Reasons for Failure of Construction Claims

Shahzad,



Although generally you are correct in that alot of "construction lawyers" don’t have hands on experience of actually building the job, I can name some that, by the time the claim comes to be heard, know the job and technicalities of building it as well as the people who built it.



There are now several people around who have worked for many years in the construction industry and have then decided to a become lawyer / barrister / Arbitrator - usually having done a course like the MSc in Construction Law & Dispute Resolution at Kings College, London. (I can highly recommend that one!!!) Leeds, Bristol and other Uni’s also do similar courses. Many other routes are available to people who want to go in that direction.



Whether an in depth understanding of the building of the job is needed depends on the circumstances of the claim. If it is substantially based on contractural technicalities then probably not. A knowledge of the law and it’s interpretation of the contract is more important.



If it’s a claim dependant on events on site ie, the more usual case, then a good mix of industry and legal experience can only help although I still wouldn’t say it’s essential. The lawyer / barrister is usually just one of a team of people preparing the claim and it is the rest of the teams job to brief them.



By the time the claim has been put together the lawyer / barrister should have grasped what they need to know to present or defend the case - and it’s often not what people from an engineering / building background think it is. As usual horses for courses and as in any industry, some lawyers, ets are better than others. If they’ve got a decent amount of experience then they will know what they need.



A claims consultancies job is initially to gather the information, assess it (with legal help as required) and then advise the client as to the situation. If the client then wants to continue, (or has too because he’s defending an action) the claim consultancy job is to put together the claim / counter claim and brief the legal advisors / lawyers / barristers. Both to get their input into the claim / counter claim and to prepare them for the hearing.



I believe it is the claims consultancies job to tell their client whens he’s got a weak case and therefore to go and settle - do a deal. I do not believe it is the claim consultancies job to advise the client he has a chance then proceed to fight the case when it is apparent that he’s probably going to lose from day one (unless the client insists). Unfortunately this happens all too often for no other reason than to get fees.



Therefore, I would say that a client should be more careful who he choices as a claim consultant rather than who the lawyer / barrister will be at the end of the day. That initial advice, if given properly and in the clients interest, could save (or make) him a small fortune.

Gary



Your mentioned a few reasons for failure of Claims are logic and valid to some extent.



I also agree with you that "lawyers love construction claims to make their legal fees."



In this context, be acknowledged that there are only a few lawyers in this industry who really know the construction and also know that how to defend or win construction claims and what is construction but mostly lawyers have only Legal background (LLB) not the construction.



They never know even what is meant by "L" "B" "H" mentioned in drawing so the Contractor have to teach them first. Such Lawyer’s associate with Claim Consultancies (which is the top business in construction now) and show that they have very good knowledge but the fact is that they know nothing about the construction only give you the legal shelter.



So a Contractor should think about the selection of good Construction Claim Consultants before proceeding their claims rather than based on their names and advertising

Returning to the core question of what are the Reasons for Failure of Construction Claims. In my experience the reason is often very complex and based around a degree of mis-trust between the contractor and the architect / engineer / supervising party.



Often construction claims are due to the programme not being met and with delays occurring, the contractor is in a position where it needs to submit a claim say, for an extension of time, in order to either recover additional costs, to avoid LAD’s, or both.



I say complex, because rarely is a delay due to a single event – most often it is caused by a combination of factors such as late design release, many small changes, contractor default, weather etc. It is not uncommon for a range of these type factors to have jointly culminated in a substantial delay. What nearly always happens however is the contractor overstates the impact of the late or changed design to cover his own faults.



Many of us have seen this situation. The contractor has not been reporting that the delays have been caused by its own default. The designers are blaming the contractor but cannot quite say why (the designer doesn’t understand the critical path – that’s why!). The client can’t understand why a few small changes have had such a big stated impact. In the rush to try to recover time, corners are cut and quality suffers. The relationships are beginning to break down. To cap it all off, the contractor submits a claim for an extension of time. The contract calls for a rapid response which doesn’t give enough time for the response to be properly considered. The EOT application is rejected because it doesn’t “feel” right. It is rejected because the contractor has been considered as not being honest in the claim. There is mis-trust all round.



Does this sound familiar? To me this is why claims fail. Yes, Ashu’s reasons in his original post are sometimes the reasons, but not the main reasons. They are too clear cut and well defined reasons, whereas the real situation is often much more complex and messy. That is why lawyers love construction claims. Messy equals big legal fees!



Gary France

Chairman

Planning Engineers Organisation

Dear Clive



In my opinion, it is all depend on the respective contract. If the contract clearly stated that the contractor should not proceed with the "additional" work, without client’s approval then they are at their own risk if proceeding without informing the client. To me if they still proceed without even notifying me as the client, I definitely won’t entertain their claim in the future.



Off course there must be some balance between PR with the client and the contractual matters.



The issue is to interpret the "additional work". Sometimes the contract is vague. This where the problem starts.



NORZUL

I’m client representative. Basically contractor should not proceed with the additional work unless authorize by the client. The minimum contractor should do is at least officially inform (via letter) the client prior to the potential additional work. Off course this should be after having discussed with the client first.



I believe the above will avoid any dispute in the future.

As mentioned below, are there anyother geninue reasons for failure of construction claims ?

Why do claims fail yes most of the key points have been noted but what about common sense

You have a repeat client who you claim a very small amount from, do you proceed or drop it on the basis of business relationship

In some countries govenments will assess prequalifications on their perception of a contractors claim attitude

While both of the above do not strictly answer your question they do indicate why some claims are withdrawn or never made at all

Oscar

The main reason for failure of construction claims is that these Claims are not compatible with the Contractual provisions and not submitted within the time prescribed in the Contracts so at the time of scrutinizing by the Engineer and Employer, these claims become time barred despite come to finalization and resolution.



Another reason for failure of claims is that these are not fully substantiated with supporting documents and procedural requirement

Hi Ashu,



The one you listed in your post #1 were the fundamentals, meaning non-copmpliance of procedural requriements as stipulated in the contract.



We will try to go to the next level, with the assumption that the procedural requirements of the contracts will be satisfied.



I think one reason for failure of Construction Claims is unreasonable conclusions of the claims. In this case, the expectation of claiming this much may not be possibly granted.



Cheers,



charlie

Hi Ashutosh,

Hi Stuart,



Nice to hear from a Nicmar Student ( if i m not wrong ) on this forum. I m also doing a Nicmar but a Distance Learner. Hope to hear more from u Ashutosh.



irfan

Ashu,



As I explain in one of my Claims Seminars, there are five basic steps to claim presentation:



I ntroduction

D etails

I mpact

O utcome

T otal



Therefore, as you can see, claim preparation can be done by an I.D.I.O.T.



[Yes, and before anyone else says it, I am probably a good example of one!!! ;-) ]



Cheers,



Stuart



www.rosmartin.com

Ashu,



In my view, the vast majority of claims fail simply because the case has not been properly presented or argued. Whilst it is true that lack of entitlement under the Contract is a pre-requisite for any claim to succeed, many claims – even if valid under the Contract – fail because the Contractor has not presented his claim in an understandable and clear manner.



Although there is no guarantee of success, a well prepared claim always has some chance of success; a badly prepared claim is guaranteed to fail. A claim is a document which has to preach to the unconverted (if not the unconvertible….!), and therefore if it fails to make the recipient see the light, no matter how strong the contractual entitlement, it will be doomed to fail.



Hope this helps,



Stuart



www.rosmartin.com

Ashu,



All of those you listed, but the biggest cause is probably that the Contractor wasn’t entitled to the claim in the first place!