Documenting a Construction Claim

At the outset of any construction project, when goodwill and trust are usually at their
high points, the parties will often neglect to record in writing many of the key
agreements and understandings reached between them. Later on in the project, when
problems start to arise, trust and goodwill often give way to the financial realities of
potential construction claims. More often than not, it is not until this latter point in time
that the parties will start to thoroughly record events, as well as any agreements and
understandings that may have been reached.

Failure to properly record and document construction projects can be fatal in a
claim. Written agreements and documentary evidence will almost always
outweigh oral evidence and alleged verbal agreements.

It is crucial to keep in mind the following items during the course of a project, which will
help to support or defend a claim should one arise:

1.
Keep all bid documentation and record any pre-contractual agreements,
representations and understandings in writing and ensure they are in the contract or
can be relied upon at a later stage.
2.
Ensure that a fully signed written agreement is in place before commencing work
on a project. While oral agreements are generally enforceable, written ones are easier
to prove.
3.
Read and be familiar with all contract terms, especially the notice provisions.
Failure to provide notification of a potential claim could preclude a party from bringing
its claim.
4.
Keep all project correspondence. It is often helpful to organize project
correspondence according to each key party and whether the correspondence is
incoming or outgoing. For example, it is important to remember that in order to litigate
a delay claim, it is generally necessary to reconstruct the project in detail on a daily
basis.
5.
Record all relevant conversations and send follow up correspondence. Parties
may proceed on a project for months based on a particular representation or
understanding, only to find out later during litigation that the other party denies
everything. Where there is no response to correspondence, a court may find that a
failure to respond affirms what was said in the letter.
6.
Take pictures or videos at all stages of the project. Nothing can help a judge or
lawyer more to understand a problem or deficiency on a project than an illustrative
picture of it.
7.
Keep all plans and drawings and ensure that you have accurate records of all
amendments or addendum.
8
. Make sure a project diary is kept along with diaries for key personnel. Diaries
should record: 1) the weather; 2) manpower, visitors and contractors on site; 3) key
deliveries; and 4) any notable event such as problematic or hidden site conditions or
events that may cause delay or affect productivity. Ensure that entries express facts,
rather than opinions.
9.
Maintain an as-planned schedule and regularly update it with an as-built
schedule.
There are several computer programs available to schedule and track
progress. The end product of a proper scheduling exercise is a plan that should tell a
contractor or owner what sequence work should be done in, when it should start,
what work has to be completed first, when successor activities should start, and when
it should finish. Having an accurate schedule for a project and regularly updating it will
provide a valuable tool for tracking and recording delay and the impact of that delay.
10.
Record all key events, especially ones that may lead to a claim, and specifically
record: 1) when the event occurred; 2) what it was; 3) who noticed it; 4) the projected
impact it may have on cost and time; 5) whether notice was given and to whom; and
6) response to notice.
11.
Record all change orders and claims for extras and when they were submitted
for approval, and separate those that are approved from those that are not. A
contractor who has failed to get approval for a change order should always diligently
express and protest their ongoing concerns writing. When doing so, the contractor
should adhere to the contractual notice requirements. Parties should also be aware of
the ability to give notice that they are performing under protest.
12.
Document the additional costs caused by an event. It is particularly important to
keep proper accounting and employee payroll records pertaining to additional
overhead and employee costs. Accounting records should be able to recreate the costs
associated with particular tasks and problems as well as to create a snap shot of costs
incurred at a particular point in a project.
13.
Finally, contact legal counsel as early as possible. Contractual interpretation and
strategic decisions made early can greatly enhance your prospects for success in a
construction claim.