A contractor will frequently be faced with multiple events that have the potential to delay or disrupt its contractual performance. Under the majority of construction contracts, if the contractor incurs additional costs due to events for which the employer is responsible, it is likely to be entitled to compensation.

Generally, the elements that a contractor must prove to demonstrate its entitlement to compensation are: (1) that the employer was contractually responsible for the delay/disruption to the project; (2) the contractor suffered harm (i.e. it incurred extra costs); and (3) a causal link between the event or events and the loss and expense incurred.

However, in some instances the causal link between the events giving rise to the claim and the loss and expense incurred, can be completely absent or difficult for the contractor to adduce evidence to prove the same.

For example, if a contractor is required to incorporate a number of variations for additional work and had design information supplied later than required, the effects of such matters are likely to manifest themselves in a number of ways, and it may not be possible for the contractor to identify all the additional costs incurred to each individual variation or piece of design information.

In such circumstances, the contractor may be limited to putting forward a global claim.

Below are ten tips from DBSConsult for the contractor to consider before presenting a global claim:

 

1. Avoid a Global Claim Altogether

If there is sufficient contemporaneous records or segregated costs available to avoid a global claim altogether, the contractor should make its claim using the direct evidence approach.

 

2. Ensure the Contract has been Adhered To

The contractor must have complied with the specific contract requirements for making a valid claim. It may be that global claims are not permitted under the contract.

 

3. Identify the Events which the Employer is not Responsible

If there are any significant matters for which the employer is not responsible, cost arising from this cause should be identified and omitted from the global claim.

 

4. Prove the Claim as a Matter of Fact

The contractor must be able to prove as a minimum that (i) each of the events occurred (ii) the employer bears the risk for these events (iii) the events resulted in delay and/or disruption (iv) losses were incurred.

 

5. Consider Whether the Loss would have been Incurred in Any Event

Can the contractor establish that the loss would not have been incurred in any event. For example, the employer might adduce evidence that the contractor’s tender was so low that it would have suffered the loss irrespective of the employer risk events.

 

6. Be Aware of the Inherent Risk of a Global Claim

A global claim is made as a whole and therefore runs the risk of failing as a whole. The global claim would fail if any material contribution to the cause of the loss was a factor for which the employer did not have responsibility.

 

7. Strip out the Losses Where Causal Links can be Determined

All parts of the claim where a causal link can be demonstrated should be pleaded separately, especially where different heads of claim may have different legal or contractual bases, and consequently different methods of valuation.

 

8. Remember it is the Contractors Duty to Prove His Claim

A global claim can appear to have the effect of reversing the burden of proof so that it is the employer, rather than the contractor, who has to undertake a detailed analysis of the events and quantum. It is the contractor’s duty to prove his claim.

 

9. Establish Cause and Effect First

The contractor’s efforts should be put towards establishing entitlement by as full and detailed an analysis of cause and effect as can be undertaken in the circumstances, before concentrating into calculating and supporting the compensation.

 

10. Do Not Simply List Events and Alleged Loss

The contractor should ensure his case is not merely stating a number of events on one side and a quantification of damage on the other, with no apparent link between the two.

 

Taking the above into consideration, contractors should only plead their case in a global manner where the contract allows for the same (or is silent on the matter), where it is considered completely impractical to disentangle the part of the loss attributable to each head of claim and where the contractor himself has no responsibility of any of the delay or disruption to the works (or has isolated parts for which he is responsible). Contact us to discuss how we can support you, as and when you need it.

 

This article was originally written and published on the internet by DBS Consult on 08/11/18.

 

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.

 

BDAS specialise in: providing contract advice, resolving construction disputes, managing construction claims & adjudications and will give you competitive, independent advice tailored to your specific construction problems.

If you could benefit from this please call Jon now on 07795 231 231 or email: Jon@BDASweb.com