Techniques to Assess Construction Claim Damages

While the construction claim can be used for securing new business, negotiation, and arbitration, the chief purpose is to recover damages. Damage amount and existence is the claimant’s responsibility.

Just proving the entitlement or existence does not help to recover the claim. You can only recover breach of contract damages when they represent the actual loss. Due to the inherent implications of construction claims, it is not possible to calculate the precise amount.

For this purpose, analysts apply different techniques. A detailed damage analysis can help reduce the award amount.

If you are looking for help in calculations of construction damage claims, choose a highly qualified quantum expert to get the job done for you efficiently. Read on for the best methods for examining construction claim damages:

Methods to Examine Construction Claim Damages

Construction damages are of two types: general and consequential damages. General damages come from the direct delay event. On the other hand, consequential damages cannot be predicted directly. Here are some of the techniques to analyze general construction claims:

Total Cost Method

In this technique, the total cost incurred (including profit and overhead) minus the contract price is calculated to examine the total damages.

Although, it is quite straightforward, but there is a significant loophole in it. It gives the contractor complete freedom to include any price they wish to add in the claim amount.

Estimated Cost Technique

In the estimated cost method, experts only take out the estimates of the amounts of all damages. These estimates are based on the rates mentioned in the bill of quantities. If an item is not mentioned in the bill, then the amount is taken from the rate analysis by the contractor.

When the damage causes are taken out using the estimate cost method, the final amount can be taken using the actual cost technique.

Modified Cost Technique

Modified cost method is an improved form of the total cost technique. In this, the contractor subtracts the extra costs that come from errors – like the bid error, default of contract or his fault. Sometimes, analysts use modified and the total cost technique both for calculating construction damages.

Actual Cost Method

Contractors have complete cost records with them. In this technique, the analysts use the actual cost records for damage calculation. Each cost of material, total workforce hours, and each equipment price is added to get the total amount of damages.

For actual cost calculation, one needs to have an efficient accounting system to produce detailed and precise cost records. Therefore, it is always an excellent idea to hire a professional quantum expert to get accurate results – and prevent risks and errors.

Moreover, to validate the actual costs, analysts frequently refer to the contract bills and invoices. So preserve all these records until the settlement of your claim.

Conclusion

There are four techniques to calculate construction claim damages including the actual cost method, the total cost method, estimated cost technique, and modified technique.

For 100 percent error-free results, consider taking expert services. Professional quantum analysts can reassure the authenticity and accuracy of your damage claim.