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15 Rules for construction variation claims and change orders

28/10/2021

Most construction projects will change and vary from the works that were originally priced. There will be unexpected construction delays and problems.

Variations and changes occur for many different reasons, and not all of them entitle the Contractor to a claim.

Contractors that don’t claim variations or change orders they are entitled to claim will incur costs that they did not allow for in their price. Contractors that do not claim delays they are entitled to claim could finish the project late and be penalised by the Client.

Regrettably some construction projects end in long, expensive, and bitter disputes over the validity of variation claims and change orders. But, it does not have to be this way.

I have been involved with over 120 construction projects. I submitted variation claims or change orders on almost all of these projects. Some projects nearly doubled in value and some projects increased in time by up to 80%.

I settled all change orders amicably with the Client, except two projects. One had a dispute adjudication board on the project and this was used to resolve the issue. One project we employed a lawyer and declared a dispute because the Client did not respond to our claims.

I got most of the time and money I claimed. And, importantly we did further projects with most Clients, so our reputation was not tarnished with these change orders.

It is possible to submit and agree variation claims and change orders amicably without upsetting Clients.

Preparing, submitting, and negotiating variation claims and change orders is something that contractors often do badly. It's a topic close to my heart, and something I've written several articles about, which I reference below. I've also written an easy to read guide for contractors: Construction Claims: A Short Guide for Contractors.

Below are 15 simple rules to help you successfully deal with variations and changes on your construction project.
#constructiondisputes #changeorders

15 Rules for dealing with construction variations and delays

Most construction projects will have changes and delays, and Contractors are usually entitled to claim for the changes and delays which were not caused by their team, and which they did not know about or could not have reasonably foreseen when they priced the project. (Read: When Contractors Can’t Claim a Delay From Their Client on Construction Projects.)
Failure to claim legitimate change orders could mean that the Contractor does work for free, and if they complete the project late due to delays beyond their control which they didn’t claim, they could even be penalised by the Client. (Read: Are you working for free on your construction project?)
The Contractor is not automatically entitled to be paid for the change, or granted additional time. The Contractor must prove the additional time and costs. They must justify why these costs and time are due. They need to show they have taken all steps to avoid the variation, and that they have provided adequate notification and if possible forewarning to the Client of the event and it's implications. As they say: There is no such thing as a free lunch! (Watch: An introduction to construction variation claims for construction project managers Video 4 - Reasons claims are rejected)
It’s important Project Managers take an active part in preparing variation claims, or certainly check them. It's their project, and invariably their name at the bottom of the claim. They must have the facts at hand when the Client quizes them on the claim. (Read: Should construction project managers take the lead with variation claims?)
The Client must be notified of delays or changes as soon as they become known. This gives Clients an opportunity to rectify issues. Change orders must be submitted when the event occurs. Early agreement of change orders is essential for the Contractor’s cashflow. (Watch: An introduction to construction variation claims video 19 - Variation Claim Notification.)
All contractual correspondence must be in writing. (Watch: An introduction to construction variation claims for construction project managers video 15 - Instructions.)
Accurate project records are essential for proving change orders. These records must be maintained from the project start. (Read: Documents That Will Make Your Construction Variation Claim Successful.)
Contractors must take the time and put effort into preparing change orders. Checking that they have allowed for all impacts and costs of the event. Usually Contractors have one chance to get the variation claim right. The claims are often worth lots of money, so the time spent on them will be well worth the effort. (Read: Construction project variations – have you included all your costs?)
Change orders must be well thought through, accurate, logical, clear, and with supporting documentation, so that even those not familiar with the project understand them. (Read: Will your next construction variation claim be successful?)
Spurious and inflated change orders should be discouraged. They are a waste of time and reflect poorly on the Project Manager’s integrity, and puts legitimate claims in jeopardy. (Watch: an introduction to construction variation claims video 8 - when you can not claim extension of time.)
Contractors must be prepared to negotiate change orders with their Clients. This negotiation does not necessarily mean giving back time and money which the Contractor was entitled to, rather it’s about arguing the facts with the Client and persuading them of the virtues of the change order. (Watch: Negotiating a construction variation claim – read this first to improve your success 10 Tips To Submit Winning Variation Claims.)
Change orders should not be viewed as a way to make money. Where possible Contractors should limit change orders by forewarning Clients early of problems, and even avoiding some projects and Clients that are disorganised. Change orders are seldom the cash cows that Contractors think they are. (Watch: An introduction to construction variation claims video 17 - When variation claims aren't good for contractors.)
Contractors must promptly deal with change orders from Subcontractors. Where these are for the account of their Client, the Contractor should check the change order is correct and clear, then add their costs and perhaps other Subcontractor’s costs, before submitting the change order to the Client. (Watch: An introduction to construction variation claims for construction project managers video 13 - Claims by Subcontractors against Contractors.)
When Clients do not agree to a change order the Contractor can declare a dispute, following the processes outlined in the contract. Usually Contractors cannot stop work. (Read: Don’t you hate it when clients ignore your change orders?)
Before declaring a dispute Contractors should exhaust all means of resolving the issue, and consider whether the dispute will yield a positive outcome. Disputes cost time and money to resolve, with often no guarantee of a positive outcome. (Read: Avoiding disputes on your construction project.)

Winning Construction Change Orders

It is possible to amicably agree change orders with Clients by following these 15 rules. Contractors are entitled to claim for legitimate changes and delays which they could not reasonably have foreseen or allowed for. Change orders should not end in disputes.
#constructionclaims #constructioncontracts #constructionlaw

Other useful articles
Don’t start construction projects without a proper contract.
Can I Claim for Additional Time on My Construction Project?

Information in this article is from the author's book ‘Construction Claims: A Short Guide for Contractors’.
© 2021 This article is not to be reproduced for commercial purposes without written permission from the author.

Do you want to learn how to manage construction projects successfully

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Paul Netscher has written several easy to read books for owners, contractors, construction managers, construction supervisors and foremen. They cover all aspects of construction management and are filled with tips and insights.
Visit to read more.
The books are available in paper and ebook from most online stores including Amazon.

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The Basics of Warehouse Construction

21/10/2021

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The warehouse is the heart of any business, and it's crucial to get the storage right. A warehouse can be tailored to suit your needs in a number of ways; for example, you might need specific shelving or racks depending on what you're storing.
We'll take a look into some of the basics that go into constructing a warehouse, so you know exactly what you're getting when building one.
We also recommend checking out this blog post about The Top 5 Software for Construction Project Planning & Management.

Photo by Pickawood on Unsplash

What Is A Warehouse?

A warehouse is the storage facility for a company's inventory and serves as its point of distribution to consumers. It can either be spread over an entire area or part of one, depending on how much you need to store!

A standard warehouse consists primarily of shelves where merchandise is stored pending shipment out. However, there are different construction types that can be used to suit different needs.

We'll take a look into some of the basics that go into constructing a warehouse, so you know exactly what you're getting when building one!
According to Statista, The number of warehouses is expected to reach just under 180,000 by 2025.

The boom in e-commerce has led retailers and manufacturers alike for space that can store goods without transportation costs as well as provide easy access at any time necessary; this has caused an upsurge throughout North America where 25% more warehousing facilities are being built every year on average than anywhere else around the world!

Types Of Warehouses

There are three types of warehouses to consider for your storage needs. These include full-service (i.e.: including manufacturing and distribution), general service (storage only), or cross-docking (where the shipment is received, processed, and shipped out again). It's important to consider this when choosing your warehouse type.

Warehouses are vital for most businesses; make sure you get the one that suits your needs best!

Considerations For Warehouse Construction

There are a number of factors to consider when constructing your warehouse. These include the type and size, but also important elements such as ventilation, noise control, lighting, and more! Make sure you get it right from the beginning so that no aspect is left unfinished or overlooked.

Building Material
When it comes to warehouse construction materials, steel is the most common. The framework of a typical building uses this material for its support and durability in holding heavy loads without getting damaged easily over time as other types can do.
Designers also prefer using metals due to their strength when combined with fiberglass roofs that allow natural light inside while making them easy enough repairs if anything ever needed to be replaced on-site during use too!

As expected wood has always been an important resource used not only within buildings themselves but also shelves/storage space all around them; they're perfect places where goods will stay safely until needed again at some point down the line.
Construction costs account for about 80% of the overall cost of a warehouse, which emphasizes the importance of ensuring high quality.

We're all looking for a little inspiration, so why not check out this blog post about the Most Popular Commercial Roofs and Roofing Materials.

Structure and Location
To keep up with the demand for next-day delivery, warehouses are being built closer to customers. However, this requires an adequate location and good connections for logistics in order to reduce inventory wait times which is why most new development takes place on industrial estates near major cities, where land prices allow them access into those areas without having too much traffic congestion around their facilities as there was once before due primarily because people living close by needed things delivered quickly.

Importance of Size
When choosing a warehouse space, size matters.
According to WarehouseSpace, the typical 1 km long and over 500 thousand container-sized buildings can cost hundreds or thousands more depending on which type you choose: smaller ones are cheaper but they offer less storage capacity for inventory while requiring similar running costs as larger facilities (costs per square meter).

Safety
A warehouse is a great place to store things, but it also comes with risks. All structures must be fireproof and the roof cannot exceed 40 feet tall if you want an easy way out in case of emergencies like fires or other accidents that happen on site.
In addition to this precautionary measure for safety purposes, there are some key steps taken before construction begins such as obtaining planning permission which can only occur after meeting all necessary requirements via inspection from local authorities overseeing building codes.

These precautions protect both inventories stored within these facilities (warehouse stock) plus those who work inside them by reducing risk factors caused by injuries resulting from falls among others. As a warehouse employer, you also have a legal responsibility to protect workers and others from risk to their health and safety. According to the warehouse experts at Todoos, to keep a safe and operational warehouse, ensure you have a thorough cleaning schedule, garbage receptacles placed in priority areas, and information to promote hand-washing and general hygiene.

Photo by CPG. IO on Unsplash

Conclusion

Your warehouse is your most valuable asset. It’s the backbone of your business and must be designed with safety in mind always.

Considerations should be made about what materials will work best in your situation and where the location may have an impact on how much it would cost to construct a new one. How big does your company need? What safety features do they require? These questions can all help with determining whether or not constructing a new facility is worth it!

After considering all these factors, you should have a good idea about how to build or renovate an effective warehouse for your company's needs. Remember that no two warehouses are built alike so it’s important to take into account what will work best for you and yours before getting started on any project!
We hope this article has been helpful in understanding more about warehouses and why knowledge in this area may benefit you as well as others who read it!

Other useful articles
How can clients ensure their projects meet their expectations?
The 10 Biggest Risks Clients and Owners Face On Construction Projects
Collaboration in construction

Author

From Murray Bilby, Crowd Control Expert at Todoos. Todos specializes in everything that warehouse managers may require for seamless functioning of their facility – from queuing systems to waste receptacles, cigarette receptacles, signage, and even barriers for restricting access to areas where only a selected few are allowed.

Do you want to learn how to manage construction projects successfully

Click on picture to view books on Amazon

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When can contractors claim extra costs?

14/10/2021

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Sometimes Contractors don’t claim the costs they are entitled to claim.

Who works for free? (An introduction to construction variation claims for construction project managers - part 1 - why you should submit claims)

It's often difficult for Contractors to make a profit. Margins are tight. Yet, some contractors do work for free. They neglect to claim for legitimate changes and delays caused by the client or due to reasons they could not have foreseen.

So what should contractors look out for? When can they claim additional costs?
#changeorders

Additional Costs Contractors Can Claim

The Contractor can claim additional costs when:

The specification is changed.
The scope increases.
The Client makes changes to completed work which requires work to be redone.
Changes in law which result in additional costs – like additional paid holidays.
Instructions issued by the Client that change the work, add additional items, or cause a delay. (An introduction to construction variation claims for construction project managers video 15 - Instructions)
Changes of commercial or contractual terms.
Changes in working conditions – for example encountering unexpected conditions.
The Client or their Subcontractors damage completed work.
The Client not fulfilling their obligations – like failure to supply utilities or materials.
The Client asking for additional quality tests.
The Client requiring additional safety measures above the requirements of legislation, the contract conditions and what would be the norm in the industry.
Disruption costs which are caused by the Client, or the Client’s delay, or acceleration request. (An introduction to construction variation claims for construction project managers video 10 - Disruption claims)
There is a claimable delay. Has Your Project Been Delayed?
The Contractor is instructed to accelerate the work.

Basically anything the Contractor did not price, where they did not know that they were meant to price and allow for, nor could they have reasonably have foreseen the event occurring.
#constructionvariations

Claiming additional costs

The Contractor must be able to demonstrate that these events impacted them and prove the resulting costs. Include supporting documentation. (Documents That Will Make Your Construction Variation Claim Successful).

Don't work for free. Understand your contract and claim the legitimate costs that you are entitled to claim.
#constructionclaims #constructioncontracts #constructionlaw

Other useful articles
Don’t you hate it when clients ignore your change orders?
Negotiating a construction variation claim – read this first to improve your success
10 Tips To Submit Winning Variation Claims

This article is an extract from the author's book ‘Construction Claims: A Short Guide for Contractors’.
© 2021 This article is not to be reproduced for commercial purposes without written permission from the author.

Do you want to learn how to manage construction projects successfully

Click on picture to view books on Amazon

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The Contractor's Duty to Ask Questions

7/10/2021

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Often disputes and Claims arise on construction projects because of misunderstandings. (Avoiding disputes on your construction project.) Why are there misunderstandings? Well usually because of poor communication. This may be because information isn't provided, or the information is incomplete, or there is conflicting information. Sometimes the Contractor in their haste to construct the project has not taken the time to fully interpret the information provided, or perhaps search for missing information. The problem could even be within the Contractor's team where information has not been passed to those doing the work. (the importance of good communication on projects)

Whatever the case, misunderstanding the information provided, or interpreting the information incorrectly, or making the wrong assumptions when there is conflicting or incomplete information, could be very costly for the Contractor, resulting in delays and work being redone.
#constructionprojectmanagement #constructiondisputes

Asking Questions May Avoid Mistakes

Often Contractors assume something incorrectly, leading them to make mistakes that a simple question could have avoided.

If something isn’t clear in the contract document, in the specifications, or on construction drawings provided by the Client then the Contractor must seek clarification.
It is essential that these questions and the answers to the questions are in writing and recorded as an Request for information (RFI), Engineering Query or similar. These should be dated with proof when they were submitted.
Simply because the information wasn’t clear or was missing doesn’t absolve the Contractor from performing the work correctly and as the Client intended.
It’s therefore essential that the Contractor ensures that their Team asks questions when they are uncertain of something, and raise a query when there are discrepancies, or an item doesn’t appear to be correct.
The contractor’s Supervisors and Foremen are often in the forefront when they work from drawings and specifications provided. In the rush to complete the work they sometimes misinterpret or misunderstand what is on the drawing, or, in some cases even make their own plan when something on the drawing is obviously incorrect.
It’s also important to query discrepancies between drawings, or between drawings and the specifications

#constructionmanagement

Lack of Clarity When Pricing Construction Projects

Sometimes Contractors make errors when they price construction projects. They incorrectly assumed something resulting in them pricing a project too low, or submitting a construction schedule which isn't achievable. Unfortunately sometimes information provided by the Client for pricing the project is incomplete, or unclear. Some critical project information could even be missing.

The contractor should not assume anything when pricing a construction project.

If the scope of work isn’t clear, specifications aren’t included, there is a lack of clarity to what the Client is supplying, or there are contradictions between drawings, documents or specifications then it’s important the Contractor seeks clarity before submitting their price.
Should the Client not provide the information requested then the Contractor should include with their price the assumptions they made in arriving at their quoted price, or ensure that it is clear what they have priced, what they are providing and what the Client should provide.
In some instances the contract document and scope of works may be so poorly prepared that the Contractor should consider not pricing the construction project.
Being awarded a construction project where the pricing documentation is seriously flawed will almost certainly lead to a construction project with numerous change orders and disputes.

#pricingconstructionprojects

Wrong Assumptions Lead to Expensive Construction Errors

Never assume anything. Query things which you are unsure of, or which don't look right. No question is stupid, but mistakes are stupid and cost money. Take a little extra time to check what you are doing is correct.

Contractor's have a duty to ask questions.
#constructionmanagementtips

Other useful articles
Conflict Resolution and Prevention on Construction Projects
Avoiding the unexpected in construction
Did you make a difference on your construction project today?

This article is an extract from the author's books 'Successful Construction Project Management' and 'The Successful Construction Supervisor and Foreman'.

Do you want to learn how to manage construction projects successfully

Click on picture to view books on Amazon

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15 Rules for construction variation claims and change orders

15 Rules for dealing with construction variations and delays

Winning Construction Change Orders

Do you want to learn how to manage construction projects successfully

The Basics of Warehouse Construction

What Is A Warehouse?

Types Of Warehouses

Considerations For Warehouse Construction

Conclusion

Author

Do you want to learn how to manage construction projects successfully

When can contractors claim extra costs?

Additional Costs Contractors Can Claim

Claiming additional costs

Do you want to learn how to manage construction projects successfully

The Contractor's Duty to Ask Questions

Asking Questions May Avoid Mistakes

Lack of Clarity When Pricing Construction Projects

Wrong Assumptions Lead to Expensive Construction Errors

Do you want to learn how to manage construction projects successfully

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