Notice: Give it or Lose $$$!!!
Construction is a risky enterprise for contractors. Unplanned and unanticipated events continually occur and should be addressed as quickly as possible. In fact, construction contracts are written specifically to deal with unanticipated events and issues. Properly managing the costs resulting from unanticipated events experienced during construction often determines whether the project is profitable or not.
When unanticipated conditions and issues arise, the contractor’s first action should be to immediately notify the owner of the potential impact (additional costs and time) of the unanticipated event or issue. Contractually, providing proper notice to owners of a potential change or unanticipated event when it arises enables owners to evaluate and address the potential change as quickly and cost effectively as possible. However, more importantly for contractors, properly notifying owners of a potential change or unanticipated event is an essential step in establishing their entitlement to request and recover their additional costs and the corresponding time extension.
Notice requirements are peppered throughout every construction contract and are too often ignored by both parties when unanticipated events are encountered. Do not fall into this trap! Improper notice is referred to as the owner’s “shield” from contractor requests for additional compensation. Contractors must be both knowledgeable of their contractual notice requirements and diligent in fulfilling them to ensure that they put themselves in the best position to recover their additional costs caused by unanticipated events.
For more on this or any other topic, please call me at 215-814-6400 or email me at mark.nagata@traunerconsulting.com.
