Construction projects are inherently complex, often encountering unexpected delays and challenges. These setbacks, while frustrating, don’t have to derail your project or compromise its success. Understanding the common causes of claims and their potential impact is key to managing risks effectively, ensuring your projects stay on track—both in terms of schedule and budget.
Common Causes of Construction Claims
Construction claims often stem from unclear scope and poorly defined contract terms during the project’s initial phases. When changes in design, scope, or scheduling occur mid-construction, they can lead to a domino effect of disputes and claims.
Another key factor is ineffective communication regarding contract responsibilities, which can create misunderstandings and misaligned expectations among project stakeholders, further exacerbating potential issues.
Below are some common causes of construction claims and tips on how to avoid them:
1. Contract Errors and Omissions
Contract errors are among the most frequent causes of construction claims—but also the easiest to prevent. A simple typo or ambiguous wording can lead to costly misunderstandings.
For example, if a contract states that a contractor will build at $100 per square foot but lacks specifications about room size or materials, the client may end up paying more than expected because the contractor assumed full-size construction with premium finishes.
How to avoid it:
✔ Thoroughly review contracts with a legal expert before signing.
✔ Ensure all terms, scope, and pricing details are clearly defined.
✔ Consult with experts to verify contract accuracy.
2. Change of Scope
The project scope outlines the work, materials, and services to be delivered. It is typically documented and provided to contractors for bidding. Any misalignment between the scope and actual work can cause costly claims and delay in completion of the project.
Sometimes, omissions in the original scope are accidental, while other times, changes arise as needs evolve. However, incorporating new elements mid-project often leads to higher costs due to design and logistical challenges.
How to avoid it:
✔ Clearly define the full scope in bid documents.
✔ Communicate any gaps in the scope early in the process.
✔ Implement a change of scope management process to track and approve modifications efficiently.
3. Incorrect or Incomplete Design
Design errors are another common source of claims. Designers may unintentionally reuse outdated templates or overlook project-specific requirements, resulting in flawed drawings and specifications.
How to avoid it:
✔ Conduct detailed design reviews before construction begins.
✔ Ensure coordination between designers, engineers, and contractors to catch discrepancies early.
✔ Use constructability reviews to assess practical feasibility before finalizing designs.
4. Differing Site Conditions or delay in providing Right Of Way or an encumbrance free site
Unforeseen site conditions—such as soil instability, underground utilities, or unexpected weather—can lead to production delays and cost overruns. If initial site assessments are inaccurate, contractors may face unexpected challenges, potentially leading to claims for additional time and costs.
How to avoid it:
✔ Conduct a thorough site analysis before project initiation.
✔ Include contingency plans in contracts for unforeseen conditions.
✔ Ensure open communication between project teams to address site challenges promptly.
5. Client Intervention
Client-driven changes can be both beneficial and disruptive. While some modifications improve project outcomes, excessive alterations—especially last-minute requests—can cause delays, budget overruns, and supply chain issues.
Additionally, if clients remove or modify agreed-upon elements without proper communication, subcontractors may need additional materials or labor, leading to unexpected costs.
How to avoid it:
✔ Set clear expectations with clients about the impact of changes.
✔ Implement a structured approval process for modifications.
✔ Maintain open and transparent client communication throughout the project.
