Concede your own contribution before they find it
Taking your own share of the overrun out openly costs you less than being caught hiding it. Every overrun has a slice that is yours: a tender error, your own failed supplier, some rework.
Updated: . By Jack Butler-Kettle, Construction Claims Consultant.
Why it matters
Every overrun has more than one cause, and your main contractor's surveyor knows which were yours before opening the claim, because they were there. Claim the whole overrun and you leave them to find your share. When they do, they present it as something you tried to hide. From then on the claim is read as a negotiating position and cut like one. Taking your share out openly, with the reasons, costs you that sum. In return, the rest of the figure reads as measured by someone willing to take things out as well as put them in.
How to do it
- List every cause of the overrun without asking who pays, including tender errors, your own suppliers and subcontractors, rework and your own inefficiency.
- Mark each cause as yours, theirs or shared, using the records, not the story you would like to tell.
- Value your own causes and take them out of the claim, showing the deduction on the face of it.
- State in one paragraph of the covering note what has been taken out and why.
- Keep the working papers for the items taken out, so you can back up the deduction if asked.
Example
Illustrative example. The scenario and figures are invented.
The facts
A subcontractor's package cost £340,000 more than it was paid. The first version of the claim puts all of it down to late design and claims it as loss and expense. The surveyor reviewing it finds that a tender omission and a failed drainage sub-subcontractor caused part of the overrun.
What happens
- The tender omission is valued at £45,000, by checking the estimate against the bills, and taken out.
- The cost of replacing the drainage sub-subcontractor, £38,000 above the original order, is taken out.
- Rework caused by the subcontractor's own setting out error, £17,000, is taken out.
- The claim goes in at £240,000, with the three deductions listed in the covering note.
Overrun netted off
| Item | Amount |
|---|---|
| Total overrun | £340,000 |
| Less tender omission | -£45,000 |
| Less drainage sub-subcontractor | -£38,000 |
| Less own rework | -£17,000 |
| Claimed | £240,000 |
The outcome
The main contractor's response accepts the deductions as a sign the claim was built honestly. It argues only the late design head, which settles at £205,000. A £340,000 claim caught including the subcontractor's own errors would have been cut far below that.
To have this done for you, see our Delay & Disruption Claim service.