By: Editorial Staff, Date: January 2nd, 2024
In the complex world of construction, disputes and disagreements are unfortunate but unavoidable due to timelines, budgets, and various factors. As construction projects progress, stakeholders often encounter various challenges, including unexpected delays, exceeding budgets, and disagreements over contract terms. It is in these moments that the concept of construction claims takes center stage, becoming a crucial aspect of project management and resolution.
This article will delve into the factors that give rise to construction claims and provide proactive strategies that can be employed to mitigate their occurrence.
Various challenges during construction can lead to construction claims. Below are the most common types of construction claims:
- Construction Delay Claims
Construction delays are inevitable, leading to projects finishing beyond the agreed-upon deadline of completion. The causes of these delays can range from bad weather, permit issues, sudden changes in the plan, differing site conditions, to defective design plans. While some causes may be beyond the control of the client or contractor, a construction delay claim can be filed, especially if the delay results in financial loss.
Such delay claims can significantly impact both the contractor and the client, affecting them in terms of financial loss, reputational damage, and legal consequences.
- Payment Dispute Claims
Payment disputes frequently arise in the building and construction industry, typically occurring when the contractor requests payment for completed work, and the client either denies payment, fails to provide a payment schedule, or withholds payment.
- Differing Site Conditions
In construction, a differing site condition arises when an unexpected or unknown physical condition at the site significantly differs from what was mentioned in the contract or what could reasonably be discovered before signing the contract. When the contractor discovers such conditions, delays and additional costs may be incurred, leading contractors to request additional compensation or time to finish the project.
- Damage Claims
Damage claims arise when the contractor causes any damage to the site or property while working on the project. If the client incurs property loss due to the damage, they can file for damages against the contractor, who will be held liable for the harm.
Preventing and resolving construction claims is paramount for both the contractor and the client. Following are some ways to prevent construction claims:
- Have a clear and comprehensive contract.
Having a contract that clearly defines the scope, schedule, budget, and quality of the work can help in minimizing the risk of construction claims. A clear contract can avoid misunderstandings, uncertainties, and conflicts that might result in claims and legal disputes.
- Monitor performance and compliance.
Monitoring and documenting the performance and compliance of all parties can be helpful for effective communication and aid in conflict resolution in case a dispute arises in the future.
- Manage changes and delays properly.
Changes and delays are unavoidable but can also heavily impact the scope, budget, and quality of the project. Managing changes and delays involves a clear process for requesting, approving, and implementing changes.
- Resolve disputes as early as possible.
Disputes that are not resolved early can lead to claims and litigation, causing stress for all parties and damaging the relationship and reputation of those involved. Establishing a dispute resolution method, such as negotiation, can aid in settling the dispute early. It is also important to be cooperative and respectful rather than placing blame.
As we move forward in the ever-evolving landscape of construction, understanding and addressing the root causes of construction claims will undoubtedly contribute to more successful and harmonious projects in the future.
Learn more ways to troubleshoot construction claims in our webcast: Troubleshooting Guide to Construction Claims: How to Manage Changes and Delays
