Tips for Construction Claims and Risk Management

Claims and Risk – thoughts to put most people off their breakfast, lunch and dinner!

But in construction, when we start on a project, we never do actually know what we are walking into.

We tend not to think of it that way, but risks are an inevitable part of any construction project. Once they reveal themselves the response and actions we need to take are usually covered in the Standard Form of Contract. Even Acts of God get thrown back onto the client as one of their risks!

What usually has to happen, once a Risk is revealed is to submit a Claim. Loosely speaking even the Client instituting a design change is a Risk which warrants a Claim. So

Here are a Few Tips about Risk and Claims

1. Make sure everyone involved in the project feel that they are team members.
2. Try to establish a personal relationship, based on trust, with the client’s Main Board Director with over-view of the project. Do that and no objections come from his underlings about them having to spend a bit more cash on the job.
3. Understand that any construction company putting in a Claim might desperately need the extra cash for any extra work they have done. Without it they may well have to go bankrupt. That will mean a lot more having to be spent to get another sub-contractor in!
4. If you send out a Request for Information, make a diary entry and then another when you get a response. Over-runs on the 7 days allowed are common and a frequent cause of Delay.
5. Watch out for the QS trying to make an unjustified additional profit for his company by making over-priced and unjustifiable Claims! It also usually means the project is put back on track!
6. Watch out for a PQS pursuing his own vested interest by finding objections to everything so his contract runs on longer.
7. ( Here I bang on about the same old thing ) – Have a good, comprehensive Detailed Programme to Completion for the project, up-dated weekly! That gives an immediate heads up for the liability for any Claims relating to Delay!
8. In the Site Meetings put Claims on the Agenda! Then publicly slap the ear ‘oles of any party trying to submit unreasonable Claims!
9. As for Risks, if everyone feels they are a fully paid up Team Member, the arrival on site of a Risk will be flagged up quickly and action taken to minimise its impact on the overall project.
10. Never forget that the first ones to discover the threat of a Risk are often the skilled tradesmen! Make yourself accessible and approachable for them. They only talk to management who treat them with respect!

So there it is! Approached with a bit of common sense and with an open mind Risks get minimised and Claims become a simple matter of amicable book-keeping instead of ending up in Dispute. That is a real Risk! Arbitration, never mind the Court, is horrendously expensive!