Cookie Notice: This site uses cookies to provide you with a more responsive and personalized service. By using this site you agree to our use of cookies. Please read our privacy statement for more information on how we use cookies.

Resources

Construction Claims & Disputes | Presenting a Global Claim

Construction Claims & Disputes | Presenting a Global Claim

Important points to consider before filing a global claim.
 

Contractors are frequently faced with multiple events that have the potential to delay or disrupt their contractual performance. Under the majority of construction contracts, if the contractor incurs additional costs due to events for which the employer is responsible, the contractor is likely to be entitled to compensation.

Generally, to prove their entitlement to compensation, the contractor must demonstrate that:

  1. The employer was contractually responsible for the delay/disruption to the project
  2. The contractor suffered harm (i.e. incurred extra costs)
  3. A causal link between the event(s) and the loss and expense incurred

However, in some instances the causal link between the event(s) and the loss and expense incurred can be completely absent, or difficult for the contractor to cite.

For example, if a contractor is required to incorporate a number of variations for additional work, and design information was supplied later than required, the effects of such matters are likely to manifest themselves in a number of ways. As a result, it may not be possible for the contractor to identify all the additional costs incurred to each individual variation or piece of design information.

In such circumstances, the contractor may be limited to putting forward a global claim. Before presenting a global claim, contractors should consider the following:

Avoiding a global claim altogether

If there are sufficient, contemporaneous records or segregated costs available to avoid a global claim altogether, the contractor should make their claim using the direct evidence approach.

Ensuring the contract has been adhered to

The contractor must have complied with the specific contract requirements for making a valid claim. It may be that global claims are not permitted under the contract.

Identifying the events for which the employer is not responsible

If there are any significant matters for which the employer is not responsible, cost arising from this cause should be identified and omitted from the global claim.

Proving the claim as a matter of fact

The contractor must be able to prove as a minimum that:

  • Each of the events occurred
  • The employer bears the risk for these events
  • The events resulted in delay
  • Losses were incurred

Considering whether the loss would have been incurred in any event

Can the contractor establish that the loss would not have been incurred in any event? For example, the employer might cite evidence that the contractor’s tender was so low that it would have suffered the loss regardless of the employer risk events.

Being aware of the inherent risk of a global claim

A global claim is made as a whole and therefore runs the risk of failing as a whole. The global claim would fail if any material contribution to the cause of the loss was a factor for which the employer was not responsible.

Stripping out the losses where causal links can be determined

All parts of the claim where a causal link can be demonstrated should be pleaded separately, especially where different heads of claim may have different legal or contractual bases, and, consequently, different methods of valuation.

Remembering it is the contractor’s duty to prove their claim

A global claim can appear to have the effect of reversing the burden of proof so that it is the employer, rather than the contractor, who must undertake a detailed analysis of the events and quantum. It is the contractor’s duty to prove their claim.

Establishing cause and effect first

The contractor’s efforts should be put toward establishing entitlement with a full and detailed analysis of cause and effect (as much as possible under the circumstances) before concentrating on calculating and supporting the compensation.

Not simply listing events and alleged loss

The contractor should ensure their case is not merely stating a number of events on one side and a quantification of damage on the other, with no apparent link between the two.

Conclusion

Taking the above into consideration, contractors should only plead their case in a global manner where the contract allows for the same (or is silent on the matter), where it is considered completely impractical to disentangle the part of the loss attributable to each head of claim, and where the contractor has no responsibility of any of the delay or disruption to the works (or has isolated parts for which they are responsible).

Interested in learning more?

Contact resources@jsheld.com and we will connect you with a member of our team. You can also reach our main office at 516-621-2900.

 
INDUSTRY INSIGHTS
Keep up with the latest research and announcements from our team.
person Created with Sketch. Directory