7 Ways Contractors Can Avoid Construction Claims

HKA publishes its Crux Insight Report each year, analyzing the causes of claims and disputes on major capital and infrastructure projects. As of July 2022, the research found $80-billion in disputes on $2.13-trillion in over 1,600 multi-year projects. The disputes amounted to over 35% of capital expenditure, and schedules were typically prolonged by over 68%. From outside the industry looking in, this seems unsustainable. And yet, these are real-world numbers from real projects happening now.

Contractors face enormous impacts to schedules and budgets as a result of claims and disputes, but it’s not a lost cause. Thanks to opportunities for digitalization and emerging project design and management tools, companies can reap the benefits of improvements around documentation, change order management and design approvals.  

Based on the top causes of claims or disputes on construction projects in the Americas, following are 7 ways contractors can avoid construction claims:

1. Reduce potential changes in scope through collaboration among all project stakeholders. The value of collaboration is in allowing stakeholders to identify risks and strive to avoid or mitigate them. Site meetings, pre-bid meetings and pre-construction meetings should be mandatory. Collaboration involves trust, which is an essential ingredient in successful projects.
2. Make sure the design is correct and complete. Building information modeling with a tool like Revit is one of the best ways to achieve that goal. Teams need to streamline the digital or paper processes used for design approvals.
3. Pre-qualify workers and subcontractors adequately to make sure they are trained and capable of performing the work they will be assigned. Some projects have requirements that involve subcontractors, so make sure their bids take that into account.  

4. Provide proper management of subcontractors and suppliers. Since the contractor is responsible for the work the subs do, communication is key. Put contract details in writing, including payment terms. Parties involved in construction phases should streamline processes commonly used for change order management and project correspondence. Progress should be tracked daily to make sure the project stays on schedule. Leverage project data to monitor and manage daily operations using tools like those in Autodesk Build, part of Autodesk Construction Cloud. They can be used for PDFs, Revit models and CAD files.
5. Make sure the contract is understood and managed or administered properly. The second most common cause of claims and disputes on projects is related to contract interpretation issues. Good collaboration using a Unified Platform goes a long way toward understanding the project long before ground is broken. For example, more and more contracts are requiring a digital twin to be provided at handover.
6. Ensure design information is issued on time. The CRUX report stated, “a significant proportion of claims and disputes have a design-centric cause…”.
7. Make sure appropriate people have access to the project site when they need it. A common data environment, will help ensure that everyone is working with the same information, and they are all on the same page during a project.     

Construction companies need to move toward digitalization, including the use of digital twins. To reap the full benefit of design and project management tools, the entire planning and delivery team needs to keep up to date with the latest technology.