Claims Documentation, Validation,
Whether an organization is considering submitting a claim or defending a claim, the first step is determining if a claim is legally defendable. Depending on the size and complexity of the claim it may not be practical to turn the claim over to an attorney. Basically there are four elements to a defendable claim:
· Contract Formation
There must be a legally binding contract with the other party. If the agreement has been properly written and executed this is especially easy to prove. Most construction claims are based on alleged oral contracts made that alter the written agreement. Without written agreement change orders to the contrary, it must be proven that an enforceable oral (spoken) contract was made or that an enforceable contract change can be implied from the circumstances of the situation.
Each party must prove that they did what was required under the terms of the contract and that additional compensation claimed is based on costs incurred because of circumstances beyond their control.
The party making the claim must show that the other party failed to meet their contractual obligations or did not provide enough information about the circumstances for the claimant to properly price the work. If the claim is based on poor quality, then this must be proven.
The party making the claim must show that they suffered an economic loss as a result of the other party’s breach of contract. Determining the amount of damages is usually the most contested issue of a construction claim. The party performing the work almost always prices the additional work required at considerably more than the paying party thinks it is worth.
C. A. Services can provide the following services to assist a party in supporting their position:
· Preliminary Claims Analysis
This is required to determine actual damages, causes, and potential recoveries. In addition, the analysis will address potential time required, costs, success probability and strategies.
· Claim Preparation or Claim Defense Preparation
Whether submitting a claim or defending a claim, a comprehensive document must be prepared to identify and substantiate all relevant issues in all potential categories. This must be done in a concise and compelling manner. Claims must be written in simple language, well organized, and substantiated with accurate back-up documentation. The more thorough and convincing a claim presentation or claim defense is, the more likely a favorable resolution will occur. Activities required to complete either document include, but are not limited to, the following:
· Contract and Change Order Reviews
· Initial Bid and Inquiry Review
· Schedule Impact Analysis
· Delays and Disruptions Analysis
· Productivity Impact Analysis
· Estimating the costs of having a 3rd party complete the contested work.
· Settlement options
· Claims Presentations
· Communications and Negotiations with the other Party
Many times persons close to disputes lose their perspective and communications break down. Loss of productive communications between two parties is the leading cause for claims going to lengthy and expensive arbitration or litigation for settlement. C.A. Services can typically open closed communication channels and restart productive negotiations, as required, to avoid arbitration or litigation.
· Documentation and Execution of Settlement Agreements
Once a settlement is reached it is essential that a settlement is documented and properly executed. All agreed upon work should be completed as soon as possible and all amounts due should be paid as soon as possible. Expedited completion and close out of settlement agreements reduce the chances of additional issues surfacing that could void verbal agreements not properly documented and executed.
Direct Links to Related Checklists & Templates
Construction Claims Management Package
Claims Avoidance Checklist
Claims Recovery Checklist