Construction Claims Explained: Types & How to Avoid Them 🏗️

✋ What Is a Construction Claim?

Ever been handed something different than what you expected? Maybe you asked for a window seat on a flight ✈️ and ended up in the middle?

In the construction world, when the final product — or the journey to get there — doesn’t quite match the initial agreement, it can lead to what’s known as a construction claim. These claims are formal requests made by one party in a project to another, seeking compensation or relief due to changes, disruptions, or disagreements that pop up during or after the project begins.

Think of it as raising your hand and saying, “Hold on a second, this isn’t quite right, and it’s affecting me!”

🔍 So, What Does a Claim Really Mean?

At its core, a construction claim is a formal disagreement or dispute between two contracting parties. It’s not just a minor complaint — it’s an official stance that one side believes they’re entitled to:

• 💰 Additional payment for unforeseen work or changes
• ⏳ Extra time to complete the project
• 📝 Or alterations to the agreed terms

Interestingly, it’s not just contractors who raise claims. Project owners can also file claims — say, for delays or non-compliance by the contractor. Claims go both ways.

📄 It All Starts With the Contract

The construction contract is the playbook. It usually spells out:

• 📘 What exactly counts as a claim
• 📌 The step-by-step process for submitting and resolving claims

Bottom line? Whether you’re a contractor, subcontractor, or owner — get familiar with the contract. It’s your first and most powerful tool in managing claims before they snowball into bigger disputes.

🚧 Common Causes of Construction Claims

Construction sites are buzzing hubs of activity 👷‍♀️👷, involving numerous individuals, intricate plans, and a whole lot of potential for things to deviate from the initial blueprint. It’s almost a given that at some point, a project might encounter a few unexpected turns. These deviations from the planned course are often the breeding ground for construction claims.

⏱️ Delays

One of the most frequent triggers for claims is delays. When a project stretches beyond the agreed-upon completion date, it can lead to significant financial implications and strained relationships. Causes of delay include:

• 🌧️ Unforeseen weather events
• 🚚 Supply chain disruptions or late material deliveries
• ✏️ Design changes during execution
• 📑 Permit or approval delays

Managing project timelines proactively is essential in keeping these types of claims at bay.

🔁 Changes in Scope

Scope changes occur when the original requirements are modified mid-project. These may be due to:

• Client requests for different finishes or features
• Unexpected site conditions
• Regulatory or code updates

Such changes often result in additional costs or schedule shifts. Having a robust change management process (like clear change orders) is crucial to prevent disputes.

💵 Payment Disputes

Disputes about payment are a common flashpoint. Issues can include:

• Underpayment or non-payment
• Delays in release of funds
• Disagreements over quality or scope of completed work

Clear contract language, agreed invoicing formats, and transparent processes help minimize payment-related claims.

🪨 Unforeseen Site Conditions

Sometimes the ground beneath or structure behind a wall hides surprises. Unanticipated site conditions may include:

• 🪨 Subsurface rock or obstructions
• ☣️ Contaminated soil or hazardous materials
• 🚧 Hidden utilities or old foundations

While pre-construction site investigations help, not all conditions can be predicted — making this a frequent cause of claims.

🔧 Defects and Poor Workmanship

Claims often arise when work or materials don’t meet expected standards. These quality issues may include:

• Use of subpar or incorrect materials
• Poor construction practices
• Non-compliance with codes or specs

Strong QA/QC systems and inspections can prevent these types of claims before they escalate.

⚠️ Accidents & Property Damage

Damage to property or equipment during construction—whether due to accidents or negligence—can result in major claims. This includes:

• Damage to existing or neighboring structures
• Loss of equipment or materials
• On-site mishaps affecting stakeholders

Robust safety measures and proper insurance coverage are your best defense.

📜 Contractual Issues

Sometimes, the contract itself is the source of the problem. Claims may arise due to:

• Ambiguous or poorly worded clauses
• Unclear obligations or deliverables
• Disputes over claim procedures

A clear, well-drafted contract understood by all parties is the foundation of claim prevention.

💡 Being proactive, detail-oriented, and transparent in your processes can significantly reduce the likelihood of claims — and make resolving them much smoother when they do arise.

📌 Key Types of Construction Claims

⏳ Delay Claims

These claims arise when a project exceeds its agreed-upon completion date. The causes of delays can vary widely, including:

• ⛈️ Severe weather events
• ✏️ Owner-initiated design changes
• 👷 Contractor-related issues like insufficient labor

Example: Imagine a builder contracted to complete a home extension before a homeowner’s summer barbecue 🍖. If unexpected heavy rainfall delays the foundation work, causing the project to miss the deadline, the builder may file a delay claim to recover extra time and associated costs.

Delay claims can be:

• Excusable: Usually eligible for time extensions (e.g., bad weather)
• Inexcusable: Attributable to the contractor, with no entitlement
• Compensable: Entitled to both time and money (e.g., owner-caused delays)

🚧 Disruption Claims

These claims focus on decreased productivity and efficiency, not necessarily project delays. Even if the project finishes on time, significant disturbances during execution can justify a disruption claim.

Example: A plumbing crew is trying to install pipes but constantly has to pause and move aside because the electrical team is working in the same tight space. This constant interruption leads to wasted time and increased labor costs — classic grounds for a disruption claim.

Key to disruption claims is proving loss of productivity and demonstrating the link between disturbances and extra cost. This often requires detailed, time-stamped records showing when and how efficiency was compromised.

✍️ Changes in Scope Claims

When the client or circumstances change the original contract requirements, it may lead to a scope change claim — typically for added cost and time.

Example: In a kitchen remodel, the contract includes standard countertops. Midway through the project, the client asks for high-end granite instead. This upgrade increases both material cost and installation effort, giving rise to a change in scope claim.

These claims depend on whether the extra work is outside the original contract. They are best supported by formal change orders that include:

• 📝 Description of the new scope
• 📅 Revised timeline (if any)
• 💵 Adjusted cost

Documentation is key — without a signed change order, the claim might not hold up.

💰 Payment Claims

Payment claims revolve around disagreements regarding compensation for completed work. These may include:

• Non-payment or partial payment for completed tasks
• Disputes over the value of the work performed
• Conflicts regarding the payment schedule outlined in the contract

Example: A subcontractor finishes all drywall installation but the main contractor withholds payment, claiming substandard quality. The subcontractor may file a payment claim to recover owed funds.

These claims can relate to:

• Progress payments during the project
• Final payment at project completion
• Release of retained (withheld) amounts

Prevention tip: Clear payment terms and schedules, along with solid documentation of completed work at every stage, help prevent these disputes from escalating.

🛠️ Other Common Construction Claims

🪨 Unforeseen Site Conditions Claims

These claims arise when the contractor encounters unexpected physical conditions, such as subsurface rock, buried debris, or undocumented utilities. The extra time and cost associated with adjusting to these surprises can form the basis of a claim.

🚧 Damage Claims

When construction activities cause property damage, injury, or financial losses, parties may seek compensation. For example, an accidental water pipe burst damaging nearby office equipment could trigger a damage claim.

⚡ Acceleration Claims

These occur when the contractor is expected to finish the work faster than originally planned, often incurring additional costs (e.g., overtime labor, increased equipment use).

• Directed Acceleration: The owner explicitly instructs the contractor to speed up
• Constructive Acceleration: The contractor is forced to accelerate due to denial of a legitimate time extension

🔧 Defective Work Claims

These claims emerge when the work or materials fail to meet contract specifications or codes. The result may be rework, repair, or compensation for resulting damages. Proving non-compliance with standards or contract terms is usually required.

💡 With the right processes, documentation, and clarity in your contract, most of these claims can either be prevented or efficiently resolved.

⚖️ So, How Do Construction Claims Get Resolved?

When a construction claim surfaces, the involved parties typically embark on a process to reach a resolution. Several methods are commonly used to address these disputes:

🤝 Negotiation

The first and often preferred step is negotiation — direct discussions between the disputing parties. It’s typically the quickest, most cost-effective option and aims to preserve working relationships.

🗣️ Mediation

If negotiation fails, the next step may be mediation. This involves a neutral third party (the mediator) who helps facilitate dialogue and guide the parties toward a mutually acceptable settlement.

Mediation is non-binding and focuses on finding common ground with help from an impartial facilitator, without imposing a decision.

⚖️ Arbitration

Arbitration is a more formal process where a neutral arbitrator (or panel) hears both sides and makes a legally binding decision. It’s commonly used in the construction industry for its efficiency and industry-specific expertise.

Arbitration offers a middle ground — more formal than mediation, but typically faster and less public than litigation.

🏛️ Litigation

Litigation involves taking the dispute to court for a judge or jury to decide. It’s often the last resort due to its complexity, cost, and duration.

While it provides a definitive, enforceable resolution, litigation can be time-consuming and adversarial, potentially damaging professional relationships.

⚡ Adjudication

Adjudication is a quicker, often contractually required process that delivers a decision on the dispute, usually on a temporary basis. It allows work to continue and helps maintain project cash flow.

The decision is binding in the short term but can be challenged later through arbitration or litigation.

🧠 Expert Determination

When a dispute involves complex technical issues, expert determination may be the most suitable method. A neutral expert evaluates the matter and delivers a decision based on their specialized knowledge.

This is particularly effective for technical disputes requiring in-depth subject expertise, rather than general legal arguments.

💡 Choosing the right resolution method depends on the nature of the dispute, project priorities, and how quickly a resolution is needed.

🔍 The Real Impact of Construction Claims

Construction claims are not just occasional hiccups; they are a significant aspect of the industry, often involving substantial sums and time. Here are some interesting facts that highlight their impact:

• 🌍 Globally, the average value of a construction dispute in 2021 reached a staggering $52.6 million. This figure underscores the high financial stakes often associated with these disagreements.
• 🇺🇸 In North America, the average dispute value in 2022 was $42.8 million, up from $37.9 million in 2020 and $30.1 million in 2021 — a clear upward trend in financial impact.
• ⏳ The average duration of dispute resolution was 16.7 months in North America and 15.4 months globally in 2021 — pointing to prolonged uncertainty and added costs.
• 📄 One of the top causes of disputes in 2021 was poorly drafted or incomplete and unsubstantiated claims, showing the need for well-documented, structured claim preparation.
• 📉 In 2024, over 50% of US construction firms reported project delays or abandonments due to rising costs — a common trigger for claims.
• 👷‍♂️ More than 70% of all claims in the US construction industry are workers’ compensation claims, highlighting the inherent risks of the work environment and the importance of jobsite safety.

💡 Pro Tip: A well-prepared claim can mean the difference between prolonged legal battles and swift resolutions. Invest in documentation and clarity from day one!

📊 Average Dispute Value & Length in North America

To further illustrate the financial trends, the following table summarizes the average value and duration of construction disputes in North America based on available data:

✍️ Conclusion: Claims Don’t Have to Be a Headache!

Construction claims, while a common occurrence, don’t have to be a source of constant worry. With the right knowledge and preparation, they can be managed smoothly and professionally.

By understanding:

• ✔️ What claims are and how they work
• ✔️ The most common causes of claims
• ✔️ The different types and how to respond to them
• ✔️ Resolution methods that suit your situation

…professionals and stakeholders in the construction industry can approach claims with greater confidence and less stress.

Best practices include:

• 💬 Maintaining clear and open communication
• 📜 Drafting detailed and fair contracts
• 🔍 Monitoring progress and addressing issues early

Remember: A little foresight and preparation can go a long way in ensuring smoother, more successful construction projects for everyone involved. 🎉