Construction projects are by nature complex, uncertain, run on for long durations, and involve many parties. Therefore, if you are getting involved in a construction project, dispute avoidance should be all parties’ overriding objective. Not only does a construction claim weigh heavy on all the parties involved, but it also delays a project unnecessarily and leads to unforeseen complexities. Here are the most construction claims that often occur during a construction project.
Differing Site Conditions Claims
Suppose one party encounters different conditions of the project site compared to those identified in the contract documents or what was clear from pre-bid inspections. In that case, they are well within their right to serve a notice, making sure to define in detail how the condition is a differing site condition and additional costs they anticipate. For instance, a contractor has been told that the job site is grass, only in a sandpit. In such a case, construction costs can run quite higher than initially agreed upon. Similarly, unforeseen conditions are encountered when renovating an existing structure as materials become removed. Under these circumstances, the contractor is entitled to additional compensation.
Payment related claims
Delayed or withheld payment of bills, security deposit, maintenance deposit, etc., unreasonable deductions, and failure to account for all of the costs on the project are the most common causes of claims in the construction industry. Under such claims, the contractor is the claimant, while the client becomes the respondent.
Change is inevitable in any construction project. The contractor may receive a change or a revision order from the client after the project has started. A dispute may arise regarding the project’s scope, especially if the modification fundamentally altered the cost and schedule of the project. Particularly, if there is a change to the original plan due to a misinterpretation of the existing contract, faulty specifications on the end of the client, or external factors hindering the contractor’s work, the contractor is compensated for the additional costs the change incurred.
When either party in a construction contract temporarily suspends a contract, which can cause the other party to incur additional costs, the responsible party will be liable to compensate. This is why it is important for the parties involved to know beforehand whether the other party can suspend performance, how long, and whether suspension is liable for compensation before the project resumes. Similarly, the contract should mention the number of days after suspension when the other party can terminate the contract.
Construction claims pertain to schedule impact and occur when unforeseen events, circumstances, or activities hinder project completion as originally planned. Sometimes, delays occur due to situations that are out of the contractor’s control.
Delays and disruptions are quite common with larger, more complex projects. Delays are also difficult and time-consuming to prove, especially in projects involving multiple stakeholders and tons of details and activities.
Extra Work Claims
Sometimes, the client may expand the project’s scope after construction has started. Any extra work performed by the contractor that was not part of the original contract is eligible for compensation. However, a dispute may arise due to a misunderstanding in the contract documents. The owner believes that the work was a part of the original contract, but the contractor believes otherwise.
Difference In Pricing Claims
These types of claims usually pop up during the final stages of construction. Usually these claims pertain to the perceived price difference between the contractor and the owner with regard to the materials used. Usually, any change to the scope of the project inevitably leads to a difference in pricing.
Defective and Deficient Contract Documents
Contractors usually use the given project documents to determine their bid for the project, including their costs and profit. Suppose a contractor has built exactly in line with the plans and specifications prepared by the owner. In that case, the contractor cannot be held accountable for any defects in the building due to inaccurate or lack of information in the plans and specifications.