Understanding Notice and Claims Procedures for Subcontractors
Construction contracts usually contain convoluted, confusing, and often contradictory notice and claims provisions.
The purposes of the notice and claims provisions are to avoid construction disputes by resolving them before they get to court. Yet, overly complicated notice and claims provisions often create disputes or make simple issues more complicated, as they can be used a tool to deny payment to an unsuspecting subcontractor.
Not every issue on a project requires the involvement of an attorney. However, when an owner or general contractor starts telling you to follow the notice and claims provisions, it may be time to seek advice from a seasoned construction attorney.
If you are not in a position to consult a construction attorney, it is important for you to be aware that notice and claims provisions have strict deadlines for written notice with harsh forfeiture provisions for failing to follow them.
In dealing with a construction dispute on the job, providing information to the general contractor or owner is the key. In fact, providing notice is essentially a way for the owner to get information to allow for better and more informed decision making.
Courts generally enforce notice and claims provisions because the failure to have all the information hinders the owner's decision making.
As a subcontractor encountering an issue on the job, keep in mind the following tips to maximize your chances of getting paid for extra work, delays, or impacts on the job or getting the upper hand in an eventual construction dispute:
- If you see something, say something: Always notify the other party of a problem that is, or could be, affecting your work as soon as you recognize the problem.
- Think big picture: Whenever you receive a request for information (RFI) response, schedule update, or supplemental instruction, or other job-wide correspondence, ask yourself how this will change your project plan, efficiency, and costs and notify the general contractor.
- Less is more: Send a basic notice as soon as you can after you recognized a problem; gathering the backup should never delay your initial notice.
- New news is always good news (for you): Keep updating the general contractor with new information about the problem or the cost of the work as it becomes known to you.
- It's better to know what you don't know: If you cannot determine something that you think the owner would want to know before paying for extra work, then notify the general contractor of what it is and why you can't know it yet.
- Write it down: Make sure that every notification is in writing, hand delivered, and emailed. On a Construction Project, anything that is not in writing did not happen.
- Cover Your Bases: Always ask the general contractor (in writing) if they need any more information from you. If the general contractor answers yes, provide that information promptly. If the general contractor answers no, then it will be harder for the general contractor to claim ignorance of the problem at a later time.
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