Engineers are often called upon to quantify the economic consequences or "damages" suffered by one or more participants in a law suit, insurance claim or before an arbitration panel. The cause of such economic loss or damages may be the result of an accident or the overt action by one or more of the parties of the agreement or by third party intervention.
This paper presents the differences and applicability of two types of economic evaluations to estimate damages. The first method is the Fair Market Value (FMV) approach traditionally used in cases of confiscation or expropriation that may result from interventions from a third party outside the agreement. The second method is a Loss of Bargain (LOB) approach to estimate damages caused by breaches by one or more of the parties of the contract.