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II. Claim Notice Provisions

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Once the claimant fulfills the pre-claim requirements, it can initiate the formal claims process by properly noticing the respondent about the claim, if required by contract. Most construction contracts include claim notice procedures and it is important to identify how the notice of a claim can be served, as certain standard contract forms still do not include electronic delivery as an acceptable form of notice.

Notice provisions place the burden on the claimant to give the respondent a heads up on issues that involve impacts that affect the claimant's cost and/or time on the project. Timely notice benefits the respondent because it allows for a timely investigation of the claim issue so sound decisions can be made in a contemporaneous manner. In certain instances, failure to timely notice the respondent may prejudice the respondent.

Some claimants are hesitant to follow contractual claim procedures for fear of the negative effect it might have to the performing party–paying party relationship. Other claimants fear that the issuance of formal claims might cause respondent retaliation. As a result, claimants often bundle claim issues and submit them at the tail end of projects, which can catch respondents by surprise, and this typically leads to unproductive communications and binding dispute resolution. One way to avoid such discomfort is for the parties to review the dispute resolution process up front and periodically during the production phase so both parties are reminded that the defined claim protocol is there to resolve issues early in the dispute resolution process and it serves to prevent claims from snowballing to a point where binding dispute resolution is the only way to achieve resolution. Resolving claims early is typically a benefit to both parties.

Each of the examples below is based on a contractor being the claimant and an owner being the respondent and the two parties have entered a standard contract form and the owner is responsible for the design on the project. The examples cover the notice of claim provision typically required for general claim items, claims regarding a lack of adequate funding, claims related to a failure to make timely payments, and termination by the contractor.

Fundamentals of Construction Claims

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