INTRODUCTION OF

CONSTRUCTION CLAIMS
•What are Claims
•Types of Claims
•Objectives of Claims
•Points to be considered before
proceeding
•Notices of Claims
•Interference by the Employer
•Claims against Consultants
•Construction Contracts
•Documents relating to claims
•Procedures of Claims
 WHAT ARE CLAIMS?
The definition of a claim in a dictionary is
an assertion of a right to something.

Claim is the demand for something supposed to be

due
TIME CLAIMS

CLAIMS COST CLAIMS

PAYMENT CLAIMS
Consideration & normal, therefore excluded from this topic
TYPES OF COST CLAIMS
•Loss / expenses (Damages)
•Additional payment under
specific provisions of the contract
•Variations
•Disruption
•Prolongation
TYPES OF CLAIMS

COMMON LAW/
EX-CONTRACTUAL

CONTRACTUAL EX-GRATIA
 CONTRACTUAL CLAIMS
Where the contract provides for the event or
circumstances being complained of . Clearly
this should be the first line of consideration
as it is pointless to look elsewhere and rely
upon common law rights when express
provision exists. Further, contractual matters
are usually within the powers of the
Architect/Engineer to settle. (SFBC Cl 11(6), 24
& 34(3)
 EX-CONTRACTUAL /
COMMON LAW CLAIMS
• Where the contract does not make express
provision and therefore grounds outside the
contract have to be sought - i.e. in common
law.
• Such claims are usually outside the
Architect's /Engineer's power and require
specific authority from the Employer for them
to examine the claims and make appropriate
recommendations.
 EX-GRATIA CLAIMS
• By definition such claims have no grounds upon
which either side could successfully sue the other
at law.
• Their only basis is that a loss has been made and
that something more tangible than sympathy is
being sought, but anything paid will be an 'act of
grace' with, at best, some possible
acknowledgement of morale obligation.
• These claims should not be resorted to if
contractual or extra-contractual claims exist.
• Ex-gratia claims are sympathy claims
 CAUSES OF CLAIMS
• Late payments • Variations
• Changes in • Rejection of "or
conditions similar"
• Delay / substitutions
interference • Unclear
• Acceleration responsibilities of
• Errors / omissions the contractor /
in design / employer
document • Failure in pre-
• Suspension of the contract planning
work
 OBJECTIVES OF CLAIMS
Objectives of time claims
• To extend the contract completion time
• To reduce the amount of L. D. liable to pay to the
Employer
• To prepare for the claims for the cost claims
(remember this is not automatically)
Objectives of cost claims
• To reimburse the loss & expenses incurred
• To compensate the extra preliminaries due to delay
by the faults of the Architect, etc.
Objectives of ex-gratia claims
• To ask for sympathy in compensation, which has no
contractual grounds for the claims, for the best
efforts the contractor has put.
POINTS TO BE CONSIDERED
BEFORE PROCEEDING
• Claims should be well planned at the beginning of
the contract rather than at the end of the contract
• Check the contractual grounds before claim -
contractual justification, i.e. identify the contract
condition(s)
• The event giving rise to the claim should be actually
occurred
• True cause(s) of the claim should be identified
• Surrounding circumstance relating to the claim
should be recorded
• A good claim should be well organised and
presented in a concise way
• Understand the attitude of the Employer to claims
 NOTICES OF CLAIMS
A contractor MUST GIVE NOTICE of his intention to
claim extension of time or additional payment - for
whatever reason; and the notice must be given as
soon as it becomes apparent or within the time
limited set out in the contract.

Failing to do this may

• prejudice (not necessarily invalidating the claim)
the establishment of claims
• affect the ability of the Architect/Engineer/Quantity
Surveyor to consider and evaluate them properly
• damage or seriously impair credibility of such
claims.
 PURPOSES OF THE
NOTICES OF CLAIMS
• Proper notice will enable the pros and cons of
entitlement to be discussed,
• The setting up of records (if necessary without
prejudice to liability in the first place) required to
establish the quantum of the claim.
• In some cases it may enable the Architect/Engineer
to take action to reduce or mitigate potential loss
by issuing a variation order - which would not be
possible if notices were delayed until work was
complete or the claim itself presented.
• If the Contractor has not submitted a written claims
at all, there would be no consideration and the
claim procedure would not even commence.
 NOTICES OF CLAIMS
Is giving notice of claim a condition precedent
to the contractor's entitlement of claims ?
No in most cases.
Crosby v. Portland UDC
"Provided that the contractor shall not be
entitled to recover any extra cost unless he
gives written notice of his intention to claim
to the Engineer within twenty-eight days of
the Engineer's order"
The claim was rejected as the contractor has
not given notice within the specified period.
HOW CAN NOTICES OF CLAIMS
BE PRECEDENT TO CLAIM ?
To be a condition precedent to claim, two
elements must be presented:

 The precise time within which the notice

was to be served should be stated

It was expressly stated that the rights of

claims are forfeited unless notice was
served within that time.
 INTERFERENCE BY
THE EMPLOYER
Architect should act: fairly
impartially

Employer influenced the Architect to

undercertify the payment

Contractor can claim interest on

the undercertified amount
 INTERFERENCE BY
THE EMPLOYER
Employer influenced the Architect not to issue EOT
even if the grounds are valid

Contractor accelerated the program

Contractor later recognized Employer's interference

Recover the Rescind the contract

acceleration costs OR + quantum meruit
 CLAIMS AGAINST
CONSULTANTS
Sutcliffe V. Thackrah (1974)
Consultants have duty of care owed to the
contractor
'Negligence' is the label given to certain
courses of conduct which fall below a
standard acceptable to the community. The
criterion is the model conduct of a
'reasonable man'.
Claim for damages against the consultants
CLAIMS FOR PROFESSIONAL
NEGLIGENCE
For a successful claim, the contractor suing
in negligence must prove three points to
maintain a successful claim:
• The consultant was under a duty of care to
the contractor
• There had been a breach of that duty
• As a result the contractor has suffered
damage
 DUTY OF CARE
You must take reasonable care to avoid acts
or omissions which you can reasonably
foresee would be likely to injure your
neighbour.

Neighbour - persons who are so closely and

directly affected by your act that you ought
reasonably have them in contemplation as
being so affected when you are directing your
mind to the acts or omissions which are
called in question.
 STANDARD OF CARE
A reasonable man would use or show in the
circumstances of the particular case under
consideration.
So, the injury must have been reasonably
foreseeable, and the effect must be the
direct result of the defendant's act.
The test of foreseeablility is applied much
more positively by the courts when the
source of the liability is active misconduct
than when is failure to act.
FORESEEABILITY OF CARE
Therefore,
• The damage or harm to the plaintiff
was reasonably foreseeable by the
defendant
• The relationship between them was
sufficiently proximate to give rise to
a duty
• It is just and reasonable to impose
such a duty (which includes
considerations of public policy)
 BREACH OF DUTY
• When there is a greater risk of injury,
more precautions will be expected.
• If reasonable precautions are taken
against the risk of harm, the duty of
care will be discharged, and no
action will lie.
 DAMAGES
• Merely exposing someone to danger is not an
actionable wrong, there must be some actual
detriment as a result of the exposure.
• The damages are subject to the test of
remoteness of damage. The problem of
'proximate cause' involves two factors; the
factual question of whether the defendant's
breach of duty and the plaintiff's injury constitute
a cause-and-effect relationship, and where to
draw the line in a consequential sequence of
events which result in injury.
CONCLUSION OF NEGLIGENCE
In laying down the limits of liability for negligent
conduct, the courts have developed certain
concepts which form the basic ingredients of
actionable negligence. These elements are :
 a duty, legally recognized, not to expose others to
unreasonable risks,
 conduct which falls below the accepted standard,
or breach of that duty,
 material injury resulting from the sub-standard
conduct,
 a reasonably close connection between the
conduct and the injury ( the question of
'remoteness of damage') and
 the absence of conduct by the plaintiff which
caused his injuries
CONSTRUCTION CONTRACTS
In the forthcoming lectures, the following
forms of contract will be referred to :
• Agreement & Schedule of Conditions of
Building Contract for use in the Hong Kong
Special Administrative Region (Private Edition
- with or without quantities) - Second
amendments published in July 1999
• Sub-contract for use where the Sub-
contractor is nominated under the Standard
Form of Building Contract for Hong Kong -
Second amendments published in February
2000
TIME & COST CLAIMS IN SFBC(HK)
EVENT TIME COST
CLAUSE CLAUSE
BORNE BY BORNE BY
Force majeure Employer 23(a) Contractor 24
Inclement weather Employer 23(b) Contractor 24
Fire, lightning, etc. Employer 23(c) Contractor 24
Civil commotion Employer 23(d) Contractor 24
Discrepancy Employer 23(e) Employer 24(1)(c)
A. I. Employer 23(e) Employer 11
Postponement Employer 23(e) Employer 24(1)(e)
Late instructions Employer 23(f) Employer 24
NSC delay Employer 23(g) Employer 24(1)(a)
Employer's worker Employer 23(h) Employer 24(1)(d)
Opening up Employer 23(i) Employer 24(1)(b)
Labor & materials Employer 23(j) Contractor 24
……….
Antiquities Employer 23(k) Employer 34(3)
 DOCUMENTS
RELATING TO CLAIMS
Pre-tender documents
• Contract bills • Correspondence
• Schedules of work • Minutes of meetings
• Specification • Site diaries /Daily report
• Contract drawings • Progress photos & chart
• Programs • Materials delivery
• Method statements schedules
Post-tender documents • Invoices
• Instructions / variations • Payroll sheet
• Further drawings • Plant records
• Levels & setting out • Scaffolding records
information • Daywork schedule
PROCEDURES OF CLAIM
• Notices of claims
• Establishing the Claims
• Examining the claims
• Evaluating the Claims
• Negotiating and settling the claims
 ESTABLISHING CLAIMS
Establishing a claim simply means making the
other party being convinced that the claim is valid
and that the integral parts are claimable and
correctly valued.
The establishing procedure shall consist of two
steps :-
 Establishing the validity of the grounds of claim.
 Proofing the effects of such disruption /
disturbance of regular progress of the works by
substantiating the accurate and factual
documentation of performance, records,
correspondence, inspection reports,
photographs programmes, etc.
 EXAMINING, EVALUATING
NEGOTIATING
& SETTLING CLAIMS
• Early settlement / evaluation of claims
are preferred as the facts are fresh in the
parties' minds
• Details to be discussed in Lecture 6