Most Contractors have mastered the art of generating construction claims for submission to clients. Sometimes they do so just to call the bluff of clients and inexperienced clients or clients with inexperienced in-house project staff are likely to be trapped and are sometimes coerced or forced to settle these claims with huge financial cost burdens on the project. We will deal with why Contractors submit claims in separate content, but at the moment, we want to look into how clients can actually avoid claims being brought by contractors. Do we mean clients can totally avoid claims? not at all. This is not the focus of this write-up. The focus is to alert clients to be alert enough and take proactive claims avoidance measures or at best measures that could put clients in a comfortable situation to only accept legitimate claims from contractors; and to also ensure that the right, fair and deserved claims entitlements are the only outcome of any claims reviews, assessments and recommendations.
Yes, it is commonly said that he who alleges must prove and as such the onus of proof is on the Contractors bringing claims against the clients; however, it’s noted that the contractors often put forward many documents and write-ups and rely on such as their substantiation for their claims but in most cases, clients claims team are never satisfied that those substantiations are enough or are the right substantiation. In some cases, clients’ claims teams just write to contractors rejecting or denying contractors’ claims with a single statement “You have not substantiated your claims” without going into the specifics of what is missing from contractors’ submissions; meanwhile, we found it far more responsible for clients to have an enormous reservoir of records to counter or deny claims being put forward by contractors. If clients are able to cite specific project records as evidence relied upon to deny contractors’ claims or prove that the contractors’ submission was incorrect, erroneous and capable of misleading and misrepresenting facts on the subject of the claim would just be an awesome and smart way of avoiding claims by clients.
To mention a few on the lists of actions clients can take to avert claims or at best reduce claims on projects are:
- Ensure complete documentation of contract requirements devoid of ambiguity but with clearly defined scope, schedule, budget, specifications, statutory authority’s roles and scope, and clear/defined risk allocation.
- Ensure simplified language in the wording of project/contract agreements, terms and conditions.
- Ensure a well-organized, planned and documented communication and notification timelines, stating when each Party should do what, and stating duration within which a Party should act or respond on a matter.
- Ensure a well-planned and detailed documentation of daily reports of all contractor’s records of events which robustly details and records all activities, events, occurrences, resources, weather, submittals, approvals, resources deployed, materials deliveries, manpower, machinery/plants&equipment, labour records, inspections, work fronts, daily planned work activities, daily achieved work activities and few others. These may look tedious but technology has simplified site operations and project record reporting nowadays. Deputing one or two staff to do this on a daily basis with full electronic automation and validation will undoubtedly support the Parties’ position during claims review, assessment and recommendation.
Conclusively, the best practice of record-keeping claims avoidance forecast planning and taking proactive measures during contract formulation, documentation and execution can tremendously help clients to save cost and avoid unmerited claims by contractors.
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