Construction Claim Rejected? Step 1: Get to know your claim

Contract Administration, Publications

Consider this scenario:

You own a construction company or are perhaps managing a large project. As normal, you submit a monthly progress claim. However, on this occasion, the client disagrees with the amount.
A dispute follows. The amount in dispute is significant.

What steps do you take next?

In this 3 part series, we will look at the 3 key steps to take when assessing the strength of your commercial position and options:

Understand your construction claim and commercial position;
Understand your client’s argument and commercial position; and
Choose the right combination of claim recovery options.

In this article, we will be considering step 1:

Understand your construction claim and commercial position

The first step is to know and understand your claim and your position.

Contract: Get a copy of the construction contract. Make sure it’s the complete contract. Know the order of priority for each of the separate contract documents. Review the contract. You should already have a strong understanding of the contract, as discussed here.

Elements of claim: Be across the facts and law that underpins your claim. Identify each element in support of your claim. Do you have an available reference date to bring this claim? Is it an interim or final claim? Is it a claim for original scope works? Variations? Extension of time? Delay costs? Disruption costs? Or a combination of these or others? Was your contract terminated before you made the claim?

Facts: Know the facts and evidence in support of the claim. All of them. What events form the basis of the entitlement you now claim for? Did you preserve that entitlement by submitting the necessary contractual notices within the time prescribed by the contract? If not, has the client waived their right to rely upon the time bar provisions of the contract?

Strengths, Weaknesses and Timing: Identify the weaknesses in your claim, and develop an argument to respond to these weaknesses. If it’s a weak claim, better to work that out sooner rather than later. On the other hand, if you assess your claim as strong, then you may wish to go hard early and get the hop on your fellow subcontractors or contractors who may be seeking to recover from the same pool funds of the client.

Witnesses: Who are your key witnesses? Which component part of your argument will their evidence address? Are they reliable witnesses? Will you need an expert’s report to support any part of my claim? Perhaps a quantity surveyor, programmer, engineer, or another technical expert?

Commercials: Think about the broader commercial position. Do you want to win work from this client after this claim is resolved? If so, do you need to tone down the aggressiveness of your approach in order to preserve that relationship? Or is too much at stake to worry about such niceties?

Cost/ benefit: How much is the claim really worth? How much do you want to spend to recover the claim amount? How much time do you personally want to spend on it? Disputes take their toll. Will you risk a cost order against you if you lose, meaning you will be throwing good money after bad? Should you look into litigation funding?

Reputation: Will your reputation within the construction industry be adversely impacted by bringing this claim? Or will it help you by showing that you won’t be bullied by clients who refuse to make payments despite the existence of a clear contractual entitlement?

In our next article, we will look at steps to understanding your client’s argument and commercial position.

What about you? Have you had a construction claim rejected? How did you get to know your claim? Did you take any additional steps not listed above? We welcome your comments.

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