How to Prepare a Construction Claim: A Complete Guide

Like other activities in life, construction projects have various parties, resources, and timelines. Even though construction projects are meticulously planned, issues may arise during the course of the work that makes construction claims unavoidable. Simply put, a construction claim is a formal request identifying the project’s compensation and dispute which may emanate as a result of delay, defect, or some unforeseen project modifications. Construction claims require adequate preparation in order to defend the interests of contractors, project owners, and subcontractors.  

With this in mind, this guide advises on preparing construction claims offering valuable suggestions alongside relevant legal guidelines for every step of the process.

What is a Construction Claim?

A construction claim is an initial step that is taken in a construction dispute and arises out of a construction contract. Claims arise because of delays, defects, and nonpayment. In general, a claim can be made when there is something wrong which could be in the form of time, expenditure, or scope in the construction activities.

Construction claims protect risk and undistributed losses that contrast to the allocated project risks during execution and that arise when construction operations are not conducted according to the contract.

Common Types of Construction Claims

Understanding the types of claims is the first step to preparing a proper claim. Here are some of the most common types of construction claims:

1. Delay Claims: Delays are one of the most common reasons for construction claims. These occur when work is delayed due to unforeseen factors such as weather, material shortages, or changes in design. Delay claims may request an extension of time or compensation for additional costs incurred because of the delay.
2. Defective Work Claims: When the construction work does not meet the agreed-upon standards or has defects that require rework, a defective work claim can be made. This claim seeks compensation for the costs of fixing the issue or the damage caused by the defect.
3. Non-payment or Underpayment Claims: Contractors and subcontractors sometimes face situations where they are not paid in full or on time. If a construction party feels they are owed money, they can file a non-payment claim to ensure they are compensated for the work performed.
4. Change Order Claims: Sometimes the scope of work changes during a project. Change order claims are filed when a contractor requests payment for additional work that was not initially planned for in the original contract.
5. Disruption Claims: Disruption claims arise when work on a project is interrupted by inefficient coordination, changes, or other disruptions. These claims aim to recover additional costs and time lost due to these disruptions.
6. Force Majeure Claims: Events outside anyone’s control—such as natural disasters, pandemics, or other extreme circumstances—fall under force majeure claims. These claims request a time extension or relief from penalties due to unforeseen events that impact the project.

How to Prepare a Construction Claim: A Step-by-Step Guide

Although preparing a construction claim may feel overwhelming, having a straightforward process to follow eases the burden. Outlined below is a structured approach to assist you in preparing a winning construction claim.

Step 1: Review the Contract

The first and most crucial step in preparing a construction claim is to review the contract. The contract is your reference point for how to handle disputes and claims, and it typically contains provisions for:

• Change Orders: Review clauses that explain how changes in scope are managed.
• Dispute Resolution: Understand whether the contract requires mediation, arbitration, or litigation for disputes.
• Force Majeure: Check if there is a force majeure clause that could affect the claim if a disaster or uncontrollable event occurs.

By understanding the contract’s terms, you can identify the procedures for submitting a claim and ensure you comply with them.

Step 2: Gather Relevant Documentation

Documentation is key to building a solid case. Ensure you gather and organize all relevant materials that support your claim. These could include:

• Contracts and Change Orders: Ensure you have copies of all signed contracts and any change orders that affect the work.
• Emails and Correspondence: Keep track of all communications regarding the issue, such as emails, letters, and meeting notes.
• Daily Logs: Construction daily logs provide a detailed record of work progress, delays, and any issues that may support your claim.
• Photographs and Videos: Use photos and videos to document defects, delays, or issues on the site that might support your claim.
• Invoices and Payment Records: If your claim is about non-payment, you should have invoices, payment records, and statements that prove the amount owed.

Having thorough documentation will strengthen your case and increase the likelihood of a successful claim.

Step 3: Identify the Cause of the Claim

Before you prepare a claim, you need to fully understand the cause of the issue. If you’re filing a delay claim, ask questions such as:

• Was the delay due to weather, labor issues, or material shortages?
• Was the delay caused by a change order or a subcontractor’s mistake?

Understanding the root cause of the problem helps to clarify whether the claim is valid and provides a clear basis for compensation or an extension.

Step 4: Quantify the Impact of the Claim

Once you’ve identified the cause of the problem, you need to calculate the financial and time impact of the issue. For example:

• Time Impact: If the issue causes a delay, calculate how much extra time was required to complete the project and how it affects the overall timeline.
• Cost Impact: If the issue involves additional work or materials, you must calculate the extra costs involved, such as labor, material, or overhead costs.

Clear, accurate calculations will strengthen your claim and show exactly what you’re requesting.

Step 5: Write the Claim Statement

Once you have all the details, it’s time to write your claim statement. A well-crafted claim statement is clear, factual, and concise. The claim statement should include:

1. Introduction: Provide a brief overview of the situation, outlining the nature of the claim.
2. Details of the Claim: Explain the issue in detail, including what went wrong and why the claim is being made.
3. Supporting Evidence: Attach any documentation such as contracts, emails, or photographs that support the claim.
4. Impact Calculation: Provide a detailed calculation of the time or costs involved.
5. Resolution Request: Clearly state what you want to resolve the issue—whether it’s a time extension, financial compensation, or other adjustments.

The claim statement should be professional and free from unnecessary emotion.

Step 6: Submit the Claim

After writing your claim, submit it according to the process outlined in the contract. Most contracts specify how and when claims should be submitted. Be sure to follow the correct procedure to avoid any delays or issues with your claim being accepted.

Step 7: Follow Up and Resolve the Claim

Although preparing a construction claim may feel overwhelming, having a straightforward process to follow eases the burden. Outlined below is a structured approach to assist you in preparing a winning construction claim.

Legal Considerations in Construction Claims

Legal issues can complicate construction claims, so it’s important to be aware of any relevant laws and regulations in your state. Here are some key legal considerations:

• Statute of Limitations: Construction claims typically have a time limit for filing. Be sure to file your claim within the allotted time frame, or you may lose your right to pursue it.
• Dispute Resolution: Many contracts include clauses that require disputes to be resolved through mediation or arbitration instead of going to court.
• Legal Counsel: In complex cases, consulting with a construction attorney can help ensure that your claim is legally sound and well-supported.

How Construction Estimation Can Help

A proper construction estimation can be crucial when preparing a claim. Estimating the costs accurately allows you to determine the exact financial impact of delays or defects, ensuring your claim is well-supported. Accurate estimates also help identify areas where cost overruns may have occurred and provide a basis for requesting compensation.

Conclusion

Drafting a construction claim appears to be a complex endeavor; however, employing a structured strategy can aid in overcoming the challenge. It is advised that one begins by revisiting the contract, collecting relevant documents, and analyzing the root of the problem as well as its ramifications. Provide a well defined claim statement and follow up diligently to ascertain a resolution. Understanding the myriad steps provided will aid in navigating through the construction claim process efficiently and effectively and attaining proper reimbursement and resolution in relation to conflicts that emerge within the project.