You spend a lot of time considering the expenses and risks when preparing a bid for a construction project. Regardless of how much time you spend though, you cannot predict every event that may arise which may cause you to incur additional costs or extend how long the work will take. It’s inevitable during construction something will happen you have no control over and could not reasonably anticipate. Cost of work increases, your scope of work expands, and/or requires a change to your work schedule and completion deadline. When this happens, you need to be prepared and understand the steps necessary to make compelling construction variation claims to get the right price for your construction services or construction deadlines. It’s also important to know what contractors can do to avoid litigation.
The first step to filing an effective construction variation claim
The first step to filing an effective variation claim (or change order request, depending on the contract terminology), is to know what your contract says about variation claims. You should review and understand when and how to file your variation claim before starting work to avoid delaying your claim by first learning the terms at the time it is needed. You need to understand what triggers your obligation to file a claim (occurrence of the event causing the need for variation vs. your first knowledge a variation is needed), how long you have to file (X calendar days vs. X work days from triggering event), and what information you need to provide to support the claim (proof of cause, calculations, project specific forms). The deadline for filing variations claims is usually short, so be prepared to file before your need to file arises.
Immediately give written notice of your intent to file a claim
When a construction variation claim does arise, immediately give written notice of your intent to file a claim to the appropriate client contact designated to receive notice. Begin gathering information to determine and support your claim for a variation in the price or schedule. This should include cost estimates for additional or changed work, delivery dates for additional materials, weather predictions and any other information used to calculate the change to price or schedule. Summarize the information you gather and submit your completed claim with all supporting documentation before the claim period stated in the contract expires. If you don’t have all the information need to calculate or support your claim, submit your claim before the deadline with a statement the calculation is incomplete and subject to change upon receipt of final information. If you miss the deadline to file your claim, file it as soon as you can after the deadline anyway. Some companies will waive the deadline requirement and grant the variation for the good of the project and to maintain a good relationship with your company.
Establish that your actions did not cause the need for the variation
In addition to providing support for your variation calculations, you must establish your actions did not cause the need for the variation and the cause was not within your control. The standard denial of a variation request is to claim you caused, contributed, or could have avoided the event causing the variation. If your investigation of the variation event reveals you caused the event, you may not want to file a variation claim to avoid any conflict with your client. However, if you were only a small factor in the cause of the event, you may still want to file the claim for a chance to receive some, if not all, of the variation you are seeking.
Use your business sense
The final tip for filing an effective variation claim is to use your business sense. If your relationship with the client is fragile and you wish to receive more work, you may decide it’s best not to file every variation claim you have a right to. Also, use common sense. Do not overlap claims by including costs or time covered in a previous variation claim. Don’t pad your claimed expenses or request unnecessary extensions to the schedule. Also, don’t file variation claims for small delays or expenses. Finally, if you don’t completely understand when and how to file an effective variation claim on a construction project, contact a construction lawyer.