Causes of Construction Claim: Types and Preventive Measures
Clients, contractors, and subcontractors often file construction claims to increase their benefits as a result of efforts to meet their objectives. In order to remain competitive, contractors sometimes propose project bids with low profit margins.
Because of this, contractors face additional pressure to complete the projects while generating lower profits. Due to differing expectations and aims, the contractor may end up dissatisfying the client during the execution of the project.
Construction Claim Causes
In the construction industry, there are many conflicts between parties, which usually lead to lawsuits.
The supply of drawings, handover of the site, the supply of materials, payments, and the start of work was delayed. The maintenance deposit will be refunded & extending the deadline resulted in extra overhead.
A loss can occur from idle labor and idle machinery as a result of errors in design due to inadequate design information, a change in the scope of work, or an accident.
During construction, plans and specifications changed. Contract documents contain ambiguities.
Low Planning from Contractor
Despite inadequate site investigation, the tender was based on low rates. Certain changes are made by the owner or changes that occur without their consent.
The contractor was incompetent in terms of technical skills because the deadline had been extended and he was financially bankrupt.
Poor construction quality and inappropriate equipment led to the disaster. Lack of compliance with authorized procedures as a result of the work causing damage to adjacent buildings.
Workers have stopped working as a result of the strike. The cause of the disaster was natural calamities. The cost of materials and fuel has increased. During adverse weather conditions, ground conditions were unforeseen.
Construction Claims Types
Construction projects can damage nearby properties such as businesses if they cause harm to the property. By bringing a claim for damages against the contractor, the customer who sustained property loss can hold the contractor accountable.
Various Conditions of Site
When the client's representation of the project site differs from the actual condition of the site, it may be possible to claim different site conditions.
Whenever unanticipated events delay the completion of a project beyond what had been anticipated. A delay in construction will result in a loss of production and money. In addition to flawed designs, bad weather, a pandemic, or an earthquake, there can be events beyond the control of the contractor.
Daily Work Changes
Typically, this is a claim made in the construction industry. This claim is made when the contractor receives a modification order from the customer after the project has already begun. The contractor and customer disagree when it comes to what is covered by the contract.
Construction site safety regulations may not have been followed when accidents occur. The catastrophe might involve construction workers as well as onlookers.
Project Budget Increases
A price escalation claim occurs if the anticipated project budget rises due to the project being completed early or on time. The clients submit claims because the accelerated service is a billable service, and the costs associated with it are their responsibility.
Solution for Avoiding Construction Claim
Solving any kind of Contractual Issue
It is important for contractors to take preventive measures to avoid the lengthy process of construction claims. Contracts have clear terms and conditions that prevent legal disputes between parties. Good contracts ensure a fair distribution of risks among all parties to reduce risk and legal conflicts.
Design teams should be given as much time as possible to develop accurate and consistent specifications, bills of quantities, and drawings.
Construction contractors prioritize the safety of their employees & the property of the project. By implementing a construction safety program, safety concerns can be addressed & injury risks reduced.
Quality Checking of Work
The contractor should maintain the quality of his work by hiring qualified workers and following sound management practices.
Timesheets, diary entries, reports, photographs, labor records, equipment used on the job, weather impacts, and construction progress should be maintained promptly. A change order should be signed by the contractor before any modification work begins on the job site.
To learn more, watch the following video tutorial.
Video Source: AIA Contract Documents
Wrapping it up
Construction claims are rated as one of the most stressful and unpleasant project moments by project participants. In the worst case scenario, they can lead to a protracted legal battle or even bankruptcy. Additionally, scope revisions, change orders, mistakes, and omissions contribute to claims.