | Interest at your rate minus interest at the posted or offered rate for your credit tier, over the life of the loan. | $120,000 over 60 months at 14.5% vs 7.25% = $25,985 more interest | Loan agreement; the lender’s dated rate sheet; an amortization schedule for each rate. |
| Cash tied up by slow pay | Days paid late × daily billings = extra receivables carried; × your line-of-credit rate = annual cost. | $60,000 a month paid at 75 days instead of 30: $90,000 carried, $10,800 a year at 12% | Accounts-receivable aging; line-of-credit statements; the payment clause (49 CFR 26.29 requires primes to pay subs within 30 days of being paid). |
| Insurance or bonding premium differential | (Your premium rate − the rate quoted to a firm of comparable capacity) × amount bonded or insured. | 2.5% vs 1.5% on $1.8 million bonded = $18,000 | Bond premium invoices; the agent’s quote letter; a second quote or a published rate range. |
| Unpaid receivables | Invoices written off or uncollected past 180 days, plus what you spent trying to collect. | $42,500 written off on two 2023 jobs + $3,200 in collection fees = $45,700 | Aged receivables; the write-off entries; demand letters; any lien or claim you filed. |
| Lost wages before ownership | (Wage a peer with your credentials earned − wage you were paid) × hours × years. | ($38 − $22) × 2,000 hours × 4 years = $128,000 | W-2s or pay stubs; the published scale or the posting for the job you were denied; your certifications for that period. |
Two rules for every row. Show the formula, not only the result. And put the document in the same sentence as the figure, so the reader never has to hunt for it.
Two worked examples
A. Higher cost of capital. In March 2022 an owner borrowed $120,000 for a paver over 60 months at 14.5 percent. The lender’s rate sheet for that month, printed from its website, listed 7.25 percent for equipment loans to borrowers in the owner’s credit tier with the same down payment. At 14.5 percent the payment is $2,823.39 a month and total interest over the term is $49,404. At 7.25 percent the payment is $2,390.32 and total interest is $23,419. The difference is $433.07 a month and $25,985 over the life of the loan. That is the magnitude. The type is higher cost of capital. The sentence for the narrative:
Note what the sentence does not do. It does not round $25,985 up to $30,000, and it does not count the payments the owner would have made at any rate. Only the increment is harm.
B. Cash tied up by slow pay. A subcontractor bills a prime $60,000 a month. The recipient pays the prime on time, and 49 CFR 26.29 requires the prime to pay the sub within 30 days of receiving each payment. The sub’s aging report shows an average of 75 days. Daily billings are $60,000 ÷ 30 = $2,000. Forty-five extra days × $2,000 = $90,000 of the sub’s money sitting in someone else’s account on an average day. The sub carries it on a line of credit at 12 percent: $90,000 × 0.12 = $10,800 a year.
One caution, and it matters. Slow pay by itself is an industry problem, not a disadvantage. What ties it to your basis is the financing you had to use to bridge it. If a peer with your qualifications would have carried the same $90,000 on a 7 percent bank line, the harm attributable to your barrier is the spread: $90,000 × (12% − 7%) = $4,500 a year. Claim that figure, and say in the same paragraph why the bank line was not available to you. The sentence:
When you only have an estimate
Most owners do not have a rate sheet from 2014. Write the estimate anyway, and label it. Three habits keep an estimate honest.
- Use “at least” only when every input is a documented floor. If the loan agreement says 14.5 percent and the rate sheet says 7.25 percent, “at least $25,985” is true. If either number is remembered rather than read, it is not.
- Use “approximately” when one input is estimated, and say which one. “Approximately $10,800 a year, applying the 12 percent rate on my 2024 line statements to the average balance on the aging report.” The reader knows exactly where the softness is.
- Never stack estimates. If the margin is a guess and the number of lost bids is a guess, anchor the one you can document and bracket the other: “three bids I was not permitted to submit (solicitations attached), at a margin of approximately 9 percent based on my 2023 job-cost reports.”
A fill-in pattern that fits every row of the worksheet:
If the document is gone, say so and say what stands in for it: a bank statement showing the payment amount, a tax return showing the interest deduction, a letter from the agent confirming the premium. “I no longer have the 2014 rate sheet; the payment history on the attached statements works out to an effective rate of 21 percent” is a sentence an examiner can check. “I paid a lot more than I should have” is not.
Nothing in § 26.67(a)(3) says “to the penny.” It says type and magnitude. An honest figure with its method shown beats a precise figure with no method every time. Two last points of hygiene: do not mix annual figures with lifetime figures in one total without saying which is which, and close the harm section with a short table, one line per harm, exhibit letter beside each. Examiners add the column. Make it easy for them.
The narrative interview asks for these figures one row at a time, and for the document behind each, then drafts the harm passage with the arithmetic shown. Read the draft free; pay when you download. This post explains a regulation and is not legal or accounting advice; have your accountant look at the figures before your UCP does. For the deadlines that make this urgent, see the final-rule guide.