Construction Contracts Claims -Part 2

Claims in construction projects can arise from both principals/contractors and contractors/subcontractors for various reasons. Understanding these potential claims from each perspective helps both parties better prepare for and manage their responsibilities and risks throughout the project.

Part 1 of this article covered essential steps to consider before raising any claims, including the importance of impact assessment and best practices from both sides. In this Part 2, I present an extensive list of potential claims from both perspectives. While this list is comprehensive, it is not exhaustive.

Claims can arise from both the contractor’s and subcontractor’s viewpoints. Terms such as Principal, Contractor, and Subcontractor may be used interchangeably. The claims are grouped to facilitate understanding, though the order may not apply universally.

Claims from a Principal/Contractor

1. Delay Claims

- Cause: Delays caused by the subcontractor’s slow progress or failure to meet deadlines.

- Documentation: Project schedules, correspondence, and evidence of delays.

2. Change Order Claims

- Cause: Deviations from the original scope or additional work required due to the subcontractor’s actions.

- Documentation: Approved change orders, revised scopes, and cost implications.

3. Defective Work Claims

- Cause: Subcontractor’s work fails to meet contract specifications or quality standards.

- Documentation: Inspection reports, photographs of defects, and non-compliance notices.

4. Non-Performance Claims

- Cause: Subcontractor fails to complete the work or meet performance standards.

- Documentation: Work progress reports, performance metrics, and communication records.

5. Cost Overrun Claims

- Cause: Subcontractor’s work exceeds the estimated cost due to unforeseen issues or inefficiencies.

- Documentation: Cost reports, invoices, and detailed breakdowns of overruns.

6. Liquidated Damages

- Cause: Subcontractor’s delay results in project completion penalties.

- Documentation: Contract terms, delay records, and penalty calculations.

7. Unapproved Substitutions

- Cause: Subcontractor uses materials or methods not approved by the contractor or design team.

- Documentation: Approval documents, specifications, and evidence of unauthorized substitutions.

8. Safety and Compliance Violations

- Cause: Subcontractor fails to adhere to safety regulations or compliance requirements.

- Documentation: Safety reports, violation notices, and regulatory compliance records.

9. Resource Allocation Issues

- Cause: Subcontractor does not allocate sufficient resources or manpower to complete the work on time.

- Documentation: Resource allocation plans, staffing records, and progress reports.

10. Breach of Contract Terms

- Cause: Subcontractor fails to meet other specific contractual terms, such as quality standards or timelines.

- Documentation: Contract terms, performance metrics, and evidence of non-compliance.

11. Insurance and Bonding Issues

- Cause: Subcontractor lacks proper insurance or bonding, leading to financial risks for the contractor.

- Documentation: Insurance certificates, bonding documents, and correspondence about insurance coverage.

12. Incomplete Documentation

- Cause: Subcontractor fails to provide required documentation such as as-built drawings or warranties.

- Documentation: Contract requirements, missing documents, and communication records.

13. Unapproved Methods or Procedures

- Cause: Subcontractor uses methods or procedures not approved or specified by the contractor.

- Documentation: Method statements, approval documents, and evidence of unapproved methods.

14. Deficient Workmanship

- Cause: Subcontractor’s work does not meet the expected standards or industry best practices.

- Documentation: Quality control reports, inspection reports, and photographic evidence of deficiencies.

15. Delayed Submittals

- Cause: Subcontractor fails to submit required documents or approvals on time, impacting project progress.

- Documentation: Submittal logs, correspondence requesting documents, and impact assessments.

16. Unmet Contractual Obligations

- Cause: Subcontractor fails to meet specific contractual obligations or milestones.

- Documentation: Contract terms, milestone schedules, and evidence of missed obligations.

17. Improper Use of Materials

- Cause: Subcontractor uses materials improperly or deviates from the material specifications.

- Documentation: Material specifications, usage records, and evidence of improper use.

18. Performance Bond Claims

- Cause: Subcontractor fails to perform as required, leading to a claim on the performance bond.

- Documentation: Performance bond documents, performance reports, and evidence of non-performance.

19. Compliance with Specifications

- Cause: Subcontractor’s work does not comply with the project specifications or design requirements.

- Documentation: Specifications, design documents, inspection reports, and compliance notices.

20. Rework Costs

- Cause: Subcontractor’s work requires rework due to errors or omissions.

- Documentation: Records of initial work, rework instructions, cost reports for rework, and impact on project schedule.

21. Site Conditions Disputes

- Cause: Unanticipated site conditions affect the subcontractor’s work and project progress.

- Documentation: Site condition reports, impact assessments, and correspondence regarding site issues.

22. Incomplete Work

- Cause: Subcontractor fails to complete the work as specified in the contract.

- Documentation: Contract documents, punch lists, and completion records.

23. Quality Assurance Failures

- Cause: Subcontractor fails to adhere to quality assurance procedures.

- Documentation: Quality assurance plans, inspection reports, and evidence of non-compliance.

24. Unplanned Work Stoppages

- Cause: Subcontractor stops work due to unplanned reasons, causing project delays.

- Documentation: Work stoppage records, reasons for stoppages, and impact assessments.

25. Incorrect Performance Reporting

- Cause: Subcontractor provides incorrect or misleading performance reports.

- Documentation: Performance reports, correspondence addressing inaccuracies, and evidence of correct performance.

26. Safety Incidents

- Cause: Safety incidents caused by the subcontractor’s work or methods.

- Documentation: Incident reports, safety audits, and correspondence about safety issues.

27. Inadequate Material Storage

- Cause: Subcontractor fails to store materials properly, causing damage or deterioration.

- Documentation: Storage guidelines, inspection reports, and evidence of damaged materials.

28. Failure to Meet Performance Benchmarks

- Cause: Subcontractor fails to meet specified performance benchmarks.

- Documentation: Performance benchmarks, performance reports, and evidence of underperformance.

29. Subcontractor Bond Claims

- Cause: Subcontractor’s failure to perform leads to a claim against the subcontractor’s bond.

- Documentation: Bond documents, performance records, and evidence of non-performance.

30. Claims for Increased Overhead

- Cause: Subcontractor’s work requires additional overhead costs not originally anticipated.

- Documentation: Overhead cost records, project schedules, and impact assessments.

31. Discrepancies in Work Quality

- Cause: Discrepancies between expected and actual work quality.

- Documentation: Quality standards, inspection reports, and evidence of discrepancies.

32. Performance Delays

- Cause: Delays in performance due to subcontractor’s inefficiencies.

- Documentation: Performance schedules, delay records, and impact assessments.

33. Failure to Provide Required Documentation

- Cause: Subcontractor fails to provide necessary documentation such as certifications or compliance records.

- Documentation: Required documentation, compliance records, and correspondence.

34. Misuse of Project Funds

- Cause: Mismanagement or misuse of project funds allocated to the subcontractor.

- Documentation: Financial records, fund allocation documents, and evidence of misuse.

35. Excessive Warranty Claims

- Cause: Subcontractor’s work leads to excessive warranty claims or callbacks.

- Documentation: Warranty documents, records of warranty claims, and evidence of recurring issues.

Claims from a Contractor/Subcontractor

1. Delay Claims

- Cause: Delays caused by the contractor or other subcontractors that impact the subcontractor’s schedule.

- Documentation: Project schedules, delay notices, and evidence of impacts on work.

2. Change Order Claims

- Cause: Additional work or changes requested by the contractor that affect the scope or cost.

- Documentation: Change order requests, revised scopes, and cost estimates.

3. Defective Design Claims

- Cause: Issues with the design provided by the contractor that affect the subcontractor’s work.

- Documentation: Design documents, correspondence about design issues, and impact assessments.

4. Non-Payment Claims

- Cause: Contractor fails to make payments as per the agreed terms.

- Documentation: Invoices, payment schedules, and correspondence regarding payment disputes.

5. Extended Overhead Claims

- Cause: Additional overhead costs incurred due to extended project duration or delays not caused by the subcontractor.

- Documentation: Overhead cost records, delay impact analysis, and correspondence.

6. Impact Claims

- Cause: Impacts on the subcontractor’s work due to factors like site access issues or coordination problems.

- Documentation: Records of impacts, communication with the contractor, and cost implications.

7. Constructive Changes

- Cause: Unofficial changes to the scope or method of work that impact the subcontractor’s performance or cost.

- Documentation: Records of communications regarding changes and how they affect the work.

8. Site Access Issues

- Cause: Contractor or other parties restrict access to the work site, impacting the subcontractor’s ability to perform work.

- Documentation: Access logs, correspondence regarding site access, and impact assessments.

9. Delay in Issuing Instructions

- Cause: Contractor delays in providing necessary information, drawings, or approvals that impact the subcontractor’s work.

- Documentation: Correspondence requesting instructions, approval delays, and impact assessments.

10. Unresolved Coordination Issues

- Cause: Lack of coordination between the contractor and subcontractor, leading to conflicts or inefficiencies.

- Documentation: Coordination meeting minutes, correspondence addressing issues, and impact assessments.

11. Errors in Contractor-Provided Information

- Cause: Errors or omissions in information or drawings provided by the contractor that affect the subcontractor’s work.

- Documentation: Contractor-provided documents, error reports, and correspondence about corrections.

12. Project Conditions

- Cause: Adverse or unforeseen site conditions not disclosed by the contractor that affect the subcontractor’s work.

- Documentation: Site condition reports, impact assessments, and communications about site issues.

13. Incorrect or Insufficient Payment

- Cause: Contractor issues incorrect or insufficient payments for completed work or materials.

- Documentation: Payment records, invoices, and correspondence regarding payment discrepancies.

14. Contractor-Induced Delays

- Cause: Delays caused by the contractor’s actions or inactions, such as delays in approving submittals or providing access.

- Documentation: Delay records, project schedules, and communication records.

15. Unreasonable Contractor Demands

- Cause: Contractor imposes unreasonable demands or requirements beyond the original scope or contract terms.

- Documentation: Records of demands, contract terms, and evidence of unreasonable requirements.

16. Changes in Regulatory Requirements

- Cause: Changes in local codes or regulations after contract signing that affect the subcontractor’s work.

- Documentation: Updated regulatory requirements, correspondence with the contractor, and impact assessments.

17. Discrepancies in Quantity Estimates

- Cause: Discrepancies between estimated and actual quantities of work or materials.

- Documentation: Quantity estimates, actual quantities, and correspondence regarding discrepancies.

18. Discrepancies in Contract Documents

- Cause: Discrepancies or inconsistencies in contract documents or drawings provided by the contractor.

- Documentation: Contract documents, drawings, discrepancy reports, and correspondence.

19. Errors in Contractor’s Scope of Work

- Cause: Errors or omissions in the scope of work provided by the contractor that impact the subcontractor’s performance.

- Documentation: Scope of work documents, correction requests, and correspondence.

20. Unforeseen Work Conditions

- Cause: Unforeseen conditions at the site, such as hidden utilities or hazardous materials, not disclosed by the contractor.

- Documentation: Site condition reports, impact assessments, and correspondence regarding unforeseen conditions.

21. Excessive Warranty Claims

- Cause: Subcontractor’s work leads to excessive warranty claims or callbacks.

- Documentation: Warranty documents, records of warranty claims, and evidence of recurring issues.

22. Unauthorized Work

- Cause: Contractor directs to perform work outside the agreed scope without authorization.

- Documentation: Work orders, correspondence about scope changes, and evidence of unauthorized work.

23. Failure to Provide Clear Instructions

- Cause: Contractor fails to provide clear or adequate instructions, leading to confusion or errors in the subcontractor’s work.

- Documentation: Instructions provided, correspondence requesting clarification, and impact assessments.

24. Failure to Provide Access or Utilities

- Cause: Contractor fails to provide necessary access or utilities required for the subcontractor’s work.

- Documentation: Access logs, utility records, and correspondence with the contractor.

25. Excessive or Unreasonable Change Orders

- Cause: Subcontractor submits change orders deemed excessive or unreasonable by the contractor.

- Documentation: Change order requests, correspondence, and justification for changes.

26. Inadequate Supervision

- Cause: Contractor does not provide adequate supervision and approval, leading to issues with work quality or compliance.

- Documentation: Supervision records, quality control reports, and correspondence about supervision issues.

27. Unplanned Work Stoppages

- Cause: Contractor stops work due to unplanned reasons, causing project delays.

- Documentation: Work stoppage records, reasons for stoppages, and impact assessments.

28. Inaccurate Scheduling

- Cause: Contractor provides inaccurate scheduling information, affecting overall project timing.

- Documentation: Scheduling documents, correspondence regarding scheduling, and impact analysis.

29. Failure to Meet Quality Standards

- Cause: Subcontractor’s work does not meet the quality standards or specifications outlined in the contract.

- Documentation: Quality standards, inspection reports, and correspondence.

30. Unauthorized Use of Materials

- Cause: Subcontractors materials used unauthorizedly and improperly by others.

- Documentation: Material specifications, usage records, and evidence of improper use.

31. Incomplete or Inaccurate Contract Documents

- Cause: Contractor provides incomplete or inaccurate contract documents affecting the subcontractor’s performance.

- Documentation: Contract documents, error reports, and correspondence.

32. Disputes Over Project Changes

- Cause: Disputes arise over changes to the project scope or requirements not agreed upon by the subcontractor.

- Documentation: Change orders, correspondence, and dispute records.

33. Failure to Resolve Disputes

- Cause: Contractor does not resolve disputes or conflicts in a timely manner, impacting the subcontractor’s work.

- Documentation: Dispute records, correspondence, and resolution attempts.

34. Inadequate Communication from Contractor

- Cause: Insufficient or unclear communication from the contractor affecting the subcontractor’s performance.

- Documentation: Communication logs, meeting minutes, and correspondence.

35. Discrepancies in Contractual Obligations

- Cause: Discrepancies or misunderstandings regarding the contractor’s contractual obligations.

- Documentation: Contract documents, obligation records, and correspondence.

By considering these claims, assessing the impacts and adhering to best practices, both contractors and subcontractors including Principal can better manage their responsibilities and navigate the complexities of construction projects. This approach helps in minimizing disputes and ensuring smoother project execution.