Fundamentals of Construction Claims. William J. McConnell

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.

      A. Notice of Claim Provisions for General Claim Items

Certain standard contract forms require the claimant to issue a formal notice of claim to the respondent prior to issuing complete claim submissions. This makes sense because it typically takes time to calculate cost and time impacts associated with claims. It is standard for notice of claims to be issued by the claimant within 14–21 days of the event giving rise to the claim or first recognition of the event.

      1. AIA A201 General Conditions

      Per Section 1.6.2 of the AIA A201, the claimant (owner or contractor) shall serve notice of claims in writing and deliver such notices via certified or registered mail, or by courier providing proof of delivery. Per Section 15.1.3 of the A201, for claims where the condition giving rise to the claim is first discovered prior to the expiration of the contractor's one-year warranty period, the claimant (owner or contractor) shall initiate the claims process by providing notice to the initial decision maker, the other party, and the architect. Claims by either party must be initiated within 21 days after the occurrence of the event giving rise to such claim or within 21 days after the claimant first recognizes the condition giving rise to the claim, whichever is later. When the condition giving rise to the claim is first discovered after expiration of the contractor's one-year warranty period, it shall be initiated by notice just to the other party.

      Sample Notice Letter that Conforms to the AIA A201

      Via Certified Mail

      April 23, 20__

      Owner

      Address

      Re: Project: Project Name

      Subject: Section 15.1.3.1 Notice of Claim

      Dear Owner/Initial Decision Maker/Architect,

      Pursuant to Section 15.1.3.1 of the AIA A201 General Conditions, Contractor hereby submits a formal Notice of Claim for the additional scope of work identified on the revised architectural plans that Owner issued to Contractor one week ago, on April 23, 20__. Specifically, Drawing A.2.06 indicates approximately 80 additional feet of wall assembly that was not contemplated in the bid set of plans that the Contract Price is based upon. Thus, this scope is outside of the defined Work. Contractor is calculating cost and time impacts associated with this additional work and will issue a formal Claim for an initial decision per Section 15.2 of the A201 soon. If you have any questions or comments, please contact Contractor at your convenience.

      Sincerely,

      Contractor

      2. ConsensusDocs 200

Per Section 13.5 of the ConsensusDocs 200, the contractor's written notice for claims is effective “upon transmission by any effective means.” Thus, notice can be served via electronic mail, US postal, or overnight delivery. Per Section 8.4 of the ConsensusDocs 200, the contractor shall issue a “changes notice” of claim to the owner within 14 days of the occurrence giving rise to the claim or the contractor's first recognition of the condition giving rise to the claim. The contractor shall submit written documentation in support of the claim within 21 days of the notice. The owner shall respond to the claims no later than 14 days after receipt. If the owner does not respond within 14 days or the contractor takes exception to the owner's response, the contractor can trigger dispute resolution per Article 12.

      Sample Notice Letter that Conforms to the ConsensusDocs 200

      Via Certified Mail

      April 23, 20__

      Owner

      Address

      Re: Project: Project Name

      Subject: Section 8.4 Notice of Claim

      Dear Owner,

      Pursuant to Section 8.4 of the ConsensusDocs 200 contract, Contractor hereby submits a formal notice of claim for the additional scope of work identified on the revised architectural plans that Owner issued to Contractor one week ago, on April 23, 20__. Specifically, Drawing A.2.06 indicates approximately 80 additional feet of wall assembly that was not contemplated in the bid set of plans that the contract price is based upon. Thus, this scope is outside of the defined Work. Contractor is calculating cost and time impacts associated with this additional work and will issue a formal Claim with supporting documentation within 21 days of this notice of claim. If you have any questions or comments, please contact Contractor at your convenience.

      Sincerely,

      Contractor

      3. EJCDC C-700 General Conditions

The EJCDC C-700 general conditions do not have a specific notice requirement for claims. Section 12.01.B notes that contractor shall deliver claims to the owner and the engineer no later than 30 days after the start of the event giving rise thereto. Therefore, unlike the AIA A201 and ConsensusDocs 200, the claims process starts with the submission of the claim itself within 30 days of the event giving rise to the claim, such as a rejected change proposal by the engineer. This forces the contractor to assemble claims in an expedited fashion. Below is a sample cover letter that might accompany a Section 12.01.B claim.

      Sample Claim Cover Letter that Conforms to the EJCDC C-700

      Via Certified Mail

      April 23, 20__

      Owner

      Address

      Re: Project: Project Name

      Subject: Section 12.01.B Claim

      Dear Owner/Engineer,

      Pursuant to Section 12.01.B of the EJCDC C-700 General Conditions, Contractor hereby submits a formal claim for the additional scope of work identified on the revised engineering plans that Engineer issued to Contractor one week ago, on April 23, 20__. Specifically, Drawing A.2.06 indicates approximately 80 additional feet of wall assembly that was not contemplated in the bid set of plans that the Contract Price is based upon. Thus, this scope is outside of the defined Work. The following claim includes sections on entitlement, delay, and damages associated with this issue. If you have any questions or comments, please contact Contractor at your convenience.

      Sincerely,

      Contractor

      B. Notice of Claim Provisions for Lack of Evidence of Owner's Financial Arrangements

Most standard contract forms require the owner, upon formal request from the contractor, to request confirmation from the owner of adequate project financing. In the event the owner fails to provide proof of funding, the contractor is not required to start the work and it is entitled to a time extension until such proof is provided.

      1. AIA A201 General Conditions

      Per Section 2.2.1 of the AIA A201,