Construction Lawyer & Building Solicitors Sydney | Contracts Specialist Law Firm

Construction Claims Guide and
Management for Building Disputes

Dealing with construction claims requires effective management throughout the entire cycle of the building work.

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Construction is literally a temporary endeavour that comes with great risk. It’s best to protect yourself from crippling consequences of poor construction decisions.

Learn the process of claim management from Contract Specialist. Our lawyers can help you with any construction claims and building disputes.

Table of Contents

Types of Construction Claims

Here are the types of construction claims that you, as a construction person, are likely to experience. The listed types are the simple ones but are usually the roots of various building disputes.

A Change of Work Order or Variations in construction is a form of alteration in the agreed scope of works which may include, adding, deleting or modifying the works. This can directly affect the project budget and the completion date of the works.

The scope of work can be found in the contract, but somehow changes are necessary if the work demands. This claim is used when the construction work of a builder needs a change whether within the preexisting scope of work or not.

A damage claim is a legal remedy or an amount of money which a claimant may demand from the breaching party due to any breach or default of contract. There are various types of damages that can be claimed in case of breach or default.

Damages are not new to the construction industry, even contractors often damage a property whilst finishing a construction work and because of this, they may be held liable for it.

A construction delay is like a time lag in completion of the work project. The schedule of the work is always specified in the contract. However, it can also be called the late completion or late start. This can directly affect the project budget.

Project owner or homeowners can make a delay claim when the completion of the project which was agreed or what was specified in the contract was not met. This is a legal remedy because delays might result in a financial or productivity loss on your part.

What is EOT?

EOT stands for extension of time. Contracts basically allow the construction period to be extended if the cause of the delay is beyond the contractor’s control or not due to the contractor’s fault. An extension of time is being filed due to unstoppable nature’s conditions like having bad weather or some other natural disasters.

  • This claim arises out of differences between the actual condition of the construction site and its descriptions in the contract. If the homeowner described the site as a flat grassy field but it has a gravel pit on the actual condition, the contractor can file a different site conditions claim.

  • Due to some circumstances, contractors will be required to exceed project budgets to accomplish the project on time or ahead of the target date. Price acceleration claims arise from disagreements on who is legally accountable with the cost of accelerating work either the contractor or owner.

Summary: The general types of claims involve the scope of work, damaged property, delays, site conditions, payment, and price acceleration.

Reasons for Construction Claims

Construction Claims are not inevitable as there are a lot of factors that may cause it. The said scenarios are the most likely cause of building disputes and the filing of construction claims. Knowing how to protect your rights will give you ease in enforcing your rights with the said construction claims.

A contract may not have been drafted fairly. This might have put you in a disadvantaged position. That’s why it’s important that you get legal advice before signing any contract agreement.

Similar to an unbalanced contract, this one also happens in the pre-planning stage of the construction project. It also encompasses all kinds of delays for designs, materials, releasing of payments, and rates.

Anything related to the responsibility of a contractor adds up to this. It includes poor rates, managerial problems, delay in mobilising, health hazards, inner-state disputes, and non-availability of construction materials.

This includes some causes which are made by both the owners and contractors or situations that are really beyond their control.

Summary: The common reason for filing a construction claim is always because of a dispute or disagreements between an owner and a contractor.

Construction Claim Management

Enough with the reasons, here is the actual solution- construction claim management. This claim management process follows different steps that correspond to the stages of construction.

Prevention happens during the drafting of contract documents and development of project plan. The goal is to establish an aligned purpose and to determine the risk factors of construction claims.

The best approach is to mitigate the potential claims that may arise during the progression of the contract. This step aims to eliminate or minimise the occurrence of construction claims.

Therefore, the construction contract is the key to preventing claims coming about. A well-written contract that entails definite work responsibilities and risk allocated factors will result in lesser disputes.

Some techniques that can help in Claim Mitigation include:

  • A Request for Information (RFI) Procedure
  • Clarity of Language Schedule
  • Constructability Review
  • Documentation
  • Effective Communication
  • Pre-qualification Process
  • Project Partnering
  • Joint Recognition of Changes

No one will take the extra financial burden brought by defaults. This is a natural response of any party under a building contract. So, the next step is to pursue the claim. You should provide important documents that can be used as proofs of your claim.

It is recommended to resolve and settle the issues immediately and at the lowest point in the organization. The process starts with negotiation as this is the simplest resolution method. Then, adjudication, arbitration, and litigation. There is another resolution method called Appropriate/Alternative Dispute Resolution (ADR) which are effective as the others.

Summary: To deal with construction claims, you can follow the management process that starts with prevention and ends with resolution.

Construction Claim Template

The information you will disclose always depends on the type of your construction claim.

  • Project Name
  • Date of when you created the claim
  • Claim Dates
  • Mortgage Claim No.
  • Total Budget Amount
  • Gross Budget
  • Net Advance
  • Acquisition and Servicing
  • Municipal Fees
  • Utility Fees
  • Consultants or Professionals Fees
  • Miscellaneous Soft Cost
  • Borrowing Cost
  • Construction Contract
  • Commissioning
  • Contingencies
  • Deductions

Contracts Specialist can assist you with construction claims, building dispute resolution, and construction contracts.

If you find yourself in a bind, contact our construction contract lawyer immediately and we will help find the best resolution for you.

Construction Claims Lawyer Sydney - John Dela Cruz Photo | Contracts Specialist
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