The Claims Phase

Many people are aware that projects go through a series of phases: planning, design, construction and operations. A phase that is often over looked is the "claims phase." This phase typically begins just before the end of construction and may extend a decade passed the completion of construction. Just like any other project phase, effective management of this phase of the project demands that you understand the scope of the work to be accomplished and the means and methods needed to complete the associated scope of work. The management of the claims begins with a working knowledge of what constitutes a claim.

What is a Claim?

A claim is a request by the contractor to the owner for compensation resulting from differences between what was in the contract and what was accomplished on the project.

To unpack this definition a little bit let’s begin with the idea that the claim can only be issued between parties who have a contract. If you consider the web of contracts that are required to build buildings, claims can only be submitted between parties who are directly connected by these contracts. Thus subcontractors cannot make claims directly to the owner’s representative. Subcontractors must provide their claim to the prime contractor who then submits the claim to the owner’s representative.

The next part of the definition of claim to be explored is that the request submitted by the prime contractor to the owner’s rep is for some type of compensation. In the context of construction contracts there are only two types of compensation. Adjusting the total contract amount (either higher or lower) is the first type of compensation. Since the phrase “time is money” is nowhere more evident that on a construction site, the other type of compensation provided to construction contractors is that of changes to the duration of the construction contract (either shorter or longer).

How is the decision of how much money and time to be awarded made? The next part of the definition of a claim provides the clue. The amount of time and money awarded are based on the differences between what was in the contract and what the contractor was required to do by the owner. This means that we have to clearly know what was in the contract and must have to know what was accomplished.

In thinking about the projects you have worked on, even if it’s just picking up a hammer around your home to do some small project, consider the number of changes you encountered. The cliché of a homeowner needing to go to the home improvement store multiples times in single one day for tools and materials without being able to complete, what appeared to be a simple project, gives only a small idea of the mess that changes between what was originally planned and what actually happened can cause.

Pay Me Now or Pay Me (more) Later

The CPMTutor has referred to the need for project teams to be proactive in the identification and resolution of delays and changes. One of the most important reasons for this is to reduce claims. Until you have faced the task of trying to answer the question of “what was in the contract?” and “what was actually accomplished?” five years after everyone has left the project site, you cannot fully assess the pain and suffering associated with such work.

So let’s say you work for a large firm. Can you say, “Just let our lawyers handle it?” Even if you have a large enough staff, or outsource the work, the resources spent in such non-productive effort will be a burden to your firm when compared to the resources needed to resolve the changes before leaving the jobsite. For small with only a few projects per year, as is the case with the vast majority of builders across the world, a few claims will ruin both your reputation and your profitability.

Now that you know what to do, here’s some information to help you if you have no choice but to submit a claim. Before we begin however, here is my…


The objective of the CPMTutor is not to turn you into an attorney; heaven knows there are already enough attorneys for us all. The objective of the CPMTutor is to simply give you a general knowledge of the subject of construction claims from the point of view of how schedules may be used as part of the claims process. If you have a specific situation, you should consult an attorney.

Combination of Delays

CPM is a tool to assess the impact of changes to the project on the overall duration of the project. The focus of the use of CPM in delay analysis is to identify the impact of the claimed work on the project’s finish date. From the point of view of the original contract completion date, a project with more work than expected, and no additional resources, can be expected to finish later than originally contracted. This difference is often referred to, in this context, as a “delay.”

The first thing to know about construction claims analysis is that there are typically multiple concurrent delays on large projects. The claim analysis may not pick only the delay that is the most favorable to the party submitting the claim. The analysis must consider the impact of all concurrent delays. It is the analysis of the combination of delays that will result in a defensible evaluation of additional time due to the contractor. As each delay is evaluated, the reason for the delay can be classified into one of three types as described in the paragraphs below.

Compensable Delays

Compensable delays are those caused by the owner alone. These are deviations between the original contract and the final work performed for which the contractor was not compensated. It is only when these changes impact activities on the critical path that a compensable delay occurs. For example, if the owner wants additional work accomplished, and this work is on the critical path, then the owner is responsible for a schedule delay. If the work is not on the critical path then the contractor may be less likely to receive additional time on the project. In addition to the direct impact of compensable delays on critical path activities, here are some other considerations with regard to compensable delays:

Acceleration Claims.

Owner directs contractor to perform more work within the same time, to make up for alleged contractor delay, or directs changes activity sequence optimized for contractor workflow. Contractors should have very clear records from the owner given the direction of the additional work and the direction of when the work is to be completed.

Inefficiency Claims.

This broad category of claim often stems from widespread delays resulting from job site access, limitations to material staging areas, or approvals to start major phases of work. In many cases, owners will specifically identify these delays in the bidding documents. Since such impacts are clearly stated in the contract, contractor bid documents should take these factors into account prior to biding the job (and not during the claims phase!). If such impacts are not in the contract, the Contractor must have very clear records of the number of non-work hours caused by such delays.

Differing Site Conditions.

This broad category of claim stems from one of two types of problems, either the owner has made assumptions about the existing conditions that turn out not to be true, or that the contractor’s assumption about how they could perform the work turned out not to be possible.

Project Impact Claims.

The all-inclusive “get well” claim is often the result of accountant’s review of the project rather than an analysis of specific instances of delays on the project. Such claims, since they simply state a fixed Result from one of the above claims or be a separate claim based on interference with contractors' personnel, productivity delays due to excessive changes, design errors, etc ...

An owner or contractor may also cause a problem on a project due to inaction. For example if (a) a contractor cannot start painting until the owner selects the paint color, (b) and the owner is two weeks late approving the painting, (c) painting is on the critical path, and (d) the owner requires the contractor to finish on time. then the owner has caused a constructive acceleration claim.

Non-compensable Delays

A key idea in construction contracts is that full set of all problems that could arise on a project cannot be known ahead of time. Thus different risks of problems are apportioned to the contracting party best able to manage that risk. There are many types of problems that could arise on a construction project that are the responsibility of the construction contractor. For example, delays in purchasing or delivery of materials, differences in labor markets between the time of bidding and time of construction award, or availability of key equipment in a given geographic location. As the name implies, non-compensable delays are delays encountered by the contractor for which the owner is not responsible.

Excusable delays

Some risks are allocated in contracts to the owner and some to the contractor. Other risks cannot be apportioned to either party. Delays associated with this type of risk are called “excusable delays.” An important factor in evaluating such excusable delays is that both parties are required to consider “normally expected” delay as part of their plans. For example, a large building project that breaks ground in the upper mid-west in October can be expected to encounter major weather delays to completing foundation work due to normally expected cold temperatures and precipitation. Excusable delays for out-of-the-expected conditions result in contract time extensions without compensation for costs.

Claims Analysis

So you’ve stuck it out to this point in the chapter which means one of two things, either you are a student and this is a required chapter or you have a potential claim situation and you need an easy answer from the CPMTutor. For the student, I hope that these pages reflect the need to resolve the situation while you’re on the jobsite. For the latter, I must offer my apologies, because difficult problems usually do not have easy answers. To perform a claims analysis after the project is complete, use the following steps to recreate the project and then use that information as the basis upon which your claim may be defensibly stated.

Find the As-Planned Schedule

This is the schedule created prior to starting any physical work on the site. This shows the schedule that was created to build-out the job that was bid.

Review the As-Built Schedules

The as-built schedules are the monthly schedules that were updated to reflect the actual performance of the as-planned schedule. Note that the actual performance of the plan over time must reflect all the changes to the contractor’s workflow, agreed upon change orders, time extensions for exceptional weather conditions, etc…

If the as-built schedule was not used for payment purposes and has was been updated, or if the as-built schedule was created after the project was completed, this schedule is less likely to be an acceptable basis upon which to justify time extensions. You will need to double check that as-built schedule reflects all the actual conditions up to the day before the claimed situation occurred.

Project the Would-Have-Been Schedule

Given a defensible schedule prior to the delay, the scheduler can project the behavior of the schedule through the rest of the project. First, get the as-built schedule for the month prior to the impact. Do not use the monthly schedule following the impact since that schedule will already have delays that you need to evaluate. Second, update that schedule to the day prior to the delay’s first impact. If the delay happened the day after the schedule was submitted for payment justification, then you will not need to make an adjustment for a mid-month delay. This new schedule forms the baseline for the expected behavior if the project had not been delayed.

Identify the relevant As-Built Schedule

Since the schedule was being used during the course of the project, the as-built schedule reflects following the delay demonstrates the actual conditions on the ground. The job here is to determine which as-built schedule should be used to evaluate the specific points to be made in the claim. If there was a point delay of 20 days due to exceptionally bad weather, then only some interim as-built schedule, and not the entire set of all later as-built schedules are needed. Delays associated with poor productivity impacts due to delays in site access may require the review of all future as-built schedules because such delays impact activities across many months.

Compare and Analyze

The previous steps have simply been the mobilization task for the analysis of the claim. The actual claims analysis compares the two schedules, the would-have-been schedule and the as-built schedule to determine the difference between the planed project and the actual project outcome. To determine if the delay is compensable the owner must be the cause for these differences. The previous section on delay analysis will help you with this process.

During the process of recreating the schedules to analyze the delay, you should have all the documents needed to make that assessment available to you at this stage. All that remains is to organize this information in a truthful and compelling story.

The analysis prepared in this step is more important than any overt demand for compensation. Without the analysis there is no objective justification for any compensation whatsoever. If your objective is to actually resolve the claim then such objective justification is required. Remember this is not about right and wrong, or resolving pain and suffering, this is about getting a reasonable compensation for changes so that you can get on with running your business.


As noted at the opening of this section, the costs of performing the additionally required work identified in the claim must be evaluated using proper cost estimating methods. Such techniques are outside the scope of the CPMTutor but could be identified in any cost engineering textbook.

The primary topic for your assessment of compensation to consider when using the CPM schedule is the difference in the duration of the end of the project. There are many complex legal theories surrounding the costs incurred with delayed project completion. These theories boil down to the following idea: you will have to spend more field and home office time on the current project than you would have expected. The field office overheads may typically be charged on a daily rate based on audited costs of your field office staff.

Home offices overheads are more complicated because home office staff often work on many projects at once. Home office overheads are often allocated to claims based on that percentage of the home office overheads that can be allocated to the specific project. If there were direct costs that can be documented to backup such claims, then such home office allocation claims may be strengthened. Of course, if the project is shut down for a period of time without any work, it would be expected that the “full production” allocation of home office overhead would likely not be compensated.


The CPMTutor’s rule-of-thumb regarding claims is simply this: “Negotiate all change orders, including a full and equitable adjustment of both time and cost, before you leave the jobsite.”