"Where did it all go wrong?" If you've been in the construction business a while, you may have asked yourself this question when a claim by a project owner or some other party lands on your desk. Although there's probably no way to completely eliminate the risk of this happening, you can lessen the likelihood of claims by focusing on their most common triggers. Let's take a look at a few.

Design issues

Inaccurate or incomplete design documents can lead to errors during construction, resulting in rework, delays and cost overruns. It's important to conduct comprehensive design reviews before construction begins, which can be a challenging task.

To save time and money, or to meet federal funding deadlines, project owners may allow construction to proceed before the design, or due diligence regarding that design, is complete. For example, as ground is broken, an owner might not yet have established all necessary rights of way or secured all required licenses. This can lead to design deficiencies, scope changes and compliance delays.

One way to streamline design approval is to leverage cloud-based project management software to ensure everyone is on the same page and all boxes are checked. Be sure to communicate proactively during the preconstruction phase as well.

Scope creep

Once work begins, watch out for the dreaded "scope creep." This is when a project's scope, as defined under the contract, begins to gradually expand. Sometimes it's because of last-minute design changes, other times because the owner wants work to be done in a certain way.

Whatever the reason, it can lead to additional costs, delays and disagreements. Early identification of potential deviations in scope or inevitable changes can help mitigate these issues.

Also critical is developing a sound process for getting extra work approved and billed for as quickly as possible. Clearly communicate your company's policies and procedures regarding change orders to project owners. Doing this alone can often keep overly involved owners in check.

Disruptions or delays

Unforeseen site conditions, bad weather, labor disputes and sluggish supply chains can lead to claims for unreasonably slow work or unacceptably high costs. To minimize disruptions or delays, engage in careful preconstruction planning, mindful staffing and realistic scheduling. In addition, put contingency plans in place.

Beyond that, invest in finding, training and retaining skilled project managers who can implement industry best practices. Having the right people on the ground can prevent minor annoyances from turning into major crises.

Substandard work

Perhaps the most obvious reason to incur a claim is because of a construction defect or substandard work. Either can lead to claims for repair costs, rework or property damage.

To prevent such problems, which can hurt your company's reputation, conduct formal inspections as well as regular quality control checks. Proper training and supervision of personnel also help ensure compliance with specifications and applicable building codes.

Contract/payment disputes

Disagreements over contractual obligations, payment terms or nonperformance can result in claims for breach of contract, delays or cost overruns.

If necessary, work with an attorney to ensure your contracts clearly define scope, responsibilities, deliverables, milestones, payment schedules and change orders. To help avoid litigation, many of today's contracts also include language regarding dispute resolution methods such as mediation or arbitration.

In addition, maintain accurate documentation — including daily logs, progress reports, communication records and support for change orders.

Safety-related incidents

As you're no doubt aware, among the biggest drivers of costly construction claims are inadequate safety practices and failure to comply with safety regulations. Such shortcomings can lead to high workers' compensation premiums, fines, hefty legal bills and expensive settlements.

Establish a company culture that focuses on and celebrates safe building practices. Be sure to regularly provide up-to-date, comprehensive safety training.

Constant awareness

Construction claims tend to arise when you least expect them. Your best bet is to maintain a constant awareness of the wide range of threats that most commonly affect the types and locations of your projects. We can help you analyze the financial impact of past claims, as well as identify and budget for solid risk management practices.