Masonry Magazine June 1987 Page. 15
CONSTRUCTION CLAIMS
A CONTRACTOR WHO HAS NEVER FILED A CONSTRUCTION CLAIM IS A VANISHING BREED. SOME ANSWERS TO IMPORTANT QUESTIONS ABOUT CLAIMS WILL HELP YOU AVOID OR AT LEAST MINIMIZE EXPOSURE TO CLAIMS FROM OTHERS, OR HELP YOU PERSUE A CLAIM OF YOUR OWN.
by John C. vanDyk
Q: What is a construction claim?
A construction claim is a demand for compensation for a loss in connection with a construction project. It arises out of an unresolved dispute between parties to the construction contract, for example, between a mason contractor and an architect. A construction claim results when a written change order is not issued by the contractor and agreed to by the contractor or owner for changed or additional work at the time that the change or addition is required. The change results in a deviation in the design or scope of the work as defined in the plans and specifications, which were the basis for the original contract. The change order is a legal document that authorizes these deviations and includes changes in project costs. After the project is completed, the contractor may need to file a claim to receive compensation for changed or additional work not covered by an approved change order. But a claim is not used to recover losses suffered from mismanagement of a project.
Q: What causes changes or additions to the scope of work on a project?
Acts of the architect-engineer, construction manager, owner, or another contractor which affects the sequence or cost of the work could cause changes. Some brief examples are:
* The architect-engineer does not approve shop drawings in a reasonable time, or rejects the drawings because they are not in accordance with his specifications.
* The construction manager requires the contractor to work overtime, because the project is behind schedule, or requires work to be performed before the area is ready to bring the project back on schedule.
* The owner requires an office area and the location of equipment in that area to be changed due to more defined requirements but at no increase in contract amount.
* A subcontractor does not complete his portion of the work on time, which causes the mason contractor to work in an area congested with other craftsmen.
* The mason contractor may be required by the general contractor or the architect to work overtime to complete the project.
Q: Why do we read and hear more about claims recently?
Construction claims have gained more importance, because owners, architects and contractors attempt to protect themselves from additional costs which are not included in the original bid package. As a result, contractors resort to claims to recover money for risks they did not intend to assume in their contracts. In general, there are six basic reasons for the increase in claims:
* More detailed information is now included in specifications. Owners attempt to anticipate and thus eliminate unknown situations by being highly specific about what will be encountered by, and what is expected of, the contractor during construction. When contractors are given incomplete information, they include contingencies in their estimates to cover the unknown. With more information included in the specifications, owners believe they will receive a lower bid price.
* Use of disclaimer clauses to deny responsibility or liability for numerous items has increased. Owners and their representatives have attempted to eliminate liability for the accuracy of plans and specifications, existing conditions, the schedule, and other items in the contract documents. By not accepting liability. the owner believes he can control the budget and cost of the project.