Contract Surety

Top Ten Causes of Claims



Surprise? For the most part, claims and disputes tend to stem from the rush to move projects forward, although design, licenses and permits might not be finalized. Unfortunately, in the long run, the early scurry to hit deadlines often leads to unsatisfactory results, changes in scope, budget overages and so on. Keep reading for the specifics on the top ten causes of claims or disputes.


Root Problems

HKA’s fifth annual Crux insight analysis on global construction claims and disputes is out and, as reported by Construction Dive, claims and disputes in “the Americas region” are typically caused by:


Change in scope.

Physical conditions were unforeseen.

Design was incorrect.

Workmanship deficiencies.

Design was incomplete.

Poor management of subcontractors, suppliers or their interfaces.

Design information was issued late.

Contract management or administration failure.

Contract interpretation issues.

Access to the site was restricted or late.


As an HKA leader sums up, “Many of the dominant causes of claims and disputes — notably change in scope, unforeseen physical conditions and deficiencies in design or workmanship — arise from short-sighted attempts to save time and money up front….” When it comes to public contracts, funding is often based on deadlines—and this contributes to the sense of urgency to get a project going, even if “full due diligence, or…necessary rights of way or licenses” remain incomplete. Industry pro, Phil Shepard Bond Manager and Head Underwriter at Colonial Surety stresses that one way for contractors to mitigate the risks of disputes and claims is to invest in a strong project manager:


When issues arise with scheduling changes, poor sub-contractor performance, or other delays, a good project manager will make sure to manage and mitigate problems and keep the project running smoothly.  In addition, strong project management will keep open lines of communication between the obligee, contractor and subs and suppliers and even utility companies.  Efficient, effective project managers are invaluable to successful day to day supervision, coordination and scheduling—which lead to successful project completion.The reverse can cause project delays, liquidated damages or even lead to owners considering termination.


Gaining control of the financials—on a day to day basis—also helps contractors avoid problems because they are armed with the insights needed to make sound decisions and operate their businesses with agility despite challenges. In addition to investing in great project management, successful builders also take control of their financials. For financial intel—and a competitive edge—construction company owners across the country access The Partnership Account® for Contractors from Colonial Surety. Qualify now  for your own private digital dashboard, providing you with a day to day snapshot of single and aggregate limits and current and available bond capacity. As your work in progress decreases, update work on hand—increasing your aggregate so you can go ahead and move that next bid ahead. Afterall, you’re in control. Get started today: Pre-Qualify and Get Free Scores Here.


Go Tech

Industry leaders also urge contractors to leverage technology for improved project management from start to finish, emphasizing the importance of digital twinning and noting:


At minimum, parties involved in the construction stages should streamline the paper processes commonly used for change order management, project correspondence and design approvals. To reap the full potential of design and project management tools, the entire planning and delivery team needs to keep up to date with the latest technology. Access to digital platforms also needs to be shared, ensuring a common data environment, according to the report.


Having the right partner also increases your ability to compete in fast moving times. With the The Partnership Account® from Colonial Surety, you will use our powers of attorney to issue your own bid bond—and you can do so right up to the last moment, incorporating last minute price fluctuations and supply substitutions. With Colonial behind you, you’re also armed with a complete, powerful online surety management system. In addition to issuing your own bid bonds, you can expediently order performance and payment bonds, run management reports, check your current and aggregate limits, view your underwriting profile—and more. Let’s get you growing!


Learn more and pre-qualify for The Partnership Account® here now.


Founded in 1930, Colonial Surety Company is a leading direct seller and writer of surety bonds and insurance products across the USA. Colonial is rated “A Excellent” by A.M. Best Company and U.S. Treasury listed.