The Successful Claim
Construction projects often involve many complexities. These include delays, design issues, and disputes over the work’s scope. When such issues arise, it’s essential to have a clear, well-documented claim to protect your rights and ensure the project stays on track. Preparing a successful construction claim requires careful attention to detail, good records, and effective communication. It should also be borne in mind that a ‘claim’ is merely an assertion of your rights and entitlements under the contract. There is nothing wrong with asserting the rights the contract was written to uphold.
1. Understand the Basis of the Claim
The first step in preparing any construction claim is to identify its basis. Common types of claims include:
- Delay: Which occurs when the project timeline is disrupted due to events outside the contractor’s control, such as bad weather or late deliveries.
- Change: Claims for additional work or materials that were not originally planned or included in the contract.
- Disputes Over Payment: Claims related to non-payment or insufficient payment for work completed.
- Defects or Non-Compliance: Claims related to work not meeting the agreed-upon standards or specifications.
Identifying the cause of the dispute is key to structuring a successful claim. It’s also important to thoroughly review your contract. Identify which clauses cover the specific situation and ensure you understand the proper procedure for submitting claims. If in doubt, get professional help.
2. Review the Contract and Documentation
Before filing a claim, it is crucial to review the contract and all related documents. Contracts often contain specific procedures for submitting claims. These may include notice periods, required documentation, and deadlines.
Gather all relevant project documentation, including:
- Contract Documents: This includes the signed contract, plans, specifications, and any amendments or change orders.
- Correspondence: Emails, letters, and meeting minutes are key pieces of evidence that can support your position.
- Daily Records: Construction daily reports or progress records are invaluable for documenting the timeline of events, delays, or extra work.
- Photos and Videos: Visual evidence of delays, defects, or deviations from the contract can be persuasive.
- Invoices and Payment Records: Documents showing work completed and payments made or withheld are essential when dealing with payment disputes.
Having a comprehensive set of documents will help establish the facts and provide clear evidence to back up your successful claim.
3. Notify the Other Party
Most construction contracts require a notice of claim to be issued within a specific timeframe after the event giving rise to the claim occurs. This is crucial. Failing to provide timely notice could result in the forfeiture of the right to make a claim. In the notice, you should outline:
- The nature of the claim: Briefly explain what the claim is for (e.g., delay, additional costs, etc.).
- The cause of the issue: Identify what caused the issue, whether it’s an external event, a change in project scope, or something else.
- The impact: Describe how the issue has affected the project, including delays, increased costs, or complications.
Providing this notice is an essential step. It serves to formally alert the other party to your intention to make a claim. The notice also ensures that you remain in compliance with contractual timelines.
It is important to also check the requirements of the contract, as this may contain specific requirements of what documents are to be included with the notice.
4. Quantify the Claim
Having completed the easy part, you then need to quantify your claim. Showing how the issue has impacted the project is harder than it sounds. This could involve:
- Time Impact: If the claim involves delays, calculate how much additional time is needed to complete the work. It is unlikely to be as simple as, “a delay of five days has caused five days’ delay”. An analysis of delay will need to take into account all other factors at the time of the delay and demonstrate the impact of the specific event.
- Cost Impact: If there are additional costs associated with the claim, provide a detailed breakdown of these costs. This may include labour costs, material costs, and any other expenses incurred due to the event.
- Financial Impact on the Project: Include both direct and indirect costs. Direct costs are those incurred as a direct result of the claim. Indirect costs can include overheads or project management fees that increased due to the delay or change. The indirect costs are often the more challenging to prove.
It’s essential that these figures are supported by accurate documentation. Realistic estimates and calculations will minimise challenges to your claim.
Again, it is important to also check the requirements of the contract, as this may contain specific requirements of what documents are to be included to evidence your cost claim.
5. Engage in Negotiation or Mediation
After submission of a claim, the next step is often negotiation or mediation.
Both parties will have the opportunity to discuss the claim and attempt to reach a resolution without going to formal resolution. Being prepared for these discussions is crucial. Ensure that you:
- Know your facts: Be familiar with all the documents and evidence supporting your claim.
- Be reasonable: Construction claims often involve some degree of compromise. Be prepared to negotiate and find common ground that works for both parties.
- Consider alternatives: Sometimes, mediation can result in a settlement that benefits both sides and avoids the need for prolonged litigation. It is also important to note that the courts are recognising the benefits of mediation and instructing parties to mediate prior to litigation.
6. Be Prepared for Litigation
In cases where negotiation or mediation fails, adjudication, arbitration, litigation or another route may be necessary. Although litigation can be costly and time-consuming, it may be the only recourse when no resolution can be reached. Ensure that your claim is fully documented and that you have consulted with legal professionals to guide you through the process.
Conclusion
A successful construction claim involves understanding the causes of the dispute, documenting the issue, and following the procedures outlined in the contract. By approaching the process systematically, you increase the likelihood of a positive outcome. Start with early notification, quantifying the impact, and negotiating a fair solution. A well-prepared and presented claim helps to protect your financial interests. It also ensures that the project progresses as smoothly as possible despite challenges.
A successful claim is not necessarily a claim that includes the ‘kitchen sink’ as some may say. Well presented claims that are clear, concise and include relevant documentation only, narrated in an easy to understand format have a greater chance of success.
It needs to be remembered the claim could be seen by a number of people. These may include Employers, Contractors, Sub-Contractors, Directors of businesses who do not have the time to wade through a ‘war and peace’ style narrative. Some claims simply are extensive by their nature and complexity.
However, you may have the most valid claim in the world, but if it is not easily understood then you may run the risk of having your claim dismissed out of hand!
In the event you need help with any of the above, get in touch with Guy, Jason or one of the team.
