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Construction Claims Procedures

Document Type: Procedure
Version: 1.0
Last Updated: February 2026
Distribute To: Project Managers, Executives

Purpose​

Establish procedures for identifying, documenting, and pursuing construction claims to protect company interests.

What is a Claim?​

A claim is a demand for additional compensation or time beyond the contract, typically arising from:

  • Changed conditions
  • Owner-caused delays
  • Design errors/omissions
  • Scope changes
  • Disruption/acceleration
  • Contract breaches

Types of Claims​

1. Differing Site Conditions​

Type I: Conditions differ from what contract indicates Type II: Unusual conditions that differ from what a reasonable contractor would expect

Documentation Required:

  • Photos before disturbing
  • Written notice immediately
  • Comparison to contract documents
  • Cost of changed work

2. Change Order Claims​

Arise From:

  • Directed changes
  • Constructive changes (actions that change work)
  • Cardinal changes (beyond contract scope)

Documentation Required:

  • Direction received
  • Impact on work
  • Detailed cost breakdown
  • Schedule impact

3. Delay Claims​

Types:

  • Excusable (not contractor's fault)
  • Compensable (owner caused, may recover costs)
  • Concurrent (multiple causes)

Documentation Required:

  • Delay events log
  • Schedule analysis
  • Impact on critical path
  • Extended general conditions

4. Acceleration Claims​

Types:

  • Directed acceleration (owner directs faster completion)
  • Constructive acceleration (denial of valid time extension)

Documentation Required:

  • Time extension request (denied)
  • Direction to maintain schedule
  • Acceleration costs
  • Premium time, additional resources

5. Disruption/Loss of Productivity​

Causes:

  • Out-of-sequence work
  • Overcrowding
  • Multiple mobilizations
  • Excessive changes

Documentation Required:

  • Productivity records
  • Planned vs. actual
  • Measured mile analysis
  • Industry studies

Claim Process​

Step 1: Identify Potential Claim​

Watch For:

  • Events causing extra cost
  • Events causing delay
  • Conditions different than expected
  • Owner actions affecting work
  • Design problems

Step 2: Provide Timely Notice​

Critical:

  • Follow contract notice requirements
  • Written notice to owner/GC
  • Specific about event and impact
  • Reserve rights

Step 3: Document Thoroughly​

Contemporaneous Records:

  • Daily reports (detailed)
  • Photos and videos
  • Correspondence
  • Meeting minutes
  • Time records
  • Cost records
  • Schedule updates

Step 4: Quantify the Claim​

Elements:

  • Direct costs (labor, material, equipment)
  • Extended general conditions
  • Home office overhead
  • Profit (if allowed)
  • Time extension

Step 5: Prepare Claim Package​

Include:

  • Executive summary
  • Factual narrative
  • Contract references
  • Entitlement analysis
  • Quantum (cost) analysis
  • Supporting documentation
  • Schedule analysis (if delay)

Step 6: Submit and Negotiate​

Process:

  • Submit per contract requirements
  • Meet to discuss
  • Negotiate resolution
  • Document agreement
  • Execute change order

Step 7: Escalate if Necessary​

Options:

  • Senior management meeting
  • Mediation
  • Arbitration
  • Litigation

Claim Documentation Checklist​

================================================================
         CLAIM DOCUMENTATION CHECKLIST
================================================================

Claim: _____________________________________________________

Project: ___________________________________________________

================================================================

NOTICE:
☐ Written notice provided
☐ Timely per contract
☐ Sent to correct party
☐ Receipt confirmed
☐ Copy in file

ENTITLEMENT:
☐ Contract provisions identified
☐ Breach/change documented
☐ Causation established
☐ No waiver issues

QUANTUM:
☐ Labor costs documented
☐ Material costs documented
☐ Equipment costs documented
☐ Subcontractor costs documented
☐ Extended GCs calculated
☐ Home office overhead (if applicable)
☐ Markup per contract

SCHEDULE:
☐ Baseline schedule
☐ Update showing impact
☐ Critical path analysis
☐ Delay days calculated

SUPPORTING DOCUMENTS:
☐ Daily reports
☐ Photos
☐ Correspondence
☐ Meeting minutes
☐ RFIs
☐ Submittals
☐ Cost records
☐ Time records

================================================================

Claim Narrative Outline​

I. EXECUTIVE SUMMARY
   - Brief description
   - Amount claimed
   - Time extension requested

II. PROJECT BACKGROUND
    - Parties
    - Contract scope
    - Timeline

III. FACTUAL NARRATIVE
     - Chronological events
     - What happened
     - Who did what

IV. ENTITLEMENT
    - Contract provisions
    - Why you're entitled
    - Legal/factual basis

V. QUANTUM
   - Cost breakdown
   - Calculation methodology
   - Supporting documentation

VI. SCHEDULE ANALYSIS (if delay)
    - Impact on critical path
    - Delay days

VII. CONCLUSION
     - Summary of entitlement
     - Amount requested
     - Time extension requested

EXHIBITS
- A: Correspondence
- B: Photos
- C: Cost backup
- D: Schedule analysis

Extended General Conditions​

Typical Components:​

ItemCalculation
SuperintendentDaily rate × delay days
Project ManagerAllocated daily rate × delay days
Field officeMonthly cost × delay months
UtilitiesMonthly cost × delay months
EquipmentDaily rate × delay days
InsuranceProrated cost
BondProrated cost
Small toolsPer contract or %

Home Office Overhead​

Eichleay Formula (Federal):​

Contract billings     Allocable      Daily      Overhead
────────────────── × Overhead = Overhead ÷ Days = Rate
Total billings

Daily Rate × Delay Days = Home Office Overhead Claim

Requires proof contractor was "on standby"

Claim Prevention​

Best Practices:​

  • Understand contract before signing
  • Document everything
  • Communicate in writing
  • Provide timely notice
  • Track costs meticulously
  • Update schedule regularly
  • Address issues promptly
  • Change Order Management
  • Notice Requirements Guide
  • Schedule Management
  • Daily Reporting

Template provided by support.construction. Consult legal counsel for significant claims.