Category 08
Insights on claims and disputes
Payment notices, variations, final accounts, retention, loss and expense and time: where construction money is argued about, and what decides it.
Categories
When a disagreement becomes a dispute
Nobody announces the moment. One month you are arguing about a valuation, the next you are building a case, and the correspondence in between has...
What it actually costs to run a claim
The fee is the part everybody asks about. It is rarely the part that decides whether running the claim was worth it.
Five questions to answer before you escalate
Escalation is easy to start and hard to stop. These five questions take days to answer and decide whether the next step is the right one.
Who should decide whether to fight
The person closest to the argument is rarely the right person to decide whether it is worth having.
Reading your own contract under pressure
Most contracts are read properly twice: once before signing, if you are lucky, and once when something has gone wrong.
What an independent review tells you that your team cannot
Not because your team is wrong, but because they cannot deliver the one answer that matters most if it goes against them.
The day your correspondence becomes evidence
Nobody writes a site email expecting it to be read aloud by somebody hostile. That is exactly the audience it eventually gets.
Writing a position down before anybody files anything
Not a claim and not a letter to the other side. A document written for your own people, saying where you actually stand.
The commercial risk of running a weak claim
A claim that fails does not put you back where you started. It puts you somewhere worse, and the damage is rarely in the fee note.
When walking away is the right commercial answer
Stopping a claim feels like losing. Continuing one that cannot succeed is the more expensive way to lose.
Managing internal pressure to fight
Some claims are run because the contract supports them. Others are run because stopping would require somebody to say something uncomfortable.
How long a construction dispute actually takes
The formal stages have timetables. Everything around them does not, and that is where the years go.
The notified sum, explained without the jargon
The sum that becomes payable is not always the value of the work. It is the figure the notices fixed, which is a different thing.
Due date and final date, and why both matter
One date starts the notice clock. The other is when the money has to move. Treating them as the same thing is a reliable way to miss a deadline.
What a payment notice has to say to count
A figure on its own is an assertion. What the contract usually asks for is a figure and the reasoning that produced it.
The pay less notice deadline and what happens if you miss it
It is the shortest deadline in the payment cycle and the one with the largest consequence attached to it.
Amended payment terms and the traps inside them
The payment clause people argue about is rarely the printed one. It is the version that came back from the other side’s solicitors.
How the payment mechanism works under JCT
A sequence of dates, each one measured from the last, and a document due at most of them.
How assessment and payment work under NEC
Different vocabulary, different roles and a different rhythm. The underlying question, what is payable and by when, is the same.
The subcontract payment chain and where it breaks
Two timetables, running at different speeds, operated by the same people in the same week of every month.
When an application for payment is not valid
An application that does not do what the contract asks of it may be worth nothing at all, however carefully the work was measured.
Withholding money without serving a notice
The deduction may be entirely justified. Without the notice the contract requires, that is frequently beside the point.
The payment notice mistakes we see most often
Almost none of them are errors of measurement. They are errors of date, wording, addressee and habit.
Payment disputes on heavily amended contracts
The parties are operating a mechanism neither of them has read in full, and the first cycle that is contested is where everybody finds out.
Entitlement and quantum are two different arguments
One asks whether the contract pays for what happened. The other asks how much. Answering the second first wastes most of the money.
Relevant events and relevant matters, side by side
They appear in the same contract, they often arise from the same incident, and they do entirely different things.
Notices that are a condition of being paid
Where a notice is a condition rather than a formality, the merits of the claim behind it stop mattering.
Notice periods that an amendment has shortened
The standard form gave you a reasonable period. The amendment gave you rather less, and nobody told the site team.
Ambiguity in the scope of works, and who carries it
Both sides read the same document and reached different conclusions. The contract usually says whose problem that is.
Which document wins when two of them disagree
It is a short provision, easy to miss, and it frequently decides an argument that everybody else is having about intention.
Was that an instruction or just a direction
Somebody with authority told you to do something. Whether that was a contractual instruction is a different question, and it decides who pays.
Establishing entitlement under NEC
One procedure instead of two, tighter timescales, and a structure that rewards the party operating it properly all along.
What proving a claim actually requires of you
Being right is the starting point. Showing it, from documents somebody else can follow, is the work.
Entitlement questions peculiar to design and build
The same event produces a different answer depending on who took responsibility for the design, and that is decided at contract stage.
The contract particulars worth checking before you claim
The clauses are the same on every project using that form. The particulars are where your project is actually different.
An entitlement review, step by step
Six steps, in order. Taking them out of order is what makes claims expensive.
When the contract rates stop applying
The rates in the bill were priced for work of a particular kind, in particular conditions. Change either and the rate may no longer fit.
Star rates, and when a new rate is justified
A rate built from first principles for work the bill never contemplated. Useful where it belongs, and frequently used where it does not.
Pro rata rates and how far they can be stretched
The middle step between applying the contract rate and starting again, and the one that resolves most variation disputes when it is used properly.
Fair valuation, and what it is not
It is not whatever the work cost, and it is not whatever either party thinks is reasonable. It is a valuation built on a defined basis.
Omitted work and the money that goes with it
Taking work out of a contract is rarely as simple as taking the rate out of the account.
When a variation disrupts work that was not varied
The instructed change is valued. The effect it had on everything around it usually is not, and that is frequently the larger number.
Building a compensation event quotation that survives
A forecast rather than a record, assessed against an accepted programme, submitted to a deadline that does not move.
The site records a variation claim stands on
The valuation rule is settled in the contract. What the rule is applied to comes from the site, and that part cannot be reconstructed convincingly.
Setting out disputed variations on a schedule
The difference between an account that gets assessed and one that gets refused is usually structure rather than substance.
Variation or defect, and why the label decides who pays
Identical work on site, two entirely different commercial outcomes, decided by a question nobody asks until the account.
When a provisional sum turns into a variation
The sum was in the contract, so the work was allowed for. Whether anything else was allowed for depends on which kind of sum it was.
Writing the narrative that ties a variation claim together
Two or three pages explaining what this is and how to read it. Not thirty pages arguing that you are right.
What to do when the final account stops moving
Two numbers, a long way apart, and an exchange of letters that has stopped being about either of them.
Reconciling the contract sum to the account
Start at the figure both parties signed and account for every pound between there and the number in dispute.
Remeasurement when the quantities are the argument
The rate is agreed, the basis is agreed, and the two sides are still a long way apart because nobody has measured the same thing.
The rules that govern set off
Having a good reason to withhold money is the easy part. Doing it in the way the contract requires is where it usually goes wrong.
Liquidated damages taken off the account
The project finished late and the contract sets a rate. Between those two facts sits a procedure that decides whether the money can be taken.
What the final certificate closes, and what it does not
A document that can settle more than either party realises, on a timetable that runs whether or not anybody is watching.
Without prejudice offers and what they protect
A label used constantly and understood loosely, on documents that frequently decide how a negotiation ends.
Negotiating a final account from a position
Splitting the difference between two numbers nobody has tested is how most accounts settle, and it is not negotiation.
Structuring a quantum schedule so it can be tested
The figures are only half of it. The other half is making each one checkable without a conversation.
The final account from the subcontract side
Same mechanics, less leverage, and a settlement that frequently waits on an account two levels above it.
Assembling the evidence pack for a disputed account
Not everything you have. The documents that answer the questions somebody else is going to ask.
The time limits that close a final account
Accounts do not stay open indefinitely. Several different clocks run at once, and they start at different moments.
The sequence that releases retention
Four events, in order, each one triggering the next. Miss any of them and the money stays where it is.
The defects period, and what it actually requires
A defined period with obligations on both sides, routinely treated as an open ended warranty by one and ignored by the other.
The certificate of making good and why it matters
One of the shortest documents in a building contract and one of the most consequential, which is why its absence costs so much.
Retention when the contract ends early
The release events never happen, because the works never completed. The money is still somewhere.
Why half the retention is released at completion
The first release is the one most often forgotten, because it happens at the busiest moment on any project.
Retention when the party holding it fails
Money you have earned, held by somebody else, with nothing separating it from everything else they owe.
Chasing retention that is overdue
Nobody has said no. Nobody has said anything, which is the problem and also the opportunity.
Retention in subcontracts and the pass through problem
Two mechanisms, related commercially and independent contractually, operated as though they were one.
Disputes about whether completion happened
One date decides retention, damages and the defects period. It is frequently never certified at all.
Working out what the retention balance really is
Two spreadsheets, two figures, and a number that nobody has actually derived from the certificates.
Taking a retention claim to adjudication
A narrow claim resting on documents, which is the kind adjudication handles best.
The records that get retention released
A short list of documents, kept by somebody, decides whether the last money on a project arrives or not.
Loss and expense is not the same as damages
They cover similar ground and they are reached by different routes, with different requirements and different consequences.
Prolongation and disruption, told apart
One is the cost of being there longer. The other is the cost of working less efficiently while you were there.
The measured mile, and when it works
Compare the same work in a clean period with the same work in a disrupted one. Simple in principle and demanding in practice.
Head office overheads in a claim
The head of claim that appears everywhere and succeeds least. Usually because what it actually requires was never addressed.
Finance charges, and when they are recoverable
Money withheld has a cost to the party that should have had it. Whether that cost is recoverable depends on the route and the contract.
The evidence a disruption claim needs
Everyone on a disrupted site knows the work took longer than it should have. Showing it on paper is a different matter.
Productivity factors, and why they get refused
A table of percentages applied to labour value produces a number quickly. It also produces an argument about every percentage.
Building up preliminaries for a claim
Most of a prolongation claim is time related preliminaries. Most prolongation claims build them up from the wrong place.
Disruption when there is no clean baseline
The project was disrupted from the start, so there is no good period to measure against. That is a real problem and not always a fatal one.
Cause and effect, shown rather than asserted
A claim lists events and lists costs. The part that decides it is the connection between the two, which is usually missing.
The notices loss and expense depends on
A valid claim notified late may be worth nothing. A modest one notified properly gets assessed.
Loss and expense under NEC, which is different
The phrase does not appear in the contract. The mechanism works forwards rather than backwards, and claims built the traditional way do not fit.
The critical path, without the software
The idea is simple and the arguments about it are not. Most of them come from treating a programme as a fact rather than as a plan.
Concurrent delay, in commercial terms
Both sides caused delay in the same weeks. What follows depends on the contract, on the law, and on which version of concurrency is meant.
As planned against as built, and what it shows
Put the programme next to what actually happened and the delays are visible. Establishing their cause takes more than the comparison.
Delay notices and what they have to say
The requirement is usually short, usually clear and usually missed. What follows from missing it depends on the wording.
When the programme becomes a contract document
A programme can be a management tool or a contractual commitment. Which one it is depends on wording that is rarely read at tender.
Time at large, and why it rarely helps
It sounds like the end of the argument and it is usually the start of a much longer one.
Liquidated damages and the time claim
The deduction starts before the extension is decided. That sequencing is what makes delay disputes urgent rather than merely expensive.
Who owns the float, and why it is argued about
Spare time is money to whoever gets to use it. Most contracts are silent, which is why the question keeps arriving.
Extensions of time under NEC, which differ
The mechanism works forwards, deals with time and money together, and punishes late notification in a way traditional forms do not.
Delay records that actually work
A page a day beats a folder a month. The records that decide these claims are the ones nobody thinks are worth keeping.
Sectional completion and delay to one part
Several completion dates means several time claims, several damages rates and considerably more scope for the position to be got wrong.
How to structure an extension of time claim
The document has one job: to let somebody else reach a conclusion. Everything that does not serve that job makes it worse.