The Different Types of Construction Claims
In most construction claims, the result is going to be detrimental to both sides. Either side is likely to burden the additional cost the claim is related to (and it’s always about an extra cost either directly or indirectly) or ultimately, it will delay the project which is normally costly to everyone involved because time is money. Some of the more common types of construction claims include:
Cardinal Change. Unfortunately, there is no concrete, universal formula that determines whether a Cardinal Changes has been ordered, however, in essence, it’s about determining if “the job was modified” after the contract was agreed and signed and whether that modification fundamentally altered the nature of the project.
Constructive Change entitlement allows contractors to claim payment under the terms of the change clause, even if a change order has been issued. Previous boards and court decisions have upheld the claims that a contractor’s requirements changed by an action or inaction which constitutes a constructive change which is compensable.
Contract Termination – Contract termination can occur before work has begun or after work has begun and claims change accordingly. Before the work has started the contractor could have the right to claim to recover the loss of expected profit. However, if termination occurs during the project, it’s a little more complex. In many situations, the client will be claiming their own disputes in terms of delivery or performance, however, if work was completed in compliance with the terms of the contract the contractor might be able to claim the full contract price.
Defective and Deficient Contract Documents – Common law expects implied warranty, and that documents are relatively free from errors, and therefore bidders can determine their bid appropriately, and as a result, a satisfactory project will follow. Having inaccurate documentation opens the client up to a dispute claim.
Schedule Delay – A situation where at least one critical path work schedule has started later than the schedule dictates and/ or an activity has been extended beyond its original scheduling. A dispute concerning the reason behind either of these scenarios occurring is a possibility.
Differing Site Conditions – Simply put, if the site conditions are different than the conditions indicated in the contract or what was clear from pre-bid inspections, and the actual conditions have an impact on the contractor’s ability to perform their obligations, the contractor may be entitled to additional compensation.
Directed Change – A owner’s unilateral change – directed change – to the terms and conditions of the contract is the most common form of this entitlement.
Implied Warranty – This is a contract law term that’s related to assurances that can be presumed because of circumstances that a part of the original deal. This is more noticeable in disputes focusing on plans and specs.
Work Suspension – Refers to the owner’s temporary or permanent suspension of construction work at the site. This entitlement is now an essential component for the recovery of unabsorbed home office overhead costs by the contractor under federal contracts.