Construction Claims Prevention: How To Protect Yourself From The Start

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A construction development project can be a high-risk endeavor and requires a carefully developed plan of action to ensure the terms promised will be executed correctly and fairly for all parties involved.
When starting a construction development project, the earlier construction claims prevention methods are discussed, the easier it will be to mitigate the situation if a problem arises. Among the problems that can arise:

  • Contract defaults
  • Terminations between various parties on the project
  • Property damage caused during the project

Surety Bond Producers play an integral role in this process, as project developers will need protection in case a contractor does not fulfill their obligations. Surety Bonds are typically required in large projects and are mandatory in any government or public works project.

Protecting Your Project in the Earliest Stages

Contractors issue bid bonds to project owners to ensure that the winning bidder on the project will carry out the contract under the terms agreed upon during the bidding process.

The biggest benefits of bid bonds are that they keep the bidding process honest, eliminating frivolous bidders, and guarantees that the winning bidder executes the contract and replaces the bid bond with a performance bond.

Should a problem arise with the winning bidder, the guarantor will pay the project owner the difference between the defaulted winning bid and the next highest bid.

Setting Proper Guidelines From The Start

What could be the best way to resolve a dispute before it ever happens? Making sure the proper rules and regulations are in place from the very beginning. Having well thought out planning and agreements between both parties in any construction contractual agreement will help ensure a smooth execution regardless of any conflicting interests.

Project owners should be sure to provide contracted workers adequate time to design and inspect project goals before the work starts. It is also in the obligees best interest to properly inform the principal of the condition of any construction site as well.

Proper communication is also key during this stage. It is vital that both the obligee’s and the principal’s engineers overseeing a project fully understand what the contract is requiring. Confusion on these matters will only make it more difficult in the event of a construction claim further down the line.

Ensuring Contract Documents Are Thorough

A project of any size requires detailed documents outlining the requirements of a construction project. It is important to ensure all contractual documents are read and agreed upon by both parties before any work takes place.

An obligee requiring a construction bond should ensure everything listed in a contract document is fair to both parties, and clearly specifies deadlines and completion dates of all projects.

The purpose of such guidelines is to ensure a smooth and non-conflicting project process for all parties bound by a contract. Do not wait to address any discrepancies or disagreements before it’s too late.

A well-articulated plan of action will set all contractually bound parties up for success, regardless of the task at hand.

Questions? You could contact us anytime and we'll gladly assist you.

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"Construction Claims Prevention: How to Protect yourself from the Start"

Construction Claims Prevention Infographic
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