The Total Cost Method has been used for many years. Though it is still not preferred by Courts and in arbitration, it stll finds its place on today's construction claim damage scenarios. The "Total Cost" method is not a formula but a set of safeguards designed to protect the defendant from a runaway damages claim. One cannot claim more than was lost in direct damages. We must always keep in mind that each and every construction project is unique and the end product always different.
From the linked whitepaper: "This "cost overrun" as a measure of the damages will be deemed acceptable when the four prong safeguards of the "total cost" method are satisfied. These safeguards require the non-breaching party/contractor to show: (1) the impracticability of proving the cost of the "extra work" by other means; (2) the reasonableness of the contract price; (3) the reasonableness of the actual costs; and (4) the lack of responsibility for the increased cost of performance.