Job Book 9th Edition - Book - Page 273
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Stage 5 > Construction: Supplementary Material: 5/SM9
Loss and/or expense applications
Monetary claims arising in the context of building contracts are usually made as
a result of loss due to regular progress being affected or because of additional
costs due to a prolongation of the time on site. The wording in the Building
Contract usually identifies events or matters which are recognised as causes.
There may be procedures to be followed which exist for the convenience of
both parties. It is only these types of claims which the contract administrator
has the authority to settle.
For an application to be valid:
• the loss and/or expense must be a direct actual loss
• the works (or a part) must be materially affected
• interference or disturbance to regular planned progress must have occurred
• reimbursement must not be possible under any other contractual provision.
The contract administrator has a duty to decide whether the claim is valid
and, if information supplied is not adequate, additional reasonably necessary
information must be requested.
Ascertainment of the amount claimed can rest with the contract administrator,
but normally the Building Contract allows specifically for this function to be
referred to the cost consultant.
When dealing with applications for reimbursement, remember the following:
• The object of these provisions is to put the contractor back into the position
they would have been but for the disruption. It is not an opportunity to
profit.
• The contractor must make written application at the proper time.
• The contract administrator must form an opinion about whether direct loss
and/or expense has been incurred or is likely to be incurred, and that regular
progress has been materially affected.
• The burden of proof rests with the contractor. If the notice is not sufficient,
more information must be requested.
• Ascertainment is a matter of certainty and not approximation. Particularisation
of claims, i.e. ‘actual’ figures relating to specific items, should be expected.
The importance of keeping good records cannot be emphasised enough.
It is recommended that records should be kept of: site delays observed or
noted from reports; defective work observed which might relate to subsequent
applications when instructions are issued; ‘claims’ submitted by the contractor
which need to be noted and acted upon.
For specimen record forms, see Figures 5/6, 5/7 and 5/8.
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