Weather conditions, changes in plans and specifications, and unforeseen site conditions are just a few of the challenges that can throw a construction project off course. Unfortunately, such challenges often lead to claims—a request for additional compensation of either cost or time.
Fortunately, claims do not always result in a lawsuit. The party asserting a claim must show entitlement and damages. For entitlement, the party must show that, under the terms of the contract documents, it is entitled to the additional time or money. To prove damages, the party must show the amount in dollars or days that it was injured as a result of the underlying claim.
Claims avoidance is key. Here are some tips to help your team avoid and mitigate claims.
- Know your contract requirements. Claims avoidance begins with understanding your contract requirements—and adhering to that contract. Know your responsibilities, other parties’ responsibilities, and the ramifications of any party’s failure to fulfill its responsibilities. Identify the vague areas before work begins and develop a plan to deal with potential problems not addressed by the contract.
- Document problems and resolutions. If issues occur, document these as they arise (and not after the fact!). Such documentation may include daily logs, payroll records, job cost reports, test reports, correspondence, time-stamped photographs, and video. Keep records of problems encountered as well as methods used to resolve the issues. Finally, use correspondence effectively, intelligently, and respectfully.
- Continuously review the schedule. Knowledge of the day-to-day changes and events will help you identify potential claims before they impact the project schedule or budget. Document the activities or events that have caused a delay or acceleration. To minimize adverse impacts on a project, identify ways the project can make up for lost time and money. Often, rescheduling or re-sequencing of work will help recover lost time.
Complete contract documents, accurate project documentation, and a construction schedule are essential components to mitigating a claim. The first step is identifying that there is an impact. The next step is identifying the underlying cause of the impact. Finally, it is important to identify methods to minimize, eliminate, or correct the effect to the project.
Further, updating and maintenance of project documents may be the most important component for the mitigation of any claim. You must commit to reviewing and updating files on a daily or weekly basis. Keep in mind that it may be difficult to identify potential claims or issues if you do not maintain and update all project records regularly.
Kristen E. Braden, P.E., Esq., Director of Construction, provides construction management on public construction projects as well as construction claims management and resolution services for H.R. Gray, Inc. in Columbus, Ohio.