Why Construction Claims Occur: The Early Warning Signs

Why Construction Claims Occur: The Early Warning Signs

Construction projects are supposed to be collaborative, but too often they turn adversarial. Owners push to minimise cost; contractors fight to protect profit. The Contract, instead of being a tool for delivery, becomes a playbook for disputes.

The reality is that claims don’t arrive overnight. They build slowly, through warning signs that anyone on site can see, if they choose to look. Ignoring them is costly: a dispute that could have been resolved early hardens into arbitration, draining time, money, and relationships.

At Aegis, we specialise in recognising these signals and addressing them before they escalate. In this article, we break down the six most common early warning signs of claims, explain why they matter, and share practical lessons for project teams.

1. Incomplete Design & Premature Commencement

Rushing to site before design maturity is one of the most common triggers of claims.

Political deadlines, financing pressures, or commercial impatience push owners to award contracts early.

The result? A blizzard of RFIs, addenda, and clarifications. Trades resequence, rework multiplies, and productivity falls.

Why it matters:

• Design risk almost always sits with the employer. Courts have consistently held that contractors are entitled to rely on employer-provided specifications.

• Once disruption begins, proving impact without proper records is almost impossible.

On one Middle East refinery project, over 1,200 RFIs were raised in six months. The contractor logged each against the critical path. That record allowed the tribunal to clearly attribute delay to late design.

2. Low-Bid Awards and Unrealistic Scheduling

Competitive tendering often rewards the contractor who strips out contingency.

Owners know the price is fragile, but budgets win over realism.

This creates programmes that are optimistic at best, reckless at worst. When the first employer-caused delay occurs, the schedule collapses.

Why it matters:

• Tribunals recognise that owners cannot deny extensions for delays of their own making.

• Unrealistic programmes create fertile ground for disputes when time relief is refused.

On an EPC pipeline contract, the contractor deliberately bid low expecting recovery through variations. The employer then delayed land access but refused an extension. The dispute escalated, and the tribunal sided with the contractor on prevention grounds.

3. Delayed Approvals and Administrative Inertia

Approval cycles are the lifeblood of projects. Shop drawings, materials, method statements; all rely on timely review. Yet under-resourced design teams often respond weeks late.

The impact is cumulative: fabrication stalls, equipment sits idle, trades are stacked, and costs spiral.

Why it matters:

• Employers cannot insist on completion while their own approval delays deny contractors the chance to achieve it.

• Even where contracts have extension mechanisms, unreasonable administration still drives disputes.

In a power station project, 800 delayed shop drawing approvals pushed critical activities months late. The contractor’s approval register, tied to CPM updates, secured a USD 20 million prolongation award.

4. Ambiguous Specifications and “Or Equal” Disputes

Ambiguities are another classic early warning sign. “Or equal” clauses in procurement specs invite disputes: contractors propose compliant alternatives, employers reject them, delays mount.

Why it matters:

• Tribunals apply contra proferentem: ambiguities are construed against the drafter.

• But contractors must show their interpretation was reasonable and that requires documented queries and submissions.

On a hospital project, the employer rejected an “or equal” HVAC system that was fully compliant. Delay claims followed. The tribunal sided with the contractor because the ambiguity was of the employer’s making.

5. Denial of Excusable Delay and Strict Time Bars

Many disputes arise not from the delay itself but from how it is administered. Employers sometimes deny legitimate extension requests, either to protect completion dates or by invoking technicalities in notice clauses.

Contractors are then forced to accelerate: overtime, double shifts, resequencing.

Why it matters:

• Constructive acceleration is a recognised claim basis where extensions are unreasonably denied.

• Time-bar provisions (such as FIDIC’s 28-day notice rule) are strictly enforced in some jurisdictions, but moderated in others under good faith principles.

In one Qatar project, a contractor missed the FIDIC notice deadline for a delay caused by late permits. The DAB enforced the bar, but an ICC tribunal later awarded partial recovery on fairness grounds.

6. Parallel Contracts and Site Access Failures

Few things damage productivity more than multiple contractors crowding the same site without coordination. Employers may award overlapping packages or delay access. The result is congestion, workface clashes, and inefficiency.

Why it matters:

• Employers have a duty to coordinate. Failure to do so can amount to breach.

• The challenge lies in proving interference versus contractor inefficiency.

At an LNG terminal, two EPC contractors clashed over jetty access. Employer mismanagement of interfaces led to six months’ delay. Arbitration confirmed employer breach, awarding both time and costs.

Other Contributory Factors

Beyond these six decisive warning signs, many other factors contribute to claims:

• Contractor practices: poor site investigation, underbidding, weak controls.

• Owner practices: overzealous inspections, late decisions, incomplete design at tender.

• Contract traps: harsh exculpatory clauses, conflicting forms.

• Administration failures: inadequate delegation, poor documentation.

• Settlement failures: discouraging project-level resolutions.

At Aegis, we distil this complexity into the six signals most predictive of claims.

Why Records Decide Everything

Doctrines such as Spearin, prevention, contra proferentem, and constructive acceleration frame entitlement. But tribunals don’t decide cases on doctrine alone, they decide them on records.

Without contemporaneous programmes, notices, transmittal registers, daily logs, and cost data, even the strongest claim collapses. As one leading commentator puts it, records are the “lifeblood” of construction claims.

Tailpiece

The early warning signs of claims are not hidden. They are visible on site: incomplete design, fragile bids, delayed approvals, ambiguous specs, denied extensions, and site interference. If ignored, they will not disappear, they will harden into disputes, often years later in arbitration.

The true gold standard of contract administration is not to fight these battles after the fact, but to recognise, document, and resolve them early.

For engineers, planners, and project managers, this means more than technical skill. It means being contract-literate, record-disciplined, and vigilant. The decision to update a programme, issue a timely notice, or log labour hours may feel routine, but it is those very actions that decide the outcome of multimillion-dollar disputes.

At Aegis PMC, we specialise in transforming early warning signs into proactive strategies, reducing risk, protecting entitlement, and keeping projects away from costly arbitration.

👉 If your project is showing the signals of distress, contact Aegis today to discuss how we can help you simplify complexity, resolve disputes, and succeed.