Updating Costs Budgets and Amending Incurred Costs: Paying Party Challenges

When Can a Costs Budget Be Revised?

Costs budgets are not fixed forever. Under PD 3E, parties must revise their budget where a significant development occurs.

However:

• Overspend alone is not a significant development

• A failure to understand the case at the CCMC is not a justification

• Late attempts to “repair” a budget are often rejected

This is a key issue for paying parties seeking to limit recovery.

👉 See: Proportionality Challenges at Detailed Assessment.

The Distinction Between Incurred and Budgeted Costs

The court:

• Does not approve incurred costs at the CCMC

• But they remain subject to reasonableness and proportionality at assessment

Receiving parties often argue that incurred costs are “immune”. They are not.

Paying parties should:

✔ challenge grade

✔ challenge delegation

✔ apply proportionality

✔ rely on conduct

👉 See: Fee Earner Delegation Challenges at Detailed Assessment.

Late Budget Revisions: The Court’s Approach

Courts consistently hold:

• Revisions must be prompt

• They must be supported by clear evidence of a development

• Post-event revisions are rarely allowed

Where a party seeks to amend a budget after work is done, the correct forum is detailed assessment, not retrospective budget approval.

This creates an opportunity for paying parties to argue:

• No approved budget for the work

• Work falls outside scope

• Costs should be reduced to reasonable levels only

👉 See: Detailed Assessment Paying Party Services

Amending Incurred Costs – What Actually Happens

Attempts to “revise” incurred costs usually fail because:

• They are historic spend

• The court does not reopen incurred figures

• They are tested only at assessment

This allows paying parties to:

✔ attack proportionality globally

✔ apply stand-back reductions

✔ argue poor case management

👉 See: Recoverability and Conduct Risks

Paying Party Tactical Points

Effective challenges focus on:

• No significant development

• Budget assumptions already covered the work

• Delay in seeking revision

• Disproportionate incurred spend

• Senior time for routine work

These arguments frequently lead to substantial reductions at detailed assessment.

Why This Matters

Budget discipline is now the front-line proportionality control.

For paying parties, early analysis of:

• budget assumptions

• incurred vs budgeted spend

• scope of revisions

  
  

can materially reduce exposure.

Key Takeaways

✔ Incurred costs are not approved costs

✔ Late revisions are rarely allowed

✔ Overspend ≠ significant development

✔ Detailed assessment remains the real battleground

✔ Paying parties can use budget failures to drive reductions