Contractors don’t wish to be claim conscious as it can damage their reputation and relationships with clients. However, due to highly competitive tendering, hard negotiation, misunderstanding and underestimating, contractors can be put in a position of financial loss with no choice but to formulate a claim.
The claim must of course arise from a valid reason and generally the reason/cause is delays, variations/changes, unforeseen circumstances, insufficient information, access/possession of work areas, working concurrently with other contractors engaged by the client, and conflicts.
Claims also might be made for loss and expense, extension of time, liquidated damages, and so on. The contract should set out what can constitute a claim and how it should be dealt with.
DQS Approach to Claims
DQS have many years’ experience in preparing and defending complex construction claims and to ensure a claim is to be settled amicably it must adhere to the following:
- Avoid unmerited and exaggerated principles and quantum.
- Proper legal entitlement must be established.
- Cause and effect must be clearly demonstrated by contemporaneous records.
- Additional costs must be backed up by full supporting documents.
- A thorough review of initial surveys/ground investigations. National Economic Development Office (NEDO) reported that 60% of the claims for 5000 industrial buildings, 8000 commercial buildings, 200 roads and bridges all arose from delays due to ground problems.
- Identify design responsibilities to determine any ambiguity.
- Determine if information supplied by the contractor has become a contract document or the basis of variations. For example; programmes, resource charts and method statements.
- Review technical information that has been exchanged post contract. Many claims are based on delays resulting from design consultants issuing schedules, drawings and specifications after construction has begun. Conflict can then arise due to arguable deficiencies in that information.
- Review status and content of contractor’s programme. Identify contractual status, realistic time for carrying out sections of work and approval process for conformity and co-ordination with other contractors/specialists. This programme is most likely to be the basis upon which all future claims for delay, extension of time, disruption and loss and expense are based and it should therefore be considered in detail.
DQS are opposed to the global claim. This is a claim made by lumping together many different causes of delay to make a case for continuous disruption. DQS argue that a global claim contains all the contractor’s inefficiencies and is therefore unconvincing and a distraction to real cause and effect. It is better to be specific rather than generic. This is a more painstaking exercise but is a more precise way of establishing quantum and will lead to a more factually based judgement.