interim claims

10 Things Construction Gets Wrong When it Comes to Claims

Inadequately expressed claims are one of the leading causes of time-consuming and costly disputes. Avoid common mistakes to ensure acceptance of claims.

In this post, we set out ten common reasons that claims end up as disputes and offer best practice tips so you can ensure you do better. Take a look at the following, have you fallen foul of them? Are you constantly looking out for them so you can avoid them?

Common Mistakes

  1. Contractors wait until the end of the project to submit claims, instead of submitting claims when entitled to, as the project progresses.
  2. Contractors include several delay events into a single consolidated claim instead of preparing separate claims for each delay event.
  3. Contractors do not give notices of claim within contractual timeframes, and notices do not contain necessary information.
  4. Claims do not contain an adequate examination of cause, effect, and entitlement to justify the claim.
  5. Claims are not adequately substantiated to prove that the claim is just.
  6. Engineers and contract administrators do not follow their contractual obligations to respond to claims and attempt to reach agreement.
  7. Both claims and responses to claims are poorly expressed, so the recipient has difficulty in understanding the claimant or respondent’s positions.
  8. Delay analyses to demonstrate extensions of time are not performed following good practice.
  9. Cost claims are poorly demonstrated and substantiated.
  10. Those tasked with preparing and responding to claims are inadequately trained and qualified.

Whilst very common mistakes, these are all avoidable. They are all things you can keep an eye out for and minimise or even eliminate to ensure project success.

If you would like to learn how to submit successful claims and achieve quick resolution on projects, take a look at our e-courses.


cost claims, prolongations costs,

Cost Claims: 11 Tips for Success

Cost claims can be tricky...and if you want yours to be a success, there are some important principles to follow. Not only that, you need to present your claim in line with good practice. This article discusses both.

Before we go further though, I'd like to mention that some contracts and legal jurisdictions refer to “costs” and others refer to “loss and expense”. Essentially, they mean the same thing, but here I will refer to “costs”.

Principles for Cost Claims

1. The general principle for cost claims: put the claimant in the position that he/she would have been in, had the breach of contract or claimable event not happened.

2. Most cost claims are related to extension of time claims. If there is an extension of time, the Contractor will incur costs to maintain his site and head office for longer than planned. These costs are generally referred to as “prolongation costs” and form the majority of cost claims.

3. Most contracts provide that cost is actual cost incurred. In other words, money that the claimant has spent or will have to spend.

4. In light of the above, you cannot calculate costs from estimated costs shown in the Preliminaries or General Items from the bills of quantities.

5. If there is true concurrent delay, i.e., where an Employer-responsible delay and a Contractor-responsible delay occur at the same time, and both affect the time for completion, then the entitlement to claim costs for the concurrent delay period is generally negated. Why? Because the Contractor would have incurred costs for this period had there been no Employer-responsible delay, so he/she may not profit from his/her own failure.

6. In some cases, the contract may allow for recovery of profit and costs. Check your contract and the clause that provides entitlement for this.

7. Calculate the cost at the time that the cost was incurred. In a claim for prolongation costs, the costs are incurred during the time of the delay and not for the extended period. If, for example, a delay of 30 days occurred in August and the delay analysis demonstrates that this delays the time of completion by 15 days, you need to calculate the cost for 15 days of time-related costs during August.

Good Practice

1. Prolongation cost claims will be for extra site overheads, i.e., time-related resources deployed to the project during the time of delay. You need to keep contemporaneous records of resources to show that the claimed resources were deployed to the project. You need to submit these with the claim as substantiation.

2. Show actual cost with reference to payroll information (invoices, etc.). Substantiate these records and submit with the claim.

3. Calculate prolongation costs based on a cost per calendar day. This will then relate directly to the extension of time period. If you try to allow for irregular work weeks or public holidays, the calculations will get complicated, difficult to understand and any revisions during negotiations will be difficult to make. Keep it simple.

4. Present cost calculations in a clear, well-explained manner. Explain the principles that you've based the calculations on in the claim narrative. If necessary, provide further explanation in the narrative of how you've done the calculations. The idea here is that any non-financial expert reviewing the claim can understand the calculations, audit them and ultimately, agree with them.


Force Majeure

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