Talking about construction claims can be a bit of taboo. The word itself can conjure up thoughts of consultants trying with all their might to bump up the contract price, claiming for anything and everything they might (or might not) have entitlement to.
But claims shouldn’t be avoided, they are simply a way to assert your rights under the contract.
Claims are prepared for matters such as loss and expense, extensions of time or liquidated damages. Your contract should set out exactly what you are entitled to and the process for making a claim. It is important that you follow these contractual requirements, as a mistake along the way could mean that you lose your entitlement.
What am I Entitled to?
It is the contractor’s responsibility to identify their entitlement to claims. Before we even look to assess the value of a claim, we need to be sure that we have the right to make the claim in the first place. We would like to think that our readers are referring to the contract regularly, but if not, you’ll have to dig it out of the drawer it has been hiding in and look at your contractual rights. Remember, the contract sets out the agreed rules the parties are to play by. Even if you are familiar with the particular form of contract you are using, it is important to double check, as amendments can and usually do make a big difference to entitlement and risk allocation.
Under most forms of contract, you’ll be required to notify about changes or breaches as soon as you become aware of them. That’s why it is so important to refer back to the contract throughout the works. Ultimately, the contract is put in place for the benefit of the parities who singed for it.
When preparing the notice, it is good practice to include the contract clause you are relying upon for entitlement. As well as timing requirements, you should also check whether the contract specifies who the notice should be served to and in what format.
What Evidence Do I Need?
The general rule of thumb is “they who assert must prove”. So, if you are claiming a sum of money is owed to you, it is your obligation to prove it. This is where we come back to the age old mantra “Records, Records, Records”. In order to satisfy the burden of proof, you’ll need to evidence your case.
At this point you’ll need to review the project documents and put together your evidence. This, as always, will involve record keeping. You can rely on a number of things, such as:
- Site diaries.
- Progress reports.
- Drawings and specifications.
- Photographs and videos.
- Correspondence including emails and even WhatsApp messages.
Contemporaneous records (i.e. those produced at the time the issues occurred) are always going to carry more weight. That’s why it is so important to get your record keeping in order before issues arise. Also, the quality of the records is of importance, such as photographs that provide a wider context.
Cause and Effect
It is not merely enough to prove additional costs or delays occurred. For example, your contract might state that extreme weather events entitle you to an extension of time, and you may have evidence of an unseasonable storm taking place. However, you must prove that the storm caused the delay for your claim to be successful. A simple assertion does not prove the existence of a claim.
So, for example taking the above, you may need to show that the delayed events were on the critical path, and that progress was on track prior to the delay caused by the weather. In this case, you may need to provide a delay analysis to substantiate your claim, and also provide records showing that you had the required level of resource to carry out the works in any event
What if I’m on the Receiving End of a Claim?
If you are the employer (or working in that position) it is likely to be part of your role to assess the merit of a claim before responding. Similar to the contractor issuing the claim, your first step here will be to refer back to the contract. Just as it sets out the process for issuing a claim, it will likely set out the process and requirements for responses, including any evidential requirements
Then the detail of the claim is to be assessed. You should identify whether the claim includes the appropriate information for you to reach a conclusion. As with the above, you should be checking:
- Is the contractor entitled to claim under the appropriate contract clause?
- Has the claim been submitted in line with the contractual requirements?
- Does the claim include evidence clearly proving cause and effect?
If the answer to these questions is no, you might reject the claim or request further information. If you are satisfied that the above questions are answered, you would then look to consider whether the amount of money or time being claimed is reasonable.
As for those issuing a claim, you should make sure that the response is issued as per any contractual requirements, within the correct timeframe and in the right format.
If you’re looking for support in preparing or responding to claims, our team regularly prepare quality, fully particularised claim submissions and support clients assessing claims from their contractors. Get in touch today or visit our services page to find out more.