"Nobody wants to give money back. But, we cannot be expected to be paid for work we have not done. We also cannot be expected to pay back money rightfully ours." Contractors are usually quick to submit variation claims to the client asking for additional time and/or money. These construction claims are a result of changes and additions that the client has made to the construction works, or because the project conditions which could have been expected on the project are different (more adverse) than those actually encountered. But, sometimes the client makes changes, or there are other events, which could shorten the time the contractor takes to complete the project, or which reduces the contractor’s costs. Very few contractors voluntarily offer to provide a negative variation to the client - one which reduces the project cost or the time to complete the project. Should the client request a price or time reduction this is often met with indignation by the contractor. When Can Clients Ask for Money Back from the Contractor?Clients can ask for money back, and in some cases even a reduction in the construction duration when:
Clients can also claim money back from the contractor when:
It should be noted that in all cases the contractor should be charged a fair price and the contractor is entitled to request a breakdown of the charges and costs. When Can’t a Client Ask for Money Back from their contractor?It is important to note that the client can’t ask the contractor for money back if:
Contractors cannot expect payment for work they have not doneNone of us likes giving money back. However, as a contractor I prefer offering a negative variation before the client finds that they are entitled to money back. Preparing the variation means that I’m in control and it’s not left up to my client to do the calculations. Voluntarily giving money back establishes our credibility. Invariably the client will eventually find out that the contractor owes them money. When they do uncover the item they’ll think that the contractor has been deliberately dishonest claiming for work that they haven’t done. In addition, when the client calculates the money due to them they’ll often calculate that there is more money due than if the contractor had done the calculation first and then the contractor will have difficulty negotiating the value down. Avoiding disputes on your construction project. An introduction to construction variation claims for construction project managers video 12 - Negative Variation Claims "Practical construction management books." This article was first published on the ClockShark website. Please share this post
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The opinions expressed in the attached articles are those of the writer. It should be noted that projects are varied and different laws and restrictions apply which depend on the location of the contractor and the project. It's important that the reader uses the supplied information taking cognisance of their particular circumstances. The writer assumes no responsibility or liability for any loss of any kind arising from the reader using the information or advice contained herein. "I have what I consider some of the best books on construction management."
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