Article Date: 12/13/2013


What Is the Primary Reason for Construction Claims?


By Steve Rizer

 

What is the most common reason for construction claims? Is it contractors low-balling their bids with the intent of cashing in through changes, as at least some owners maintain? Is it want-something-for-nothing owners “changing everything” as a project progresses but refusing to pay for those changes, arguing that contractors should have anticipated the situation or built in a contingency to deal with the changes? Is it design consultants always trying to protect their designs?

 

During “Empowering the Project Team to Successfully Avoid Claims,” a webinar that WPL Publishing held last week, presenter and Trauner Consulting Services Inc. Principal J. Scott Lowe expressed a very different opinion about why claims are filed, and he offered some advice about what can be done to minimize disputes.

 

Lowe told webinar attendees that even though he often hears a theory blaming one particular type of construction professional for claims, “my personal experience is very different from that. My personal experience is that almost always the reason for the dispute is the parties can’t come to agreement.”

 

Toward the end of resolving and avoiding disputes, Lowe emphasized the importance of ensuring that project team members work through party biases and “focus on the facts and the contract as it relates to the issue at hand.”

 

Issues often lying at the heart of a claim involve the interpretation of a contract, delays, inefficiencies, acceleration, and costs, according to Lowe. “A lot of times, I find claims that I had to deal with are issues that the project team really just doesn’t have the skills or the understanding or the knowledge or the inclination to try to evaluate and resolve.” He also reported that “almost every claim I would look at has delays as a component. More and more these days, inefficiencies are another component. It’s not uncommon for me to be involved in a project where there’s been an acceleration in the claims related to the costs associated with acceleration. And there’s also lots of disagreement on the subject of the costs themselves. What is a reasonable and appropriate cost?”

 

To minimize claims across the industry, Lowe pointed out the following “problematic practices and provisions:”

  • Waiting to grant a time extensions
  • Poorly written time-and-materials or force-account provisions
  • A misunderstanding of overhead
  • Poorly developed claims provisions
  • Dysfunctional administrative appeals processes
  • Misunderstood suspension-of-work provisions

To purchase a recording of the webinar, visit http://constructionpronet.com/Products/Avoid-Claims.aspx.

 



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