Change management - Where Contractors often fall short

27 Mar

As a Claims Consultant, it is not uncommon to encounter contractors making a myriad of mistakes when managing change on projects large and small from day one.

At their best, these errors simply result in confusion and conflict; and at their worst can lead to cost overruns and loss of entitlement for delay and disruption claims - jeopardising the success of a contractual claim.

In this article, we will discuss some of the most common mistakes that contractors make when managing change, and why they are problematic.

Lack of Proper Contemporaneous Records

One of the most significant mistakes that contractors make when managing change is a lack of proper records made at the time of the event that they document.

It is crucial to maintain detailed records such as timesheets, diaries, photographs, and other documentation that can help to demonstrate the impact of changes on the project - but importantly, it is important to do so in sufficient detail so that they can be relied on. Without acceptable records, it can be challenging to prove entitlement to additional time or costs - let alone prove that the change actually happened.

Most contractual clauses around change and variations require that the Contractor demonstrates by way of daywork sheets or other auditable documentation the resources and costs engaged on any task to which the Contractor seeks additional entitlement.

Performing Works Without Proper Instructions

Another common error that contractors make is performing works without proper instructions. Changes to a construction project should be initiated through proper channels, such as change orders or variation orders issued by the Company/Client.

If the contractor proceeds with the work without proper instructions, it can be challenging to prove entitlement to additional time or costs, with a common rejection being to assert that the Contractor simply performed additional work that was either required under its scope, or that was preventable if not for the inaction of the Contractor.

The Contract will stipulate the conditions precedent for the Contractor to be awarded a variation following a Client direction whether explicit or implied.

Failing to Submit Notices in Line with Contract Timeframes

Most construction contracts require contractors to submit notices regarding changes within a specified timeframe.

Failing to submit these notices within the required timeframe will often result in the rejection in a contractor's claim to entitlement to additional time or costs. It is essential to understand the contract requirements and ensure that all necessary notices are submitted in a timely manner.

Change can occur in the field or as a matter of action by any party or simply circumstance as opposed to a direction by the client. Such examples include a Client causing delay the contractor, Client provided materials being defective and requiring rectification and so on.

In such instances - a Contract will commonly provide requirements for the Contractor to give notice that in its opinion it is entitled to a variation to the contract.

Another example of a notice often required by the contract as a condition precedent to entitlement is the requirement to submit an interim notice at set periods following the occurrence of an event that is claimed.

Notices of continuing delay often require the Contractor to notify that a delay is continuing and of any further costs involved - and is often a simple trap for the Contractor to stumble on.

Inability to Demonstrate Mitigation of Delays

Another common failure is an inability to demonstrate mitigation of delays in line with the contract requirements. Contractors often have a duty to mitigate any delays that occur on a construction project. If the contractor cannot demonstrate that they took reasonable steps to mitigate delays, it can be challenging to prove entitlement to additional time or costs either in full or in part.

Going hand in hand with the points made above, it is necessary to record any such mitigations and detail the actions taken (or not taken and why) to the client formally.

Inability to Demonstrate that Concurrent Delays Were Not Responsible for Project Delay

Concurrent delays occur when multiple events cause a delay in a construction project. It is crucial to demonstrate that the contractor's delay was not the result of concurrent delays - particularly if the concurrent delays were caused by the Contractor or its SubContractors.

If it cannot be demonstrated that the overall or longest delay was caused by the Client, the Contractor may find itself in the position of not being entitled to a claim for an extension of time.

It is essential to be able to demonstrate a critical delay on the project schedule. A critical delay is a delay that causes the project completion date to be extended - which doesn’t necessarily apply to all delays on a project.

Inability to Clearly Show the History of Progress

It is crucial to keep track of the progress of the construction project typically via a QMR (Quantity Manhour Report / Reconciliation).

Failing to show the level of progress either contemporaneously or analytically at any given period in the project’s timeline immediately und

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