Most Contracts include a provision for a Construction Claim Notice to be issued when a delay has been suffered or additional costs incurred. Sometimes, this is expressed as a condition precedent to the Contractor’s entitlement to an extension of time or reimbursement of loss and / or expense.
Whether it is a condition precedent or not, Contracts either prescribe a fixed period, for example within 7 days of becoming aware of the event, for when the notice should be issued. Or sometimes, which is even more troublesome, “within a reasonable time” or “as soon as it becomes reasonably apparent.” Trouble ensues, when the parties disagree over what this actually means, and whether a notice has been received in due time so as to be valid, and therefore the Contractor does not become time barred.
The problem is, the wording is pretty vague and subjective. Even more of a problem, is that it almost always entirely depends on the factual circumstances on site – therefore, it’s not a “one size, fits all” type of problem! In my view based on my experience, we become aware of delay and cost events from very simply two general sources (ok, I know it’s a lot more complex than that in the real world, but I am trying to keep it simple!) These being:
1) overt actions by our clients, such as a written instruction, a verbal instruction at a meeting, issue of correspondence, and / or
2) a failure to act by our clients, such as not issuing information, his own Contractors not performing or not providing access or otherwise generally not performing in the way that the Contract requires him to. If you like, his inaction that manifests itself in a physical delay on site.
The first category, I think is easier to explain. If an instruction or letter is received, we are all grown up and can easily digest the implications of same; what I mean is, it is a tangible and defined change event. We can relatively easily and quickly assess whether we think it will likely cause us any delay or disruption and raise a notice accordingly. Because remember we are required to notify of all potential events i.e. “events that are likely to cause a delay”; if it transpires it had no subsequent effect then no problem, we can just withdraw the notice.
In these circumstances, I would suggest to be on the safe side that Contractors should be aiming to issue a Construction Claim Notice within 7 days or so! My logic being that many Contracts use 7 days as a sort of default period for acting from known events or circumstances. For example, the period to request Variations, issue of quotes, the period to comply with Client’s instructions, suspension period notice, remedial measures period, period to comment on design submissions etc., and to be honest if you can’t turn a letter around in 7 days something is wrong!
The second category is a bit more subjective; say for example a Client fails to issue a drawing when promised, and when received that drawing includes changes, which both in the end delay us. When do we become aware of the event? When he fails to issue it in accordance with the Contract date? Or the date in our baseline schedule? Or the date requested in the information required list? Or the date he promised at a meeting? Or the date we actually received it? Or the date we actually carried out the work? The list goes on…..
So let’s remind ourselves, the purpose of a Construction Claim Notice is really to give the client the opportunity to do something about the issue i.e. provide the information, issue an instruction etc., so that he can mitigate the additional costs being incurred. So in a nutshell, I would say definitely not after the cost has been incurred, preferably before the event which was actually impacting on our ability to complete the work, but as a last resort, after the event has impacted…but not too long after!
