What does a claim typically result from?

A claim typically arises when there is a disagreement between a contractor and an owner or project manager regarding changes or issues that impact the contract's performance, timeframe, or cost. In this context, when a proposed change order is rejected, the contractor may feel they are entitled to additional compensation or time due to unforeseen circumstances or changes in project scope. The rejection of this proposed change order can lead to a formal claim being made by the contractor, as they seek resolution on the impact of the changes that necessitated the order.

This situation often reflects a fundamental aspect of construction projects, where disputes can arise over scope changes, delays, or other unforeseen challenges. Such claims are part of the risk management process in construction, ensuring that all parties have the opportunity to negotiate and potentially revise contract terms to reflect the actual work performed or the additional costs incurred.

While a rejected request for extension may also lead to disputes, it is not as directly tied to the formal process of negotiating additional compensation or changes as a rejected change order is. Similarly, a cash flow analysis is a financial tool and does not inherently lead to a claim by itself, nor does a completion report typically trigger the need for a claim unless it references or highlights unresolved issues from the project.