Most construction projects have changes and encounter delays. Indeed I’ve had some projects that have doubled in value, and some which have had approved extensions of time of several months. Most of my variation claims were successful, and nearly all were resolved amicably without entering expensive and lengthy legal disputes. In nearly every case we did further projects and work for the client.
How can you ensure the success of your variation claims?
- Read and understand the contract document before starting the project. Many contractors don’t read their contract documents until they are in trouble. It’s too late then. Know your rights and obligations before starting work. Understand what the client’s obligations are and ensure these are met.
- Have an approved construction schedule which is updated regularly. The schedule must reflect the chosen construction methods and be linked correctly. The construction schedule will form the basis of all delay claims. The construction schedule protects both the contractor and the customer.
- Ensure that good accurate records are kept. This includes daily diaries or reports. Check that meeting minutes are a fair reflection of what was said at the meeting. Remember, even minor inconsistencies between different documents could trip your claim up. A missing document could be the difference between a successful claim and one that’s rejected. Accurate documents are essential to support your variation claims.
- All instructions of a contractual nature must be in writing. It’s very difficult to substantiate verbal instructions. People can be very forgetful – especially when money is involved.
- Spend time on preparing variation claims. You work hard to make a $10,000 dollar profit. Why shouldn’t you put effort into preparing a variation claim for $10,000?
- Ask for help. Discuss the variation claim with those directly involved with the work. They may remember things and costs which you were unaware of or forgot. Ask for expert advice when necessary.
- Don’t play mister nice guy, just play by the rules. If you are entitled to lodge a variation claim then do so immediately. If the client has delayed you then submit a delay claim. Don’t hope it will work out at the end of the project. If the project is finished late the client will deduct delay damages from you – that’s just the rules of the contract. Many contracts have clauses which time bar claims that are late. Anyway, clients hate unpleasant surprises when contractors realise they’re in trouble at the end of the project and submit a whole bunch of variation claims.
- Claims must be well thought out and logically presented with all supporting documentation. You literally have one chance to convince the client that you are entitled to the variation claim. Don’t spoil it with a poor submission. Your variation claim should include:
- A description of the event.
- The cause of the event.
- The date of the event.
- The impact of the event.
- Steps taken to mitigate the event.
- The cost and time impacts of the event.
- All supporting documentation
- Supporting calculations
- Follow the correct procedures. That means submitting the claim to the correct person within the time period stated in the contract document.
- Check your claims before submitting them. Ask others to check the claim. Are the spelling and the grammar correct? Are all the calculations correct? Have you considered all of the costs? Have you included all of the reasons for the delay? Is the claim set out logically? Will it be understood by the reader (remember sometimes variation claims are assessed by third parties who may not be directly involved with the project or the reasons and the facts leading up to the claim)? You don’t want to be adding additional costs later which you overlooked or didn’t consider. This is unprofessional and casts doubt on the legitimacy of the original claim. Get your claim right the first time.
Claims that are clear and concise, and which have facts which are supported and can be easily justified are often agreed and settled with clients with little effort. Once contractors get a reputation for submitting bogus or inflated claims it can be difficult to convince the client when a reasonable and just claim is submitted.
Have you had a variation claim rejected? What were the reasons?
For more on winning your next variation claim get a copy of the author’s book; ‘Construction Claims: A Short Guide for Contractors’. One review of this book says; “An excellent, concise and very practical guide to the successful claims process. This is a no-nonsense approach that gets on with it.”
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