Conflicts are inherent due to the complex nature of construction projects and the different interests of involved parties. Failure to manage these conflicts may prompt one party to submit a construction claim formally. Should these claims remain unresolved, they evolve into construction disputes. This article provides an introduction to construction claims and disputes.

In construction projects, “claims” are requests/assertion of rights (such as for more money, time, or changes to contract terms). “Disputes” are disagreements that arise if those requests aren’t granted or if those rights are not recognized. For example, suppose a contractor agreed to perform excavation on a particular site but then discovered that the underground conditions were different from what was expected. If these unexpected conditions pose increased difficulty, the contractor may submit a claim requesting that the project owner provide additional compensation to perform the work. If the owner insists that it was the contractor’s responsibility to check the underground conditions before providing a quote for the project, the owner might refuse to provide the additional compensation. Thus, what started as a claim evolved into a dispute between the contractor and the project owner.

Construction claims can be broadly categorized based on the issue they address or its cause. For example, delay claims address project timeline extensions, whereas disruption claims can address labour inefficiencies/productivity loss. A comprehensive but non-definitive list of construction claims types also includes acceleration claims, variation claims, delay claims, cost overrun claims, loss of productivity claims, defective work claims, differing site conditions claims, and many others. Different types of construction claims will be described more in a future article.

Although actions can be taken to prevent a considerable number of claims and disputes, they can still arise. Effectively navigating construction claims requires a proactive and informed approach. Below is an introductory overview with respect to best practices for preparing for and handling construction claims and disputes:

• Ensure the contract covers procedures for claims and disputes. Parties should comply with their respective contractual obligations establishing the framework for collaboration. Most importantly, each party should review and understand contractual terms to clarify their rights, duties, and responsibilities for involvement.
• Have measures in place to identify issues early. Early identification of potential issues is key, allowing for proactive resolution and minimizing any adverse impact on the project. Measures that can help with early identification can include specific reporting procedures as well as technologies, such as drones or software, for monitoring purposes.
• Address issues as promptly as possible. Construction claims in projects should be addressed at the source of the issue, while facts are fresh and relationships are intact. Immediate action increases the chances of an amicable resolution without resorting to legal involvement. Further, this is especially important in long-term contracts spanning several years.
• Communicate clearly. Clear and transparent communication plays a pivotal role, ensuring that all relevant parties are well-informed to prevent misunderstandings that could potentially escalate into construction claims. Also, be informed about the other party’s position; being informed about the positions of all parties can help make negotiation more productive.

By adopting these proactive measures, project stakeholders can foster a collaborative environment and effectively manage potential challenges throughout the claims and dispute resolution process.