5 Civil Construction Tips to Streamline your Progress claims and Variation claims

One of the biggest challenges for our customers is receiving full and timely payment for works completed.  This can create cash flow challenges, and reduce profit margins.  In the worst cases, or which I know of too many, it can put contractors out of business.  As well as the financial side, this can strain the relationship with your customer.

Before founding Varicon I spent a decade in civil construction across contractor, asset owner and superintendent roles.  This was one of the issues that I experienced and led me to create the solution to my own challenges.

Fortunately there are a few simple practices that you can follow to greatly minimise these issues.  These progress claims best practices can be implemented with negligible additional work for your team.

1. Get clear on contract execution

The first practice is to ensure you have good communication with the person responsible for assessing your claims, and the best time to do this is before project kickoff.  With the unfortunate rare exception, most superintendents want to administer your contract fairly, and issues result from misalignment.

Some questions to consider asking:

• • How are we going to assess completion of works?  Eg, will work completed be assessed by contractor and superintendent, or is a quantity surveyor required?
  • What documentation do you need from us to support claims?
  • What are timeframes to ensure progress payments do not get delayed?
  • In the case of out of scope work, what approvals do we need from you before starting works and what documentation do we need to provide after completing works?
  • What else can we do to make it easier for you to assess and approve our claims?

If you can make their life easier you will get paid faster and have a better relationship.

2. Have a system

There is a lot going on during construction works, and if you don’t have a good system then things can quickly get messy.  You should have a single place and version control for the following items:

• Progress Claims
• Variation Requests
• Dayworks
• Daily site records

These become especially important in the case of disputes.  Most of these disputes can be prevented in the first place by good communication and documentation.  In the event that you still do have a dispute, these documents will help you come to a much faster resolution. Having a system like Varicon can help you streamline your progress claims and variation claims process.

 

3. Work with your superintendent on progress claims

Where possible, work with your superintendent prior to submitting a formal claim. This will depend on the nature of the works and your contract conditions.

This can be an informal process, such as sending through your draft calculations or a conversation to make sure you’re on the same page.

4.Ensure that variations and dayworks are completed according to your contract

One major cause of payment issues is poor management of variations and dayworks. To prevent these problems:

• Prior to doing works outside the original scope of works, make sure you have documented customer approval and acknowledgement that it is out of scope, and whether the Variation is to be priced or on day rates.
• If priced, ideally you should have an approved variation before commencing works, however this is not always possible. If you commence works without an approved variation, endeavour to get this as soon as possible.
• Don’t forget to request extension of time if applicable.
• If doing dayworks, ensure you produce dayworks dockets for signature by the superintendent. If they are not on site, at least send to them the dayworks docket plus any supporting documentation.
• If dayworks are not signed on the spot, keep a record of the correspondence so that you can claim these amounts in the case approval is not given in the contractually required time period.

If your contract is fully dayworks, remember that this is not a carte blanche to do whatever you deem required:

• If working under a head contractor, the responsible person there (eg, supervisor or project manager) will typically give you instructions for what work to complete.
• If working as the head contractor, ensure that you have documentation approving the scope of works to be completed on dayworks.

5. Follow best practice for progress and variation claims

Following best practices makes it easier for your customer to assess and approve your claims and gives you more legal recourse in the case of disputes.

Some things to consider:

• Ensure that your claims and variations are compliant with the contract and Security of Payments Act for your state.
• Have a version controls system in place to ensure you are working with the most recent documents.
• Include any supporting documents in a format that is easy for your customer to review.  These documents may include dayworks dockets, quantity assessments, QA records and other documents.
• Submit your claims in a timely manner and follow up if not approved in a timely manner.

All of the above steps can be managed with a well organised system using Excel or similar.  If you want to keep this easy, reach out to us to discuss your needs to see whether Varicon can improve your contract management. Book a free no-obligation demo!