For contractors, it is their responsibility to identify situations in which there is an entitlement to a claim for additional time or payment. On the employers side, identifying these situations early means they can take steps to avoid claims and make provisions for the additional costs. Consequently, it is essential for good management of projects that we are able to look at what is happening on the project and identify claims as early as possible.

So, what should we be looking for? The most frequent causes of claims are as follows:

Payment for Additional or Changed Work

On a remeasureable contract, the work is valued against agreed rates. The contractor will be paid for the work actually carried out, including any variations to the original scope of work. However, we must consider circumstances resulting in abortive work, rework or additional mobilisation of resources. The remeasurement does not compensate for these.

On a lump sum contract, a single price for the work is agreed in advance. Variation will need to be evaluated separately in order to calculate the change to the contract price. Sometimes a variation is formally acknowledged so a claim does not have to be made, but frequently, changes are introduced by instruction without acknowledgement of a variation. Consequently, submit the required notices and follow up with a claim for additional payment.

Extensions of Time

If a delay affects the agreed time of completion, contractors need to consider an extension of time. Monitoring of actual progress against planned progress is essential. As is identifying events which may have an effect on the time of completion. In either case, we must check whether the event leading to the delay is something for which the contract allows an extension of time for. If so, submit the necessary notices and follow up with a claim.

The contractor should submit extension of time claims based on when they are entitled to an extension of time. Not when they need an extension of time to avoid delay damages. Hence, identifying claims early is essential.

Prolongation Costs

Circumstances giving rise to an extension of time will often carry an entitlement to claim for additional costs of loss and expense. Submit claims for prolongation costs either with the extension of time claim or as an associated, separate claim. Put them forward as soon as possible and don’t leave them until the end of the project.

Acceleration Costs

Circumstances giving rise to an extension of time will usually carry an entitlement to claim for additional costs of loss and expense. This arises from the extended period for which the contractor is obliged to maintain time-related site resources and head office overheads.

The engineer will often attempt to pressure the contractor into undertaking acceleration measures without agreeing to the increased cost. In such a case, the contractor must make their position clear. Agree the acceleration measures and the nature of the costs before undertaking any acceleration measures. Otherwise, it may prove difficult to have a subsequent claim agreed.

Disruption Delay and Costs

Disruption occurs when an event for which the employer is responsible causes the contractor to work less efficiently. This may manifest itself in the requirement for additional resources or time in order to achieve a target. The latter situation would cause delay, which could also affect the time of completion. In this situation, an extension of time would be warranted. Identifying claims like these as they occur will give the claim a greater chance of success.

When to Submit the Claim

When a claim situation has been identified, the contractor needs to submit the claim within the time period specified by the contract. This is not usually an onerous task, provided that the contractor has sufficiently qualified and experienced resources available to prepare the claim.

Don’t leave claims until the end of the project and don’t comprise consolidated claims for more than one event. The longer you leave a claim the less likely it is that it will be accepted.

If you’re looking to know more about whether to submit your claim, check out this article. If you want to develop your understanding further, take a look at some of the courses we offer here.