Leaving Money on the Table: Easy & Ethical Claims Most Contractors Miss Out On

In the fast-paced world of construction, contractors often find themselves focused on delivering projects under tight deadlines, managing risks, and handling unexpected challenges. Amidst these responsibilities, a significant opportunity for improving profit margins is frequently overlooked—asserting claims for costs and extensions they are ethically and contractually entitled to. This article touches the most commonly missed claims, explores why they go unnoticed, and provides actionable advice for contractors to capture these "lost" opportunities without risking relationships or reputations.

1. Prolongation Costs for Delayed Approvals

• What It Is: Delays in receiving approvals—whether for drawings, materials, or work methods—can push back a project timeline. Contractors often neglect to claim prolongation costs associated with these delays, assuming they’re just part of the process.
• Why It’s Missed: Project teams often view approval delays as minor inconveniences or assume these can be absorbed within contingencies.
• Claim Strategy: Contractors should document all approval delays, associating each delay with its corresponding activity and cost impact. Submitting timely notices and quantifying costs associated with idle resources (such as labor and equipment) can bolster a claim. Contract provisions often support this under clauses related to delays caused by the employer or its representatives.

2. Claims for Re-Sequencing or Acceleration Due to Changes in Scope

• What It Is: When a client requests changes after project commencement, contractors may need to re-sequence work or accelerate certain activities to stay on schedule.
• Why It’s Missed: Contractors often accept client-driven changes without properly evaluating and claiming the cost and time impact, fearing it might reflect poorly on their flexibility.
• Claim Strategy: To manage this ethically, contractors should provide a realistic assessment of the additional costs and time required for re-sequencing or accelerating work. Present a claim based on documented evidence of added labor hours, materials, and equipment mobilization costs incurred due to the change. Contractual support is generally found under Variation or Changes clauses in FIDIC and similar contracts.

3. Extended Preliminaries Due to Project Delays

• What It Is: Projects extending beyond their original timelines often require ongoing preliminary resources (site offices, utilities, security, etc.). Contractors can claim additional costs for these preliminaries when delays are not their fault.
• Why It’s Missed: Contractors sometimes view these costs as part of “doing business” and fail to separate them from standard project costs.
• Claim Strategy: Track expenses for prolonged preliminaries and allocate these costs to the delay periods attributed to the client or external factors. Most standard contracts allow claims for extended preliminaries when delays arise from the employer or variations.

4. Unclaimed Escalation in Material and Labor Costs

• What It Is: Long-duration projects often face inflation and cost escalation. Contracts may contain provisions allowing for claims based on market-driven cost increases.
• Why It’s Missed: Many contractors overlook escalation clauses or are unaware of their presence in the contract, especially in fixed-price agreements.
• Claim Strategy: Contractors should regularly review escalation clauses, submit notices of intention to claim, and provide evidence of increased costs for materials and labor due to inflation or shortages. Timing is critical; submitting claims promptly ensures they align with contract requirements and industry standards.

5. Loss of Productivity Due to Site Access Restrictions or Interface Delays

• What It Is: Productivity can be severely impacted when contractors are restricted by limited access to work areas or when coordination with other contractors leads to idle time or inefficient sequencing.
• Why It’s Missed: Often, contractors view productivity loss as part of the “soft costs” that are difficult to quantify, leading them to avoid claims.
• Claim Strategy: Contractors should carefully document the impact of site restrictions or coordination delays on productivity rates. Using industry-standard productivity rates as a baseline, they can present evidence of the differential caused by the site conditions. This can be pursued as a claim under Disruption clauses in many contracts.

6. Weather-Related Claims Where Entitlements Exist

• What It Is: Extreme weather can halt work, leading to additional costs for demobilizing and remobilizing resources. Standard contracts often allow claims for unforeseen weather impacts.
• Why It’s Missed: Contractors often assume weather delays are absorbed within project contingencies and may not realize that claims are permitted for extreme, atypical weather.
• Claim Strategy: Contractors should maintain detailed weather records and submit claims when conditions deviate significantly from typical regional patterns. Documenting additional costs incurred for labor, equipment downtime, and resource protection can strengthen the case.

7. Utility or Services Disruptions Not Attributable to the Contractor

• What It Is: Interruptions in utility services (like power, water, or fuel) beyond the contractor’s control can cause significant project delays and cost overruns.
• Why It’s Missed: Contractors often absorb these disruptions without considering a claim, particularly if they are brief but frequent.
• Claim Strategy: Track and document each instance of utility disruption, noting its impact on work activities and any additional costs for idle resources. Contracts often allow claims for delays arising from circumstances beyond the contractor’s control under Force Majeure or Delay Compensation clauses.

8. Unforeseen Ground Conditions

• What It Is: Subsurface conditions that deviate from contract specifications (such as unexpected rock formations or water tables) can cause significant delays and additional costs.
• Why It’s Missed: Contractors may be hesitant to claim, thinking the conditions were part of the inherent risk of the project.
• Claim Strategy: Document all deviations from expected conditions and the costs or delays associated. Obtain support from geological surveys and provide detailed records of increased labor, equipment, and material expenses. Claims for unforeseen conditions are often well-supported under Differing Site Conditions clauses.

Ethical Claim Management: Balancing Fairness and Profitability

Pursuing claims ethically requires transparent communication with clients, accurate documentation, and a thorough understanding of contract entitlements. Contractors can present claims as fair compensation for unforeseen risks rather than opportunistic demands by:

• Maintaining Transparency: Sharing detailed records with clients and explaining the basis for each claim helps foster trust.
• Submitting Claims Promptly: Timing claims soon after a delay or cost impact keeps them relevant and easier for both parties to address.
• Avoiding Exaggerated Claims: Ethical claims should be rooted in actual costs or time impacts directly related to the delay or disruption.

For contractors, leaving money on the table is an all-too-common issue, especially when operating under complex contracts and tight timelines. By identifying and ethically asserting claims for delays, disruptions, and unexpected costs, contractors can protect their financial interests and maintain fair project outcomes. Regular contract reviews, diligent record-keeping, and a proactive claims strategy enable contractors to avoid these “lost” opportunities and improve profitability without compromising integrity.

Mastering the art of claims management is not merely about asserting rights but ensuring that both parties honor their contractual commitments, creating a balanced, fair, and successful project delivery environment.