REASONS FOR CLAIMS IN CONSTRUCTION CONTRACTS

REASONS FOR CLAIMS IN CONSTRUCTION CONTRACTS

• Due to an unbalanced contract.
• Due to causes for which owner/ employer is responsible.
• Due to causes for which contractor is responsible.
• Due to causes beyond the control of both sides.

DUE TO AN UNBALANCED CONTRACT

• Basic structure of contract is in favor of client and loaded against the contractor.
• Risk is unilaterally transferred to one side.
• Absence of Neutralization mechanism.
• Progress of project is not the basis of contract.

DUE TO CAUSES FOR WHICH OWNER/ EMPLOYER IS RESPONSIBLE

• Poor site investigation by the owner at the pre-tender stage.
• Delay in acquisition of land and delay in handing over the site to contractors in time, including non-availability of sufficient work-fronts during the execution of the project.
• Delay in issue of drawings by the owner.
• Delay in issue of owner issue materials by the client.
• Delay in releasing payments leading to cash-flow problems to the contractors.
• Organizational problems of the owner.
• Non co-operation from the owner/project authorities due to poor earnestness in the public owner system.
• Co-ordination and managerial problems of the owner.
• Deviations on the agreed terms and conditions of the agreements by the owner or non-fulfillment of contractual obligations.
• Delay in settlement of rates for extra items, additional items and revision of rates.
• Poor quantity surveying by the owner at the time of tender and heavy increase in the quantum/scope of work.
• Delay in settlement of claims.

• Delay in arbitration proceedings during the execution of  project.
• Forcing the contractor to appoint a particular sub contractor for certain specific works.
• Delay in completion of earlier stage contracts and hence a delay in handing over the site.
• Paucity of funds with the owner, leading to non-payment of bills and dues which leads to cash-flow problems for the contractor.
• Delay in giving decisions other than above by the owner.

DUE TO CAUSES FOR WHICH CONTRACTOR IS RESPONSIBLE

• Poor rates quoted for a few or several or all items.
• Managerial problems of the contractor.
• Strikes, militancy of the labour, and other labour related problems in the contractor’s organization.
• Lockout by contractors.
• Delay in mobilizing the required resources in time.
• Due to Causes beyond the control of both sides
• Force majeure conditions like heavy rains, floods, snow, landslides, earthquake,
• Political problems, riots, bandhs, etc.
• Health hazards and non-availability of medical facilities.
• Engineering and technical problems not previously understood.
• Inter-state disputes.
• Obstruction by mafia-gangs.
• Law and order problems
• Local problems, obstruction by local population and not employment from the owner or the contractor.
• Non – availability of construction materials (cement, steel pipes, CGI sheets) in the market.
• Non-availability of appropriate and adequate labour.