Claims in construction projects: how causes are linked to effects?

Purpose Claims are increasingly becoming a norm in construction projects and thus an area that is attracting interventions through researches. This paper aims to establish causes–effects relationship of claims in construction projects. Design/methodology/approach This is correlation study type of study that attempts to establish causes–effects relationship of claims in construction projects. Significant causes and effects of construction claims were determined using one-sample t-test. To establish the relationship, the significant causes and effects of construction claims were correlated using bivariate correlation analysis. Findings Among the significant causes, variations, change of scope of the project and delay in completion of works have high level of significant positive relationship with five to six other causes and positive relationship with multiple effects ranging from five to six. Besides, among significant effects, delay in completion and delivering of construction projects, poor contractual relationship among parties and extension of time have significant positive relationship with multiple causes. Research limitations/implications The findings of this study are limited to causes-causes relationship and causes–effects relationship of claims in construction projects. This means effects–effects relationship was not covered that could be an important area to investigate as some of causes and effects are at times termed interchangeably. Practical implications With reference to previous studies which have focused on determining the causes and effects of construction claims, the findings of the current study have specific contribution on claims management as it divulges the causes of constructions claims that have multiplier effects to the project as a result of their linkage. Originality/value The paper unveils causes of claims with multiplier effects to construction projects for project participants to devise strategies to minimize and consequently eliminate them.

FINANCING COSTS IN THE EVENT OF DEVIATIONS IN WORK PERFORMANCE UNDER CONTRACT STANDARDS

When carrying out construction contracts both, the employer and the contractor, regularly have to deal with “financing costs”. The financing costs cannot be set as a flat rate, since these can vary from one building contract to another. The pre-financing period can be determined from the conditions of the construction contract. These conditions together with the entrepreneur’s financing interest rate forms the basis for calculating the financing costs of the offer. Deviations to the construction contract can result in construction claims and often lead to extended pre-financing periods, which lead to additional financing costs. With the help of a survey the authors investigate how often the calculated pre-financing period deviates from pre-financing periods with claims. This study has the objective of drawing attention to the issue of additional financing costs due to claims. With the help of a survey the authors investigate, how often the calculated pre-financing period of the offer deviates from the pre-financing period of a service deviation performance variation / a claim. The aim of the questionnaire is to point out the topic of additional financing costs in the event case of performance deviations in the performance of services. The study investigates solely projects under national norms respectively Austrian construction contract standards which favour unit price contract. This paper explains and illustrates the impact of additional financing costs resulting from deviations from the scope of works.