Construction projects in New York State are back in action. Owners are happy to have their projects progress, and anxious to complete them as close to their original schedule as possible. The desire to meet the original deadlines may lead to an owner or general contractor accelerating a project or demanding a subcontractor increase its workforce. Work will likely be performed out of sequence. All of this could be problematic because the simultaneous restart of the majority of construction projects will strain the already dwindling labor force. There are only so many carpenters, electricians, masons, etc. available. Contractors may find themselves unable to procure the skilled labor needed to perform the work as contracted—and on time.
Furthermore, other coronavirus-related factors may further burden the labor force, such as construction owners and contractors being required to conduct daily health screenings of their employees, clean and disinfect job areas after every shift, maintain a log of visitors and workers on site, and adjust shifts and sequencing of work to maintain social distancing as much as feasibly possible. These mandatory changes may affect a contractor’s ability to timely complete their work as contracted or cause additional expenses.
What should a contractor do when confronted with increased costs due to inefficiency on a job site, an owner accelerating the work, and/or increased costs due to delays in completing the work? A contractor must give notice of its claim for additional compensation or more time. Construction contracts often have requirements for processing claims for additional money and additional time. A notice of claim clause is a “condition precedent” clause; meaning something must be done before something else can happen. A notice of a claim must be provided before getting paid for the claim/additional work. These clauses are strictly enforced. A contractor’s failure to comply with a notice of claim clause can destroy its right to get paid for that additional work.
On a public works project, a statute might also govern the time and method of filing a notice of claim. For example, on a school project, a contractor must file a Verified Notice of Claim with the governing body of the school district within 90 days after a claim accrues (Education Law § 3813). A claim on a school project accrues when a request for payment for a sum of money/extra work is denied. This can happen in an obvious way with a request and a denial in writing. It can also happen in a less obvious way, such as a partial denial of an application for payment, or denial of a change order request. The 90-day clock starts to tick from that point in time.
Examples of other public entities with statutory requirements for notice of claims are included in the following chart. These statutes might also contain statutes of limitations to sue. On school projects, the Education Law requires a lawsuit to be commenced against a school within one (1) year after that date the claim accrues.
Notice of Claim
Statute of Limitations
Villages (CPLR § 9802).
File a written verified notice of claim within one year of claim accrual.
Must commence action within 18 months after claim accrues.
Town Law (Town Law § 65(3)).
Must file a written verified notice of claim within 6 months of the date the claim accrued.
Commence action within 18 months of date claim accrues.
School Districts and Schools (Education Law § 3813).
File a detailed written verified complaint with the school board within 3 months after the accrual of the claim.
Commence action within one year of the date the claim accrues.
City of Syracuse.
File a written verified complaint within 90 days of the date the claim arises.
Commence action within one year and 90 days from the date the claim accrued.
Contractors must know about both contractual and statutory notice of claims requirements. Read your contract and read your supplementary general conditions. Consult with qualified and experienced counsel who can provide guidance with regard to construction claim processing requirements on public works projects. Make sure you protect your rights by filing a notice of claim as required by either or both your contract and statute. Failure to know and follow the contractual and statutory requirements for a notice of claim could lead to you not being paid thousands of dollars in legitimate claims.
For more information, contact Diana I. Plue, Esq. or Anthony C. Galli, Esq. at Sheats & Bailey, PLLC; a law firm dedicated to serving the construction industry. Tel: (315) 676-7314 / Email: firstname.lastname@example.org, email@example.com.
The information provided in this article is not intended to serve as specific legal advice for any particular situation. Competent legal and experienced counsel should be consulted.