Having worked as construction contractors over the past 40 years, Holloway Consulting understands the challenges contractors face in achieving profitability on projects. This is the latest page in our series about how Holloway Consulting helps contractors resolve claims
Construction Contract Claims
Determining Causes and Quantum Of Contractor Claims
There will be times when a construction contractor will recognize entitlement prior to quantum or damage, and other times when the inverse will be true. On those occasions when entitlement precedes damage, the contractor should immediately place the owner on written notice regarding the timing and nature of the causal events. In fact, in the absence of timely written notice, many claims will be barred by contract.
On those occasions when extra costs or damages are recognized ahead of entitlement, the contractor should immediately undertake an investigation into the status of the work to identify the potential causes. (Holloway has developed questionnaires to guide the contractor (and owner) through the initial phases of these investigations.)
Causes Of Contractor Claims
The complexities inherent in the claim identification and resolution process are illustrated in a brief examination of some of the consistent causes of contractor claims against owners, in both private and public contracts:
1. The owner’s failure to adjust the construction schedule, or grant a time extension, even in the face of valid contractor claims.
2. Changed conditions relating to the contract between the Owner and Contractor that are so dramatically different as to render the original agreement void.
3. Conditions outside the base agreement that are unilaterally imposed by the Owner onto the Contractor.
4. Contract documents that contain errors and omissions, code violations, or a lack of inter-discipline coordination.
5. Failure of one or more of the parties to perform in a timely manner, thereby delaying the other party.
6. Failure of the owner’s agent to perform proper investigation of subsurface and/or site conditions.
7. Changes in the work unilaterally imposed by the owner onto the contractor.
8. Conditions known only by the owner that will adversely affect the contractor’s performance.
9. Project conditions not contained in the contract documents that prevent a party from performing efficiently.
10. Overzealous, deficient, or unreasonable performance on the part of an Owner’s agent.
11. Unilateral or uncompensated suspension of the contractor’s work.
12. Contracts that are terminated by the owner, either for convenience or for cause.
13. Abnormal or unusual weather conditions.
14. Untimely delivery or deficiency in a component furnished by the owner.
There may, of course, be other causes of contractor claims, but the foregoing represents causes that repeatedly occur on construction projects.
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