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:
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:
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.
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).
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