The construction industry is rife with complexities and complications. Everyone faces a difficult time in managing construction projects. Both companies and contractors bear the brunt of project issues and other problems caused by many factors.
There are instances when contractors are not liable for any project issues. Among them are natural disasters and other unavoidable problems. Natural disasters are never in the control of any man. They can happen at any time and modern technology has helped predict their patterns, but they are still not in control of humanity.
Other unavoidable issues are also due to a myriad of factors. Political uncertainty can cause instability, and goons can attack construction projects and workers. When this happens, contractors are at the mercy of negative elements. This results in them incurring huge losses leading to the absence of workers and other resources.
How bad were the conditions for construction companies during the COVID-19 pandemic?
During the COVID-19 pandemic, the construction industry faced turbulent times. Between 2020 and 2021, they were rattled, shaken from top to bottom, and faced rising costs of deliverables, and variables alike. Cases of construction claims went through the roof.
Contractors had a tough time. They had to look after equipment, materials, and workers. They were forced to incur costs beyond their reach. Many had ended their lives. Theft at sites held contractors liable.
The pandemic put the world on lockdown. Contractors risked all their wealth to secure the sites, and they were bankrupt.
Why do contractors find it tough in the construction industry?
Consultancy practices based in Dallas, Miami, Dubai, Hamilton, Sydney, and Los Angeles were involved in a series of disputes due to the pandemic. The projects involved the construction of the following buildings and structures:
- Bridges.
- Buildings.
- Apartment buildings.
- Shopping complexes.
- Sporting complexes.
- Housing projects.
The projects were intended to help a wider group of people and citizens. Each project had a disputed amount that totaled up to $400 million. The amount included the following:
- Project prolongation expenses.
- Acceleration expenses.
- Disruption expenses.
- Disruption penalties.
Disputes often arise when contractors find anomalies in final accounts often submitted timely.
What did this remind experts of?
This reminded many Quantum Analysis experts in the industry and across various construction claims consultancies that many disputes happen once projects are nearing completion or have been completed. In both cases, the disputes are either simple, complicated, moderately complicated, or highly problematic.
What kind of advice applies to multiple contracts in line with FIDIC definitions and guidelines?
Here are some key reasons in line with FIDIC definitions and guidelines that contractors need to be careful when it comes to contracts and final disputes in most construction projects:
- Contractors usually do not submit claim notices, early warnings, and vice versa. This prevents employees, engineers, and other parties from taking action to reduce the risks or from making the needed financial provisions.
- Contractors forget to give notice when they consider the fact that an instruction has a variation that gives entitlement to additional payments. This hence prevents employers or engineers (or both) from either reversing instructions, providing financial guarantees, or both.
- Contractors often forget to submit detailed particulars of claims in contractual time frames. They usually leave submissions at the end of the projects. Employers and engineers often are unable to access and assess the liability properly.
- Contractors do not submit evaluations of variations in proper order. It prevents both engineers and employers from assessing the expenses of variations in an accurate manner. It also bars them from making adequate provisions for payment.
- Contractors also forget to submit an extension of time claims in the needed time frames as per the contract. They usually leave such matters in the ending stages of the project. Thereby it gives employers consider the fact that they are entitled to submit claims for delay penalties.
Almost anyone can assume that all construction projects are subject to budget constraints. When employers are denied the chance to potentially cut down costs or manage budgets of projects throughout the life cycle via submission of claims on a timely basis, then employers will be dealing with claims issues in the end. This is not right.
Are contractors surprised when employers do not wish to pay for a large overspend for a project?
It alternatively means the question i.e. are construction companies possibly unable to pay a large overspend for a project?
In any case, employers that have no remaining budget can be able to manage things in the best manner possible. It indicates disputing the final account contractors have irrespective of any justifications and explanations.
Contractors always desire to avoid such kinds of situations. They also must avoid waiting until the final stages of the project. They should also submit any notices and claims on time throughout the project’s life cycle. This helps contractors avoid unnecessary disputes in settling final accounts.
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