In a construction project, when you have a time or money loss due to an event which is caused by others, you apply for a claim to compensate your loss. In a good scenario, your claim got accepted. However, sometimes the employer may reject your claim. In this article, we will mention what to do next.
What is the rejection reason?
First, you need to check the employer’s reject letter and review the rejection reason. There might be some reasons for rejection of the claim. Briefly, these reasons are listed below.
- Employer does not believe you are entitled for a claim
- Employer does not agree the claimed amount
- Employer does not want to take responsibility by accepting your claim, even they know you are right
Reason 1: Employer does not believe you are entitled for a claim
Concurrent Delays & Problems
There might be various reasons for an employer to not believe your entitlement for a claim. The most common problem we faced for that reason is; concurrent delays. This means Employer & Contractor have their own issues at the same time, and both parties believe the other party caused the delay.
Missed Notification Deadlines
Most of the contracts have some deadlines to notify the Employers about compensation events. If you miss deadlines, employer may have right to reject your claim.
Employer is not capable to understand your claim or You could not explain them well
This is another common reason for a claim rejection. Since you submitted your claim but did not include a proper explanation or your employer is not capable to understand the claim explanation. To prevent this, we advise to have a good claim file, explaining what is the event, what is the impact, and what you want to compensate that impact.
Reason 2: Employer does not agree the claimed amount
In this case, Employer thinks that you have right to claim, but they do not agree the amount you claimed. Now, next step is having conversations and correspondences with them to understand why they do not agree the amount. After that, you re analyse your claim, and move this forward until you convince the employer about the claim.
Reason 3: Employer does not want to take responsibility by accepting your claim, even they know you are right
This reason is not written on the books. But we experienced this often. Accepting a claim means time and money loss for the employer and also may mean the acceptance of their poor project management. For example, if there is a delay due to unexpected environmental events, such as poor weather conditions, flood, fire etc, it would be easier to accept the contractor’s claim. But if there is a delay claim due to coordination issues, which is under the Employer’s responsibility, accepting this claim also means admitting their lack of management. So for these kind of cases, employers are tend to resist for accepting the claims. Sad but true. For these cases, whether the claim amount is high or low, you do not want to lose your rights. So if you cannot make progress, this might be the time for asking professional help.
In construction projects, many contractors lose money and time since they do extra works or spend extra time, without getting paid for that. Because they do not know how to assess compensation events and how to manage claim processes contractually.
If you would like to cover your project contractually against any losses, reach us for our claim consultancy services. Check it out here.