Common Types of Construction Claims
Posted on April 28, 2019 | ⌚ 3 min read
A claim is simply an assertion of a party's right under the contract or law. In construction, claims are more often about either time or cost, or a combination of both. Some of the common construction claims include:
A variation is a something that changes the nature of the project. This is the most common type of claims. According to FIDIC Red Book 99, the following qualifies as variations:
- changes to the quantities of any item of work included in the Contract (however, such changes do not necessarily constitute a Variation),
- changes to the quality and other characteristics of any item of work,
- changes to the levels, positions and/or dimensions of any part of the Works,
- omission of any work unless it is to be carried out by others,
- any additional work, Plant, Materials or services necessary for the Permanent Works, including any associated Tests on Completion, boreholes and other testing and exploratory work, or
- changes to the sequence or timing of the execution of the Works
The FIDIC provisions under Clause 13 [Variations and Adjustments] is clear and in an ideal world if the procedures are adhered to, disputes will be minimized since any additional payments shall be acknowledged by the Engineer. However, problems arise when the Contractor is instructed to carry out a variation either verbally on site, or in writing without acknowledging the instruction as a variation. Sub-Clause 3.3 [Instructions of the Engineer] mentions that if any instruction by the Engineer constitutes a variation, then Clause 13 shall apply.
Ideally, the Contractor should acknowledge receipt of such instruction and mention that he considers it as variation. If the Engineer accepts then all is good. If not, the Contractor should then proceed in accordance to Sub-Clause 20.1 [Contractor's Claims], and submit a notice to claim and a fully detailed claim in the relevant time frames.
Extension of Time Claims
The second most common type of claim is the Extension of Time claim, or EOT for short. The contractor claims to have been delayed by excusable compensable delays and as such is entitled to extend the Time for Completion of the Works, which prevents the Engineer from deducted delay damages. FIDIC Red Book 99 has this to say on what entitles the Contractor to an EOT in Sub-Clause 8.4 [Extension of Time for Completion]:
- a Variation (unless an adjustment to the Time for Completion has been agreed under Sub-Clause 13.3 [Variation Procedure]) or other substantial change in the quantity of an item of work included in the Contract,
- a cause of delay giving an entitlement to extension of time under a Sub-Clause of these Conditions,
- exceptionally adverse climatic conditions,
- Unforeseeable shortages in the availability of personnel or Goods caused by epidemic or governmental actions, or
- any delay, impediment or prevention caused by or attributable to the Employer, the Employer?s Personnel, or the Employer?s other contractors on the Site.
The Sub-Clause concludes that if the Contractor considers himself entitled to an EOT, the Contractor shall give notice and submit an EOT claim in accordance to Sub-Clause 20.1.
Prolongation Cost Claims
It is common for Contractors to link EOT claims with prolongation cost claims. In short, Contractors claim additional costs of site expenses and overheads due to the EOT granted and/or claimed in addition to the actual cost of carrying out the works.
Usually if the Employer suffers a delay, they would instruct the Contractors to accelerate the works to mitigate these delays, or to complete the works earlier than the Time for Completion. In this case, the Contractor could claim the additional costs borne to comply with such acceleration which may include as:
additional manpower and mobilization,
loss of production due to out of sequence works,
disruption to the planned method of working.
Other claims a Contractor may submit could be claims under law, or loss of productivity/profit. In any case, the Contractor should strictly adhere to the claim procedures and timeframes stipulated in the Contract. The claim should ideally contain some particulars that shall be discussed in a later post.
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