- Claims Consulting
- Construction Claims Management
- Environmental Claims Management
- Schedule Delay Analysis
- Damage Calculations / Analysis
Construction Claims Management
How Construction Claims Come About - Construction projects [as well as environmental restoration work] rarely can be executed exactly as was foreseen while the project was being designed. Also, the subsurface conditions at the site are rarely exactly as was envisioned by the contractor or the designer at the outset of the project. When the differences are small and have little or no economic value, they are of little matter to the parties to a contract for such work. But when the economic consequences of these differences are significant, they are of great interest to the parties. As a result, many construction contracts, especially those issued by governmental entities, include two important clauses: a 'changes clause' and a 'differing site conditions clause'. The names of these clauses may vary, but the content is generally the same.
In addition, there is usually a stated process, often with requirements for notice and record keeping, contained in the contract to facilitate the use of these clauses. The essential difference between a commercial contract and a construction contract is the fact that the parties agree that the final outcome may not be as originally contemplated, that changes of scope may occur, that compensation may therefore be changed and that, if the process outlined in the contract is followed appropriately, neither party will breach the contract by failing to fulfill the exact contract conditions. These contracts generally require a party, who claims economic damage, to work through that process before resorting to the courts for relief.
Legis Consultancy has an experienced staff of engineers, legal consultants and construction management specialists, many with strong field experience. We have addressed construction claims in a variety of contractual environments, in an equally diverse range of project types, for owner/developers, contractors, subcontractors and designers. Whether the focus of the dispute is a subdivision, a rapid transit station, an apartment complex, a power plant or a nuclear production plant, Legis Consultancy's professional staff has the experience and the knowledge to assist you and your legal counsel in resolving your claim.
The Anatomy of a Construction Claim - A successful construction claim generally consists of three major parts: an Entitlement Section, a Cost Section and a Documentation Section.
Entitlement - The entitlement is usually presented in two parts. First, the claim narrative must establish a clear entitlement on the part of the party for relief. This portion of the narrative should always flow from the contract. If the argument depends on various clauses in the contract, they must be threaded together in a logical presentation. If case law supporting interpretation of the contract language is available, it should be articulated and cited. If multiple issues are involved, each should be developed separately. The narrative must show that all required notice provisions have been met or that the owner had constructive notice of the claim. Second, as a part of the entitlement section, there is usually a technical narrative that links the facts of the changed work or failure to perform to the entitlement theory. It generally goes into substantial detail describing this connection. It might describe the changed work and how the contractor responded to these changes. Or it might detail how the contractor failed to perform. This is the story of the project, using the journalists' classic 'Who, What, When, Where, Why and How' approach in both quantitative and qualitative terms.
Cost - The cost section relates the costs incurred by the party or owner as a result of the change. This section is usually organized in such a way that it parallels the organization of the technical narrative. The costs are related directly to the each elements detailed in the technical narrative. To be effective, the costs of a change are normally developed using a 'bottoms up' approach, addressing labor, equipment, materials, etc. Note that the contract often limits the way the costs of a change are calculated, particularly the contractor's overhead and profit. The cost section usually includes a short narrative describing how the costs were developed and how they relate to the technical narrative.
Documentation - The ultimate success of a construction claim is largely found in its documentation. Even a claim with merit can be unsuccessful if it fails to prove itself in this section. Typically the entitlement narrative will cite contact provisions and appropriate case law, copies of which would be found in this section. The technical narrative would likely be supported by copies of relevant correspondence, schedules, reports, diaries, logs, etc. Documents presented in support of the Cost Section might include invoices, payrolls, time sheets, delivery tickets, etc.
Should you be faced with an unresolved construction claim situation, Legis Consultancy's highly qualified staff is available to assist you.