Critical Documentation in a Construction Claim At the start of every project, goodwill and trust are usually at their high point, and contractors often do not write down key agreements and understandings. When problems start to arise, trust and goodwill too often give way to the financial realities of potential construction claims—and you discover that your oral agreements are not remembered by the other side the same way you remember them.

Failure to properly record and document construction projects can be fatal to a claim. Written documents will almost always outweigh conflicting testimony.

It is crucial to keep in mind the following items during the course of a project, which will help to support or defend a claim should one arise:

  1. Keep all bid documentation; this may be crucial in proving damages from delay and from impacts on work.
  2. Record any pre-contractual agreements, representations and understandings. Insist they are recorded in the final contract, even if they have to be added as a special addendum.
  3. Save and back up your e-mail and all other electronic documents. Today, almost all project correspondence is by e-mail. If you go to court, and you cannot produce your e-mails, your credibility may be greatly damaged.
  4. Record all relevant conversations and send follow-up correspondence. Parties may proceed on a project for months based on a particular representation or understanding, only to find out later during litigation that the other party denies everything. Where there is no response to correspondence, a court may find that a failure to respond affirms what was said in the letter.
  5. Take pictures or videos at all stages of the project. Nothing can help a judge or lawyer more to understand a problem or deficiency on a project than actually seeing it.
  6. Keep all plans and drawings and ensure that you have accurate records of all amendments or addendums.
  7. Make sure a project diary is kept along with diaries for key personnel. Diaries should record the weather; manpower, visitors and contractors on site; key deliveries; and any notable event such as hidden site conditions or events that may cause delay or affect productivity. Ensure that entries express facts, rather than opinions.
  8. Maintain an as-planned schedule and regularly update it with an as-built schedule. Having an accurate schedule for a project and regularly updating it will provide a valuable tool for tracking and recording delay and the impact of that delay.
  9. Record all key events, especially ones that may lead to a claim, and specifically record when the event occurred, what it was, who noticed it, the projected impact it may have on cost and time, whether notice was given and to whom, and response to notice.
  10. Record all change orders and claims for extras and when they were submitted for approval, and separate those that are approved from those that are not. A contractor who has failed to get approval for a change order should always diligently express and protest their ongoing concerns in writing. When doing so, the contractor should adhere to the contractual notice requirements. Parties should also be aware of the ability to give notice that they are performing under protest or subject to a claim to be filed.
  11. Document the additional costs caused by an event. It is particularly important to keep proper accounting and employee payroll records pertaining to additional overhead and employee costs. Accounting records should be able to recreate the costs associated with particular tasks and problems as well as to create a snapshot of costs incurred at a particular point in a project.
  12. Finally, contact legal counsel as early as possible. Contractual interpretation and strategic decisions made early can greatly enhance your prospects for success in a construction claim.
Scott Batterman Hawaii Attorney Honolulu Law Firm
Scott I. Batterman
Partner