17 Jan Types Of Construction Claims And How To Avoid Them
Construction claims arise when one party believes that another party has failed to meet its contractual or other legal obligations during a project. They can relate to delays, payment, changes to the scope of work, defective work, extensions of time, or other issues that affect cost, time or project performance.
Claims can quickly become consistently and time consuming if they are not identified and managed early. Good project controls, clear communication, accurate records, and effective processes can help reduce the risk of disputes developing into formal claims.
Understanding the most common types of construction claims can help contractors, clients, consultants, and project teams identify potential problems earlier and take action before they escalate.
Breach of contract
A breach of contract occurs when one party fails to meet an obligation set out in the construction contract. This can include failing to complete work within the agreed timeframe, failing to make payments when they are due, failing to comply with specified requirements, or carrying out work that does not meet the contractual requirements.
Construction contracts set out the responsibilities of each party and the procedures that should be followed when problems arise. The specific contract and applicable law will determine what constitutes a breach and what remedies may be available.
For example, a contractor may fail to complete work within the agreed programme or fail to meet specified project or quality requirements. A client may fail to make payments when they fall due or instruct changes without following the contractual procedure.
Many potential contractual disputes can be reduced through effective project management and good record keeping. Clear instructions, documented decisions, accurate progress records, and early identification of problems can make it easier to establish what happened, when it happened, and who was responsible.
Where a contractual dispute does arise, the contract will normally set out the process for resolving it. Depending on the contract and applicable law, this may involve negotiation, mediation, adjudication, arbitration, or court proceedings.
In the Middle East, contracts in the construction sector are typically governed by the FIDIC (International Federation of Consulting Engineers) conditions of contract. The FIDIC conditions outline the rights and obligations of both the contractor and the client, as well as the procedures for resolving disputes.
Delay in completion
Delay is one of the most common causes of construction claims. A delay occurs when a project, activity, or contractual milestone is not completed within the required timeframe. Depending on the circumstances, the delay may result in additional costs, disruption to other activities, or claims for an extension of time.
Delays can arise for many different reasons. These may include changes to the project scope, late information or approvals, unforeseen site conditions, problems with materials or labour, design issues, or delays caused by other parties involved in the project.
It is important to establish the cause of a delay rather than simply looking at the date by which the work was completed. Construction projects involve many interconnected activities, and a delay in one area can have a knock-on effect on other parts of the programme.
Good project records are particularly important when dealing with delay claims. Updated programmes, site records, correspondence, instructions, meeting minutes, photographs, and records of labour and resources can all help establish what happened and how the delay affected the project.
The contract will determine how delays are dealt with and whether a party may be entitled to an extension of time, additional costs, damages, or other remedies. Early identification and proper management of delays can help prevent a relatively small programme issue from developing into a significant dispute.
Defective work
Defective work is another common source of construction claims. It occurs when completed work does not comply with the requirements of the contract, approved design, specifications, applicable standards, or required performance.
Defects can arise for many reasons, including poor workmanship, unsuitable or defective materials, incorrect installation, inadequate supervision, design errors, or failures in the inspection and quality control process.
Not every defect is necessarily the responsibility of the contractor. Establishing the cause of the defect is important, particularly where several parties have been involved in the design, procurement, manufacture, installation, or approval of the work.
The contract will normally set out the obligations of the parties in relation to defects and the procedures for notifying, investigating, and correcting defective work. Depending on the circumstances, the responsible party may be required to repair or replace the defective work, or other contractual remedies may apply.
Defects identified after completion can be particularly difficult to resolve if there is insufficient evidence of how the work was carried out. Clear inspection records, photographs, approvals, test results, material records, and documented corrective actions can help establish what happened and provide an audit trail.
The best way to reduce the risk of defective work is to identify potential problems early. Effective inspection and quality control processes should focus not only on finding defects at the end of the project, but on preventing them from occurring in the first place.
Conclusion
Construction claims can have a significant impact on cost, programme, and relationships between the parties involved in a project. While not every claim can be avoided, many potential disputes can be reduced by identifying problems early and maintaining clear, consistent project controls.
Understanding the causes of claims is only part of the solution. Strong processes, accurate records, effective communication, and early intervention can help prevent operational issues from developing into costly disputes.
If you are experiencing recurring defects, delays, unclear processes, or other operational problems on your construction project, Qualitaz can help identify where the underlying issues are occurring and what can be improved.
Find out more about our construction process improvement and operational review services.
