Most construction projects begin with high hopes and optimistic timelines, but project delays, cost overruns, and other obstacles can turn any project into a frustrating experience. It’s in these times that all parties — contractor, subcontractor, and project owner — should make the extra effort to maintain open, clear, and timely communication. Not only will this help avoid misunderstandings and improve contractor-owner relations, it can also help avoid claims and costly litigation.

Unfortunately, if you’re in the construction business long enough, claims are an unavoidable aspect of the business. But by establishing and adhering to thorough documentation protocols, you can help ensure that your claims are resolved expeditiously and, hopefully, in your favor.

Minimizing Claims Starts With Planning
The most effective way to avoid claims is to start with detailed, realistic plans with input from all relevant parties. Managing expectations is imperative before any dirt is moved. Rather than a cursory review by the original preparers, a third party not involved in creating the original plans could play an important role in identifying unrealistic expectations or raising other valid concerns.

Scheduling and Change Orders
Scheduling and change orders are two of the most common areas in which disputes arise. Some delays are unavoidable. But setting unrealistic milestones in the planning phase is a sure way to end up in a dispute. Agreeing to an overly aggressive schedule just to win a job weakens the hand should any dispute proceed to arbitration or litigation. Be realistic. Document key milestones. And document progress and reasons for missing milestones as they occur.

Unforeseen Conditions
Unanticipated work conditions are also an inevitable part of any job. Therefore, when a situation arises that warrants a change order, all facts regarding the change order should be recorded, including how it affects future costs and the original timeline.

Be sure to establish firm protocols for monitoring
or evaluating all projects. Even before the project begins you should establish when and how progress reports will be completed, what they will include, and how they will be communicated to management.

A number of software packages can help you strenghten a claim or challenge a claim filed against you by improving documentation. In effect, these software tools provide guidelines to document a variety of construction events, such as changing site conditions, defective plans, change orders, delays, and other potential disputed issues. These software packages may offer a helpful template for documentation, but they won’t do the documentation for you. Someone must monitor the project and input the details. But if the software provides guidelines or helps instill the discipline needed to document
properly, it may be worthwhile.

Team Effort
When an inevitable claim becomes reality, make documentation a team effort. Accounting personnel, project managers, legal representatives, on-site personnel, and the liaison between the project owner and contractor will all play vital roles in amassing proper documentation.

Claims should be filed in a timely fashion — they tend to weaken as time elapses. Typical claims documentation includes the original specifications and plans, schedules and regular job site progress reports, change order documentation, and all correspondence surrounding the dispute.

Additional documentation may be necessary depending on the nature of the dispute. For example, any materials that document results of an investigation into the dispute, such as interviews with key participants, will be critical.

In building your case, it’s imperative to avoid speculation or bias. All documentation should be strictly factual and objective. Claims should never be exaggerated because that will ultimately be transparent and undermine the veracity of the claim in the eyes of an arbiter or judge.