Mistakes, deficiencies, disputes and disruptions are imminent in any construction project. No department is planning construction projects perfectly. Nobody is doing constructability review; neither departments, nor contractors! Regardless of how much experience the participants might be, claims are becoming inevitable in construction projects.
There is near certainty of flaws and conflicts in the construction process. However, the contractors are failing to respond to many claim situations when they encountering the same. Negligence, ignorance, lethargy, irresponsibility, lack of coordination, lapses in maintenance of records – are some of the reasons for such deficiency. Contract Management systems are not in place. Many construction firms are not having the required special effort to handle the contractual issues in right time and in proper manner.
Firms have to put necessary emphasis on responding to construction claims and mitigating them from the outset. Identification of claim events, pursuing the same with micro management is the need of the hour. Claims are not extra income items. Claims are rightful income in abeyance due to the non-fulfilment of the required contractual procedure. Many firms are losing the same instead of doing the necessary home work.
The basis of construction claim:
Regardless of the size or complexity of the project, construction claims tend to fall into three primary categories:
Respond quickly on a claim event:
It is essential to register your right when any claim even occurs on the project. In many cases, employers and contractors are focused on the task at hand and try to delay dealing with claim issues until a later date. That later date will not come at all or lapse in the chorus of the construction follow up. Instead, at the first hint of a problem, the parties to the contract should pause, evaluate their rights and obligations under the relevant contract documents, and seek the advice of expert to guide their decision-making.
There are often statutory or contractual deadlines and notice provisions that also must be adhered to in order to preserve certain construction claim rights and defences. Some claims will cease their efficacy if not issued an early warning notice. Some claims will lapse due to improper documentation.
The limitations/constraints placed in the contract for raising claims in a proper manner, in a right time, with due documentation is the main function of the contract management team. All deviations to the contract will become variations – if the contractor acts promptly. Many claims will lapse automatically for the reason, contractor has no proper understanding about how the contract clauses fares and how the drawings and specifications effects the same.
What preparation is required?
It is important at the beginning of a project not to rush through the contract negotiation and preparation phase. Engaging with contract management expert from the initiation of the contract work and as goal is set and before a project starts can help protect interests during a project and limit exposure to lose the rightful claims.
It is sure, perfect construction project has ever been performed or will ever exist. Consider the fact that problems will arise. To mitigate the effects of these problems, proper planning is needed and that is aided greatly by involving professionals from the start of the contracting process, and thereafter getting counsel involved early on when the prospect of a claim appears on the horizon. At the first sight of a problem, be proactive. Delaying a response almost always results in bigger issues and potential litigation that is more expensive for everyone involved.
Please keep it in mind Risks and Claims are unavoidable parts of construction projects. How much attention you pay on such issues, how you manage the issues and disputes and how you keep the records intact will decide how much success you attain in realising your claims and mitigate the risks.
Further Reading:
The Importance of Construction Claims
Construction Claims are emerging as a major challenge!
How To Prove Construction Claims:
There is near certainty of flaws and conflicts in the construction process. However, the contractors are failing to respond to many claim situations when they encountering the same. Negligence, ignorance, lethargy, irresponsibility, lack of coordination, lapses in maintenance of records – are some of the reasons for such deficiency. Contract Management systems are not in place. Many construction firms are not having the required special effort to handle the contractual issues in right time and in proper manner.
Firms have to put necessary emphasis on responding to construction claims and mitigating them from the outset. Identification of claim events, pursuing the same with micro management is the need of the hour. Claims are not extra income items. Claims are rightful income in abeyance due to the non-fulfilment of the required contractual procedure. Many firms are losing the same instead of doing the necessary home work.
The basis of construction claim:
Regardless of the size or complexity of the project, construction claims tend to fall into three primary categories:
- Deficiencies in the actual design and/or construction.
- Payment disputes for base contract sums that are due; and or any excess/changed work that has been performed.
- Compensatory events.
Respond quickly on a claim event:
It is essential to register your right when any claim even occurs on the project. In many cases, employers and contractors are focused on the task at hand and try to delay dealing with claim issues until a later date. That later date will not come at all or lapse in the chorus of the construction follow up. Instead, at the first hint of a problem, the parties to the contract should pause, evaluate their rights and obligations under the relevant contract documents, and seek the advice of expert to guide their decision-making.
There are often statutory or contractual deadlines and notice provisions that also must be adhered to in order to preserve certain construction claim rights and defences. Some claims will cease their efficacy if not issued an early warning notice. Some claims will lapse due to improper documentation.
The limitations/constraints placed in the contract for raising claims in a proper manner, in a right time, with due documentation is the main function of the contract management team. All deviations to the contract will become variations – if the contractor acts promptly. Many claims will lapse automatically for the reason, contractor has no proper understanding about how the contract clauses fares and how the drawings and specifications effects the same.
What preparation is required?
It is important at the beginning of a project not to rush through the contract negotiation and preparation phase. Engaging with contract management expert from the initiation of the contract work and as goal is set and before a project starts can help protect interests during a project and limit exposure to lose the rightful claims.
It is sure, perfect construction project has ever been performed or will ever exist. Consider the fact that problems will arise. To mitigate the effects of these problems, proper planning is needed and that is aided greatly by involving professionals from the start of the contracting process, and thereafter getting counsel involved early on when the prospect of a claim appears on the horizon. At the first sight of a problem, be proactive. Delaying a response almost always results in bigger issues and potential litigation that is more expensive for everyone involved.
Please keep it in mind Risks and Claims are unavoidable parts of construction projects. How much attention you pay on such issues, how you manage the issues and disputes and how you keep the records intact will decide how much success you attain in realising your claims and mitigate the risks.
Further Reading:
The Importance of Construction Claims
Construction Claims are emerging as a major challenge!
How To Prove Construction Claims: