REUTERS | Tobias Schwarz

Back to basics – loss and expense and damages claims

A few weeks ago I gave you some of my practical tips for making or defending extension of time claims in adjudication. This week I thought I’d give you some practical tips concerning money claims, by which I mean, claims for loss and expense or damages.

I appreciate that it might appear that I’m “teaching grandmother to suck eggs”, but I make no apologies because we can all do with a refresher of the basics at times. I know I certainly can. Indeed, I suspect that a surprising amount of us have a Nutshells or equivalent hidden away in the desk drawer and refer to it in times of need. Alternatively, we can just look at PLC!

Prolongation claims

When making a prolongation claim, the referring party should:

  • Provide all available evidence of prolongation costs. While this sounds obvious, it’s amazing the amount of claims that I see that might succeed on liability, but fail or are significantly reduced because of a lack of evidence to demonstrate quantum. For example, consider a foreman who is unable to work. A referring party should:
    • submit evidence that the foreman was actually on site, like time sheets, signing-in records or a site diary; and
    • provide evidence of the costs incurred, for example salary records, expenses sheets and evidence of other employer costs such as National Insurance, pension contributions, and so on.
  • Use expert quantum evidence where necessary. Expert quantum evidence may well not be necessary for prolongation claims in adjudication, and it might be sufficient for you to rely on your own QS’ valuations. After all, if the adjudicator is a QS, he should have a good idea of whether your valuation is reasonable. However, on larger, more complex claims, you may wish to instruct an expert. If so, choose wisely.
  • Be realistic. In my view, hyper-inflated claims can damage credibility, such as claims for the referring party’s own plant, charged at exorbitant hire rates. The adjudicator might take the failure of such claims into account when apportioning his fees and expenses, so the unrealistic claim may not only fail, it may end up costing the referring party more money too.

When responding to a prolongation claim, the responding party should provide alternative quantum evidence for the adjudicator to use. It should not simply defend on liability, no matter how “rock solid” it believes the case to be. This may take the form of alternative quantum figures for the adjudicator to use and should, if possible, be cross-referenced to supporting evidence such as price book rates.

While some might argue otherwise, I personally don’t see such alternative submissions as a sign of weakness, merely as the responding party covering all bases.

Disruption claims

When making a disruption claim, the referring party should:

  • Understand what disruption is. One of the main reasons that disruption claims fail is a lack of understanding of what disruption is and what is necessary to prove such a claim. For example, while 500 variations on a project could result in disruption, the existence of the variations alone is not proof of disruption.
  • Explain how the disruption was caused. It is essential that there is an explanation by the staff involved at the “coalface” as to what events were delayed and how they were delayed, and this should be supported by evidence. Otherwise, how are you going to demonstrate that the regular progress of a task was disrupted?
  • Use a recognised technique for quantifying disruption, for example the “measured mile” technique. It may well be necessary to instruct a quantum expert to assist with this exercise.

In responding to a disruption claim, the responding party should:

  • Attack liability. Disruption claims are more difficult to prove than prolongation claims, so an attack on liability might be worthwhile.
  • Provide alternative quantum evidence for the adjudicator to use. In a similar manner to prolongation claims, providing alternative quantum evidence may pay dividends.

Happy claiming or defending.

One thought on “Back to basics – loss and expense and damages claims

  1. hi,

    im a master student in the process of gather information to complete my thesis. I would like request an opinion what is the difficulties in assessing loss and expenses in prolongation claim in construction. thank you

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