On a construction project of any complexity, disputes are often the rule–not the exception. Claims in the construction industry are commonplace. During the lifetime of most construction companies, it is likely that the company will become embroiled in a claim that cannot be resolved outside a courtroom. While it is best to avoid construction claims from the beginning of a project, it is important to resolve claims quickly and efficiently once they arise. Avoidance or a quick resolution of claims is often crucial to the economic success of the project. How you document and present a claim will often determine whether you obtain a quick and inexpensive resolution of the claim or whether you get stuck in a prolonged and expensive legal battle.
Once you determine that a claim merits prosecution, comprehensive preparation and organization is essential and should be promptly undertaken. You should immediately assemble, organize, and review the facts, evidence, and documents bearing on the claim. You should engage in this effort when memories are fresh and before facts, evidence, and documents are forever lost or forgotten. Although you should seek early resolution through informal and less onerous means, it is prudent to prepare the claim with an eye toward resolving the claim in the formal setting of arbitration, litigation, or another dispute resolution process should you fail in negotiating an early resolution of the claim. If early resolution is not achieved, complete preparation at an early stage provides important insight for developing an effective claim strategy and a factual foundation that can be relied on, subject to revision, as prosecuting the claim continues.
Claims and disputes involving construction projects tend to be technically complex and factually intensive. An effective way to present a claim and resolve a dispute is through the submission of a claim document. A claim document is a written synopsis of the claim that can be presented to the opposition at the early stages of the dispute. Of course, if formal claim submission is mandated by the contract, you must follow the contract requirements including complying with notice requirements and deadlines for submitting any documentation supporting the claim. Whether a formal or informal process is followed, the immediate and primary goal of preparing and submitting a claim document is to bring about a prompt and satisfactory resolution of the claim through an informed negotiation. Failing a satisfactory resolution of the claim, a well-prepared claim document provides a blueprint or plan for further claim prosecution. Considering and implementing the following approach will help you develop and present a well-prepared claim document.
- Keep it simple. The key to effective claim preparation and presentation is keeping it simple. Simplicity promotes understanding. The process of preparing and presenting the claim document is an important step in developing an overall claim strategy, because it requires you to refine and synthesize your claim from beginning to end. While the claim must be well supported, the claim document should explain the dispute in a simple yet complete and comprehensive fashion.
- Tell your story. View the claim document as telling a story. Keep it interesting. Make sure that you have a clear and definite theme that can be communicated, understood, and remembered readily. The theme should be the strongest argument supporting your theory of recovery.
- Include an executive summary followed by an accurate factual narrative. The primary communicative component of the claim document is the factual narrative. Given that construction claims tend to be technically complex and factually intensive, it is often helpful to include an executive summary before immersing the reader in an exceedingly long and complicated factual narrative. The factual narrative should focus on your point of view but should not be expressed in overly argumentative or combative terms. Permit the facts to speak for themselves. The writing style should be clear and precise but should not read like the project’s technical specifications. It is, after all, a story, not simply a recital of a string of facts. A narrative that is comprehensive and logically organized will provide a good resource that can later be used throughout negotiations and further prosecution of the claim.
- Emphasize the strongest claim and key facts. When multiple and unrelated claims are presented in one claim document, the document must be structured to emphasize the strongest claim. Focus on the key facts supporting your claims. Presenting and arguing every fact will simply overwhelm and confuse the reader. The resulting claim document as a tool of persuasion will be a miserable failure.
- Provide the contractual and legal basis for your claim. The executive summary and factual narrative often is followed by a written discussion of the contractual basis supporting the claim. Including a written discussion of the applicable legal principles that support and illustrate the theories on which the claim is based may also be helpful and persuasive. You should seek assistance from an experienced construction attorney to fashion the legal arguments and to ensure that the factual narrative is presented in a manner consistent with the applicable legal principles and governing contract provisions. The need for, or extent of, a legal discussion generally is geared to the expertise or experience of the ultimate decision maker for the opposition. Indeed, a thorough legal discussion may be a crucial element in educating your opponent about construction law, causing your opponent to recognize its liability and exposure, and causing your opponent to recognize the need to settle the claim early.
- Provide detailed and accurate cost and pricing data. Pricing the claim and supporting your damage calculations is every bit as important as establishing liability for your claim. Providing inaccurate or defective cost and pricing data can also subject the claimant to serious allegations of false claims, which may expose the claimant to significant penalties and financial liability. The claim document should specify the specific dollar amount claimed and should include a fairly detailed cost analysis and breakdown of the claimed damages. If not too voluminous, you should include in an indexed appendix all relevant supporting documentation. You should also identify any third party sources that you relied on to support your cost and pricing data.
- Showcase and highlight the most persuasive documentary evidence. The most potent documents should be quoted in the body of the factual narrative. Those documents that do not merit incorporation into the text, but which are referenced and support the claim, can be included in an indexed appendix that is cross-referenced with and organized to follow the factual narrative. The reader can then review the factual narrative without having to sift through every document knowing that the backup is readily available should further review be desired.
- Consider including demonstrative evidence and expert reports. Charts, graphs, drawings, and photographs are very helpful in demonstrating points made in the factual narrative and should be incorporated into the claim document to the extent practical. Similarly, consider including relevant reports by experts as attachments to the claim document as exhibits, with appropriate references to and quotes from the reports in the narrative. Of course, before including expert reports or otherwise disclosing the identity of any consulting experts, it is imperative that you first consult with your attorney to make sure that you do not otherwise waive any rights you may have to keep confidential the work of consulting experts.
Consider seeking the advice and guidance of a construction attorney at the very first sign of trouble and certainly at the earliest stages of claim preparation. A seasoned construction attorney can help you manage and contain the dispute and avoid the courthouse. If your claim is not resolved through negotiation, your attorney will ultimately be tasked with presenting your claim to a judge, jury, or arbitrator. Therefore, you should consult with your attorney to ensure that your claim document is drafted in a manner consistent with favorable resolution of the claim in a later litigation or arbitration proceeding. Your attorney can also help you to ensure that the supporting documentation and evidence are being appropriately assembled and preserved.
Your construction attorney need not take over the claim effort but should be consulted to ensure that the claim effort will not be wasted or later undercut your position in any litigation or arbitration proceeding that may ensue. An experienced construction attorney also can suggest and identify competent technical consultants or experts in specialized areas, such as accounting and scheduling, and thereby help avoid the expense and frustration of relying on an individual who lacks the proper qualifications to testify in a later legal proceeding. Early involvement of an experienced construction attorney does not presuppose a resort to litigation or arbitration. Instead, the attorney’s early involvement should facilitate comprehensive claim preparation, which should contribute to an early and successful resolution of the claim.