By Patti Wysocki
Construction claims and changes are the bane of all construction projects. For any number of reasons, scope changes, design conflicts, changed conditions, severe weather, late submittals or late approvals, and potential change orders can be a daily occurrence on complex projects, and sometimes lead to claims.
Successful recovery for valid claims begins with a proper change management program, starting with identification. The contractor must be able to recognize and identify a claim situation when it first develops, not after it has become a controversy. The second most important task is notification of the owner in compliance with the various clauses found in most public and private contracts. Clauses in the same contract document may have different notification requirements which state the period of time in order for the contractor to preserve its right for equitable adjustments.
The contractor should review the following contract clauses to determine what notification is required for any changes:
- Differing site condition
- “No damages for delay”
- Liquidated damages
- Notice of claim provision
- Dispute resolution clauses
If the contractor does not recognize a situation or waits too long to take action, any and all rights to claim can be lost.
Early identification is important for three main reasons:
1. It enables contract owners to verify, confirm and possibly remedy the situation at the earliest opportunity.
2. Sometimes a changed condition may require new designs, new material or equipment, or different construction methods. Spotting and solving time-consuming and costly problems as early as possible is mutually beneficial for all parties. Even though equitable adjustments are ultimately made, the contractor benefits from completing his or her work and moving out as soon as possible, which implies making every effort to expedite the resolution of all changes and claims situations.
3. Early identification allows the contractor adequate time to study the problems, analyze different proposal and notification options, and best prepare for claims that might prove troublesome.
The most successful contractors and owners are those that are adept at managing the claims and charge-order process and, most importantly, have a firm understanding of the identification and notification process.
If you would like to learn more about this important subject, Joe McManus of McManus & Felsen, LLP, is kicking off a 16-part online training series, “The Essential Course on Successful Management of Claims & Change Orders” with his session, “Identification and Notification: Keys to Success" on Wednesday, October 5th. Click here to learn more.