March 5, 2024

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Business Strategy For Economic Revival

9 Common Causes Of Construction Claims And Best Solutions

9 Common Causes Of Construction Claims And Best Solutions

Is it possible not to have construction claims?

Let us consider an ideal world where each and every facet of a construction project goes as planned. However, there is no such thing as an ideal world because that is what now usually happens all the time.

Research has indicated that construction disputes are common, and on average, they consume around 17 months per project in lieu of resolution, avoidance and settlements.

Construction projects are not simple. They are complicated, and in real terms, overly complicated. It is not easy to manage labor in construction because there are some who have been working for years as foremen and other associated labor positions. Many of them know lateral ways and at times, contractors need to give them concessions and relaxations.

The problems aren’t just from the labor end. The top office (meaning the site office) professionals can be complacent. They at times misplace paperwork which leads to numerous disputes.

Amendments in architectural plans from the client end can overturn the pace of the project. This results in disputes and regulatory issues where authorities can come in with a heavy hand.

Is it possible to reduce and settle issues in construction?

Is it possible to reduce and settle issues in construction?

How can all of these construction issues be reduced and settled in the best possible manner?

Industry Experts reveal that numerous factors contribute to cost and schedule overruns, including wrong designs, scope creep, incomplete documentation, and late approvals from authority figures. This is why the construction industry is strewn with errors.

9 Common Causes of Construction Claims

We will be exploring the common issues in the construction industry and determining and fixing common causes of construction claims

A lot of construction claims have started rising ever since the world got back to normal following the COVID-19 pandemic-induced lockdowns. When labor and equipment plus materials sat idle for months, it was hard for construction companies to keep up with maintenance, communication and payments.

Yes, it has been difficult, and companies still are reeling from the effects. A lot of construction and construction contracting businesses ended up in bankruptcy and thus, many have closed. Despite bailouts given out to restart them, there have been difficulties.

Such was evident from halted condominium and skyscraper projects in the Canadian city of Toronto. Contractors and construction companies decried additional expenses due to the lockdown. The City Government of Toronto and the Government of Canada were sincere in helping. Difficulties still persisted.

Let us now explore more of such issues in the industry.

1. Issues with Contracts

Numerous research reports reveal that contract problems and issues often lead to disputes between construction contractors and subcontractors, or between clients and construction companies.

Sources of discord in this matter can include disagreements on the contract terms and conditions, along with improper management of variations in contracts, especially scope creep.

2. Involvement of too many parties

The bigger the project, the higher the risk of disputes. Across the world, mega projects continue to expand and their plans, contracts and the project themselves become more complicated. This involves more parties in the process and works.

As new participants get involved, it is imperative for them to understand the contract, their roles in the project, and how they should work as a team.

3. Ambiguity on changing conditions

Another key cause of construction claims, as identified by industry experts, is discovering that conditions of construction sites are not what the early design and tender documents had specified to be. 

In most instances, geotechnical investigations might have been incomplete, and issues affecting the final design and construction are not identified until and unless a project has been awarded. Once awarded, early investigation unearths such things, often ending up in disputes.

Communicational dilemma

4. Communicational dilemma

Clear and consistent communication is compulsory everywhere!

That is right, clear and unambiguous communication channels for everyone including project teams, contractors, sub-contractors, head contractors and vice versa, are needed and necessary.

A lot of misunderstandings can take place leading to unrealistic expectations, especially at construction sites. Open and honest communication is a requirement, and if this does not happen then both parties can become aggressive and emotional. Hence it requires dispute avoidance.

5. Poorly Managed Communication 

Apart from having clear and consistent communication channels and mechanisms, managing them properly is also necessary. Else a new set of problems can pop up.

When a new set of problems pops up, it is hard to manage them and also, and it results in companies going behind in terms of progress instead of being able to keep up.

A lot of professionals spend hours looking for documents using certain keywords in legacy systems or looking for a key email for reference. However, a lot of employees fail to save copies and often take original ones with them.

6. Lax administration 

Lack of proper project management and administration also leads to disputes. When workers are not managed properly, they then slack off from duties and cause tasks to be left incomplete.

Lax administration also leads to numerous issues in project delivery where disputes can come in the form of building code violations, wiring issues, scaffolding and architectural problems plus materials lost.

7. Identifying risks 

Communication processes, if streamlined, are compulsory to help with proper risk management in construction projects.

Most professionals in the industry stress the importance of project team members having an active role in identifying potential issues at their earliest. Also, these issues should be clearly communicated to project managers.

8. Speaking up and sorting out issues

There are problems that can lead to disputes like delays in invoice payments, unnecessary variations, non-issuance of change orders, schedule delays, and disagreements on the scope of work on emerging disputes between numerous team members should be communicated directly and at the earliest. 

Each thing should be checked proactively, and all documentation and communications should help prevent issues from escalating into formal disputes.

9. Creating top-notch information systems

Project reporting on a constant scale is helpful. Project reports exist in various forms but they can help track expenses, resources, schedules, work status, any changes (or potential changes) in work scope and the like. A system of reporting which is complete, detailed and consistent will help in avoiding disputes on a good scale.

Each construction company should be aware of the advantages of top-notch software systems. They also should be able to use such software on both computers and mobile devices.

Project managers in construction are often given a wholesome amount of respect. If they are to maintain that, they should not hesitate in using mobile devices and streamlined construction project management software.

Can a software solution help fix construction claims?

Can a software solution help fix construction claims?

In all honesty, legacy systems used by most construction and construction contracting companies have dragged them behind others.

This has caused the construction delays to go beyond limits, and document retrieval becomes a costly exercise consuming a lot of resources and of course time. This is why proper document management systems were needed.

The current capacity of electronic and remote management systems is good. They can increase the speed of document retrieval, and store loads of documents too. Moreover, the adoption of modern approaches and technologies is helpful in improving project communication documentation, accessibility and streamlining work processes.

However, a lack of will in adopting these approaches and technologies is a problem. Those construction companies who did adopt them reported substantial benefits and helped reduce turnover in the industry too.