When I decided to write this book, the main purpose was to pass on my many years of experience to a new audience and provide a manual for identifying and producing construction claims from first principles. This book sets out techniques and advice – it is not intended to be a treatise on the various forms of contracts that exist, as the main elements required to make and successfully prosecute a claim are contained in all forms of construction contracts.

My aim is to simplify and explain a complex subject, and to provide the tools to research and present any construction claim.

Two quotations were my mantra while writing this book:

An expert is someone who has succeeded in making decisions and judgements simpler through knowing what to pay attention to and what to ignore –

Edward De Bono

If you can't explain it simply, you don't understand it well enough –

Albert Einstein

There are many learned books on construction claims that concentrate on understanding the legal entitlement to making a claim under the various contract terms and conditions of contract used in the industry.

This book tries to answer the following questions:

I know I have a claim, but what caused the delay or extra cost, what type of claim is it and what do I need to prepare the claim?

All construction contracts experience changes and unforeseen events that cause the Contractor to suffer delay or incur additional cost. Whether that change event is claimable relies on an understanding of the contract terms. However, preparing and making a successful claim is reliant on the collection of facts and other supporting evidence to prove what happened and detail the additional costs involved. Without evidence to prove the damage suffered, and the delay or additional costs incurred, the claim will fail.

On design‐and‐construct/turnkey–type projects, there is another obstacle to overcome – the belief by many staff that all events are the Contractor's liability, and hence that there is no need to keep records. This culture is incorrect because, even if there is no entitlement to make a claim against the Employer, records are required to avoid or defend against claims from subcontractors.

The research and collection of evidence and facts is closer to a mixture of detective work and the logical presentation of this evidence to demonstrate what happened, how it affected the construction process and why it is claimable. It requires experience and tenacity, as the personnel involved will often be defensive, feeling guilty about not overcoming the problem. When staff do not understand the requirements of the contract, or are inexperienced, there is often a reluctance to admit failure, or perhaps the mistaken belief that the event is not claimable. The inexperience of site staff can be overcome by education and an explanation of why there are clauses that entitle the Contractor to make claims for additional payment and extensions of time, all of which commonly occur on construction projects. The presentation of the facts uncovered is an art form akin to storytelling. It is more of a narrative skill than a technical construction skill in terms of organising the information and writing the claim to show a logical progression of facts and events leading to the conclusion. Successful presentation of the facts in a lucid, clear manner should ensure that your claim is taken seriously and lead to a realistic settlement.

However, all forms of contracts contain a requirement for the Contractor to give some form of written notice of the intent to make a claim, and it is of little value to later learn that you have a valid contractual right to make a claim if no one kept any records, no research was done and, more importantly, no notice of claim was served. Once the contractual entitlement has been established and notice given of the intent to make a claim, the success or failure of almost every claim relies on producing contemporary records to prove what the event actually did. This part of the process relies heavily on gathering facts and records of what happened, and what impact the event or series of events had on the regular and planned progress of the works. The key facts to determine for any claim are: ‘What?’, ‘Why?’, ‘When?’, ‘How?’, ‘Where?’ and ‘Who?’. The application of these six questions to any task form the ground rules for investigating any potential claim event. Once the answers to these six questions are found, all the facts needed to support the claim will have been assembled.

One of the major problems with construction sites is their complexity and the number of different trades and specialities employed on the site. No single construction project is identical to the next, and each project is essentially a one‐off unique design. While this singular design may contain many elements and trades, which have all been carried out before, the details of each element will be different and designed to suit that project alone. Even with something as repetitive as major road construction projects, while there are numerous standard details and specifications, each project will also contain specific changes to the standard documents, and each element will be unique to that project in some way or other, often driven by the geography of the site.

Claims arise owing to changes from the project as envisaged at tender stage compared to what happened on site. Claims have many sources of change, such as varied ground conditions, late design information, correction of errors and/or supply of missing or additional information, site instructions and variation orders, adverse weather, etc.

Other claims arise from disputes about how work is measured, or changes to the content or character of work from that originally indicated. Some claims relate to how additional work instructions should be valued – whether to use existing Bill of Quantities rates or some new rates and prices to be agreed on. Most, but not all, of these measurement disputes will get resolved after discussions, and a complete understanding of the correct measurement rules to apply is paramount when arguing such matters.

The larger contractual claims and disputes mainly relate to changes to the timing, sequence and duration of work and any resulting delays to completion. Most major disputes arise more about delay claims involving extensions of time and additional payment for delay and disruption than any other cause. Delay claims require detailed research to determine the impact an event had on progress, or whether it caused delay to completion, disruption/production losses and increased site overheads.

The purpose of this book is to provide ideas and guide you through some techniques for finding and uncovering the answers to these questions – and, having gathered all the facts, how to use them to present the argument: concisely, clearly and forcefully.

All construction contracts have claims of one form or another. This is driven by the unique nature of the industry, as most major construction projects are one‐off singular designs – unlike manufacturing, where a design can be fine‐tuned to resolve any issues and production optimised to ensure that efficient and regular output is achieved. All forms of construction contracts contain clauses dealing with additional or varied works, delay events and recovery of additional costs. These are needed to accommodate the impact of design changes, errors or omissions, variations and other changes that occur. There are, of course, various types of changes that occur on all construction projects, and the majority of these are resolved without submission of claims or recourse to a formal dispute resolution process.

The practice of making claims is not due to the belligerence of contractors; it is the nature of the construction process itself. All building and civil engineering projects suffer from unexpected events, design revisions and changes during the course of construction. This is not something new; claims for additional payment or extensions of time have been documented and recorded in Case Law for over 100 years. Sometimes the changes that form the root cause of a claim could and should be avoided by more diligence during the design phase, but others are due to unforeseen circumstances or events that can arise during any construction project. Claims are part of the fabric of the contract and arise from the construction process, wherein a design is translated from the two‐dimensional drawings into a three‐dimensional finished project. The various forms of contracts in use all deal with changes to the original project during the construction process and contain rules stipulating the notification and valuation of such changes. Such clauses are wide‐ranging and have evolved into the modern contract forms, which are designed to avoid claims being founded outside the terms of the contract.

Construction projects necessarily involve risks, and the various forms of contracts allocate responsibility for those risks: for example, unforeseen ground conditions, adverse weather, strikes, lockouts, etc., for which each party has obligations under the contract. The original designs, documents, information and tender estimates often contain mistakes. The contract clauses relating to claims, valuation of variations and entitlement to extensions of time all evolved to allocate the liability for such errors or omissions. Some contracts call variations and claims different names (e.g. ‘compensation events’ and ‘change orders’), but ‘what is a claim?’ The answer is simple: a claim is any change to a project that in some way results in additional costs and/or delays that entitle a Contractor to additional payment or an extension of time where a delay to completion has occurred.

Another source of claims is a failure by the Employer to make payments for additional measured works or other valid items claimed in the measured account. If these issues are not resolved, they also become a claim arising from a disputed item or measurement and, at the very least, adversely affect cash flow. In other words, if a new item is claimed in the monthly valuation, and the Contract Administrator agrees with it and, after some negotiations about the price, makes payment, then this is not a claim. If, however, he disagrees and crosses the item out or writes rejecting the item and will not pay for the work claimed, then it is a disputed item and, therefore, a claim – unless, of course, the Contractor withdraws the claim, having accepted the decision of the Contract Administrator. Withholding of payment for works done is also dealt with under all the common forms of contracts as a claim for interest on outstanding payments for work done.

This issue is compounded by the fact that, while many changes and variations can be agreed on with respect to the direct effect of the additional work instructed, the subsequent impact on the programme and overall completion date for the project is more difficult to determine and agree on without further detailed analyses. Claims can sometimes become very emotive, and the Contract Administrator might take the matter personally, especially if it arises from some oversight or poor wording in the contract documents or an error on the drawings. However, a claim should be approached with the same professional manner as all other issues on a construction contract.

Similarly, giving notice of a claim situation should not be shied away from. Most forms of contracts have a procedure that requires the Contractor to give notice. Under certain contracts, failure to give notice within a set timescale can result in the contractor losing all rights to additional payment and extensions of time. Therefore, the contractor should not avoid giving notice; it is not to be viewed as an aggressive act or threat – if a notice has to be given under the terms of the contract, it is merely compliance with that term, and nothing more.

Dealing with claims has always been a case of two distinct views. Those who prefer to deal with any issues as and when they arise, and those who prefer to argue and procrastinate. The parties to contracts often seem to prefer to postpone discussion of an issue, or would rather argue than resolve matters (despite all the hype about ‘partnering’ and various other ‘new’ approaches for cooperation between the parties). The problem may be personal to some construction professionals. It starts with embarrassment at having a claim situation arise, perhaps having believed that the contract was ‘iron‐clad’ or ‘claims‐proof’ and having advised the client of this belief. This denial is then followed by a stubborn refusal to accept the reality of the situation and deal with it. Later, when a formal claim is submitted, it is then a case of ‘too little too late’, as the realisation dawns that they have a serious problem that should have been resolved. The newer forms of contract all advocate dealing with claims quickly as and when they arise, resolving issues long before they become disputes. Of course, the better Contract Administrators always took this approach, and their contracts were managed in a fair and reasonable manner, with all changes and claims being resolved without the need for litigation.

The advent of the New Engineering Contract (NEC) in the UK does not alter the basic requirements of giving notice and keeping records. Furthermore, the NEC does not preclude claims for additional costs and extensions of time; it deals with them in a different way – by calling all of them ‘compensation events’. The main difference is that the impact of instructions or changes that result in a revised completion date, disruption and prolongation costs must be included in the quotation for the compensation event.

There are many forms of claims, and I will differentiate between matters more properly described as ‘variations’ and those that are ‘claims’, requiring more formal submissions and procedures. A claim is any item of additional expense or delay, which the other side refuses to accept. Claims are avoided altogether when the item raised is accepted; it only remains to be priced and agreed on in the time‐honoured fashion. There are matters that have to be investigated before the content or form of claim can be determined. All claim issues require the answer to the same six questions: ‘What happened?’; ‘How did it happen?’; ‘Why did it happen?’; ‘Where did it happen?’; ‘When did it happen?’; and ‘Who is responsible?’.

Starting with these six questions, let us address the fundamentals first:

• What happened? Money is invariably involved, and often time as well. Some event has occurred that has caused additional cost, and potentially a delay as well.
• How did it happen? This is a larger question and requires discussion with the site team to find out the facts. It could simply be the issue of site instructions or the discovery of some unexpected event – for example, uncovering an old pipe and discovering asbestos lagging.
• Why did it happen? Was the event unknown to the Contractor, was it due to instructions or was something else to blame – for example, a fire or flood that destroys a section of work that has to be repaired?
• Where did it happen? This is usually easier to find out, and interviewing the site team will resolve where the event was – for example, which floor, or the chainage along the site.
• When did it happen? May not be quite as obvious; it may take time for the realisation that an element of work had cost a lot more or had been delayed.
• Who is responsible? This question requires detailed knowledge of the contract, its terms, work scope, exclusions, etc.

So, having had a progress meeting with the site staff, or having discovered a hole in the finances at the end of the month when the cost reports are published, how do we go about making a claim?

First, and foremost, it does not matter what type of claim we are talking about – claims against the Employer, insurance claims, contra charges or counterclaims against a subcontractor. There is one fundamental thing that must be done immediately when a claim situation arises: ‘Give written notice of intent to make that claim’. All forms of contract and subcontract contain notice provisions, and the worst thing you can do is to find out later that you had a great claim, but that, because you failed to give proper and timely notice, you have lost all rights to make that claim. There are numerous examples of new contracts where the use of ‘time bars or condition precedents’ is becoming more common. These obstacles to payment, etc., may be written into the Standard Form of Contract, or they may have been incorporated by Employer amendments bound into the final contract documents. The incidence of such time‐bar clauses is widespread, and careful note must be made of the contract terms and of any time limits for notice and submission of claims to ensure that they are adhered to, so that the time‐bar clause cannot be invoked. For example, FIDIC Clause 20.1, Contractors Claims, states that failure to give written notice within 28 days of ‘becoming aware’ of a claim issue results in the claim being invalidated, and all rights to additional payment or extension of time are lost. Having given our notice of claim, what do we do next? The purpose of this book is to explain how to go about successfully identifying, recording and making a claim.

Finally, throughout this book, I will emphasise the importance of keeping records to support the claims that may be made by the Contractor, or for use in defending claims from subcontractors. In recent years, with the increasing use of ‘turnkey’ or ‘design‐and‐construct’ forms of contracts, I have noticed that the staff on such projects fail to see the need to keep records, adopting a false view that, because of the nature of the contract, everything is the Contractor's fault. This cannot be further from the truth, since, even with such design‐and‐construct versions of contracts, the Contractor still has rights to make claims for Employer risk events and defend itself from claims made by others – for example, weather delays or force majeure events may still happen, variations to the scope of work may occur and approvals can be delayed.

Of course, there are many circumstances where the employment of experts and specialists, of various disciplines, is essential to winning the day. However, many simpler claims can be successfully prosecuted and suitable ‘negotiated' settlements achieved by following the basic principles set out in this book. The adage that ‘the better the records, the better the claim submission will be, and hence the better the settlement’ always applies.