About a year ago, my wife turned vegetarian on me. I don’t have any significant objection to eating more healthy and I like the fact that she has eliminated sugar and processed foods from our pantry. However, I constantly complain about the increased costs of eating right. Not that I treat every marital conversation like a construction claim, but I do find myself grilling my wife about these increased costs and whether they are justified.
Contractors should be concerned about the same level of grilling (or review) when submitting a claim. There are a variety of increased material costs that may be included in a request for additional compensation or a claim. Those costs include additional materials to perform extra work, material escalation costs when materials are purchased at a later period of time than anticipated, additional transportation costs, additional material handling and storage costs, and additional costs for material deterioration.
In reviewing claims for additional material costs, consider the following questions:
- For claims including additional materials, have you substantiated that the additional materials were made necessary as a result of the claimed event?
- If the claim includes additional material quantities, is the estimated material quantity substantiated by your estimate and is the actual material quantity substantiated by your cost records?
- If the claim includes material escalation costs, is there a contract clause covering such; and if so, is the amount requested in the claim consistent with the clause?
- If the claim includes material escalation costs, have you established that you timely ordered materials based on the facts known at the time?
- Has the amount of material costs been adjusted for trade discounts, refunds, rebates, allowances, and cash discounts?
Again, these questions are for managers reviewing a claim before final submission. They are designed to ensure that you can demonstrate both entitlement and quantification in your request or claim.