Construction claims are one of the leading reasons contractors lose money.
It usually starts with something small. A delayed delivery. A quick design tweak. A conversation that didn’t get written down.
Then things start to snowball. Costs creep up, deadlines slip, and the blame game kicks off.
Before you know it, the job is behind schedule and your profit is taking a hit.
These kinds of claims are common in construction, but that doesn’t mean they’re just part of the job. In fact, most of them can be avoided if the right steps are in place early on.
The Construction Consultant helps clients stay ahead of these issues with clear processes and practical advice.
With proper planning, clear communication, and better contract practices, profit loss due to claims can be reduced substantially.
1. Delays In The Programme That Lead To Claims And Penalties
Delays continue to be one of the most expensive risks for contractors. Whether caused by weather, client indecision, or poor sequencing, time overruns affect both profit and delivery.
The Office for National Statistics (ONS) reported that in 2023, over 25 percent of all public infrastructure projects in the UK were delivered late.
For private projects, that number is likely even higher, though less frequently reported. Every additional week on site adds labour costs, increases overheads, and pushes back other jobs.
Why it drains your profit
You carry the cost of labour, supervision, site overheads, and plant for longer. If liquidated damages apply under the contract, you may also face financial penalties for late completion.
How to avoid it
Build a realistic programme and revisit it weekly. Use short-term lookahead planning to spot risks early. When a delay arises, issue a formal notice under the contract with dates and evidence. Keep site records that clearly show the cause, whether that is late information, poor weather, or missed decisions.
2. Variations That Are Not Properly Agreed In Writing
The Construction Playbook (Cabinet Office, 2022) identifies change management as one of the key risks in project delivery, particularly when scope shifts without proper controls in place.
On site, the most common issue is doing variation work based on verbal instructions or client comments during a site visit.
When the invoice comes in, the client disputes the cost, claiming the work was not authorised or that pricing was unclear.
Despite this, on live construction sites, variation work often begins informally.
A client may suggest a change during a walkaround, or an architect might mention something in passing — and out of a desire to keep things moving or maintain goodwill, the contractor proceeds without written confirmation.
While the intention may be practical, this approach can lead to serious problems in the long run.
Why it drains your profit
Without a signed instruction, the client is not contractually bound to pay. You end up absorbing material and labour costs for work you should have been paid for.
How to avoid it
Never proceed with change-related work without a contract instruction. Use a variation tracker and send confirmation emails summarising what was discussed and what it will cost.
Make it easy for your client or their QS to approve changes promptly by presenting the variation in a clear, itemised format.
3. Payment Delays That Restrict Your Cash Flow
Late payment is a chronic issue in UK construction.
According to the UK Government’s Payment Practices and Performance reporting, nearly one in four large UK construction firms take more than 60 days to pay their suppliers, despite contractual terms being set to 30 days.
Cash flow issues caused by late payments often result in contractors struggling to pay staff, order materials, or continue works smoothly.
Many contractors end up compromising quality or rushing tasks to maintain liquidity.
Why it drains your profit
Late payments do more than just slow things down, they put your entire operation under financial strain. When money owed to you does not arrive on time, you are often forced to use your own reserves or borrow to cover wages, material costs, and supplier invoices.
This increases your financing costs through interest, overdraft fees, or credit charges, especially if you are relying on short-term loans or trade credit to stay afloat.
It also creates pressure on your relationships with subcontractors and suppliers. If you are not paid on time, they are not paid on time, which leads to delayed deliveries, halted works, and strained trust.
In many cases, the pressure to keep the project moving forces contractors to accept reduced or partial settlements, just to get some money through the door and keep the site running.
How to avoid it
Understand your payment schedule and terms from day one. Use compliant applications and stick to the timelines set out in your contract.
Where appropriate, refer to the Construction Act (Housing Grants, Construction and Regeneration Act 1996) to issue notices of non-payment or suspend work. Always keep communication written and professional when chasing payment.
4. Poor Contract Administration That Leaves You Exposed
The National Audit Office (NAO) and Infrastructure and Projects Authority (IPA) have both highlighted poor contract management as a leading cause of overspend and disputes across government-led construction schemes.
In practice, many contractors do not fully understand the notice periods, payment conditions, or risk clauses in their contracts.
Others rely on informal agreements rather than sticking to the contractual process. This leads to delays in issuing notices or failure to claim extensions on time.
Why it drains your profit
When you do not follow the contract properly, you risk losing the protections it was meant to give you.
Many standard construction contracts include strict requirements around notifications, timelines, and approval processes.
If these procedures are not followed exactly — even by a few days — you may lose the right to claim for an extension of time or additional costs, even if the issue was genuine and outside your control.
This can quickly lead to deductions from your payments or claims being rejected outright.
For example, if you do not submit a delay notice within the timeframe specified in the contract, the client may argue that the delay was your fault, and apply liquidated damages.
Similarly, if you carry out additional work without the right paperwork in place, you may not be paid for it, regardless of how necessary or well-executed the work was.
How to avoid it
Read and understand your contract before signing. Make note of all notice requirements, especially around delays, variations, and payment applications.
Assign someone on your team to monitor these deadlines throughout the job.
Use reminders or trackers if needed. You can only protect your rights if you follow the procedures in the contract.
5. Missing Or Poor-Quality Site Records
One of the biggest reasons claims fail is the absence of evidence.
The Construction Leadership Council (CLC) and GOV.UK’s Digital Built Britain programme both emphasise that robust record-keeping is essential for managing disputes and delays.
When site diaries are not maintained or photos are not taken, contractors find it difficult to demonstrate what actually happened.
In disputes over delays, disruption, or rework, weak records will nearly always favour the other side.
Why it drains your profit
Without proper records, you have little to no defence when disputes arise.
Construction projects move quickly, and when something goes wrong, whether it is a delay, a disruption, or a change in scope — you need clear, dated evidence to support your case.
If you do not have proof of what happened, when it happened, and who was responsible, it becomes nearly impossible to justify a claim for extra time or money.
This often means that valid claims for delay, disruption, or variations are either denied outright or significantly reduced. Worse still, if you cannot demonstrate your position clearly, you may end up being blamed for issues that were caused by others — such as missed decisions by the client, design errors, or late deliveries by a supplier.
In the absence of solid documentation, it becomes your word against theirs, and that rarely ends in your favour.
How to avoid it
Create a simple site diary process.
Encourage your foremen and supervisors to make short daily entries, supported by time-stamped photos.
Track instructions, delays, labour counts, and materials on site. These records do not need to be perfect, but they do need to exist and be saved properly.
6. Design Issues That Are Missed During Pre-Construction
Many contractors begin work without resolving key design queries or reviewing coordination between disciplines.
According to the Transforming Infrastructure Performance Report, lack of early design review leads to significant rework, especially in mechanical and electrical systems, structural coordination, and fire compliance.
Design and Build contracts often place more responsibility on contractors to flag issues early.
If a gap in the design leads to a compliance failure or major change on site, you may end up footing the bill.
Why it drains your profit
Fixing design issues after work begins means removing work, reordering materials, and extending your time on site. It also increases risk of conflict with consultants and clients.
How to avoid it
Allocate time for a proper design review before starting construction. Identify missing details, unclear specs, or compliance risks.
Log design queries formally and request clear answers. If you are delivering under a D&B contract, ensure your team has the right technical support and PI insurance in place to manage that responsibility.
7. Tendering Too Low Just To Win The Work
Publicly available findings from Construction Sector Deal and analysis from the House of Lords Built Environment Committee show that underbidding is a major cause of financial stress and insolvency among small and mid-sized contractors.
While pricing aggressively may win the work, it rarely leaves room for risk or change.
When contractor prices too low, even small delays or scope shifts lead to serious margin loss.
Relying on variation claims to recover losses rarely works and often damages client relationships.
When a job is priced too low from the outset, it becomes almost impossible to manage financially once work is underway.
Every cost, from labour to materials to preliminaries — starts to eat into your already thin margin. As soon as any unforeseen issue arises, whether it is a delay, a design change, or material inflation, there is no room in the budget to absorb it.
Instead of focusing on delivering the project efficiently, you end up spending time and energy chasing variations, arguing over scope, and trying to claw back costs wherever possible.
This often leads to disputes with the client, rushed decision-making, and increasing frustration among the site team.
In some cases, the pressure to stay afloat means you cut corners just to keep the job moving, which only creates more problems later on.
In the worst-case scenario, you finish the job having made no profit at all — or worse, having lost money.
This not only affects your business financially but also damages your reputation, makes it harder to win future work, and puts strain on your team.
Repeated underpricing can lead to long-term cash flow issues, unpaid suppliers, and in some cases, insolvency.
Pricing realistically from the start is one of the most important steps you can take to protect your business.
How to avoid it
Build tenders using current market rates.
Review drawings and specifications carefully. Allow for realistic preliminaries, risks, and site conditions.
Avoid making assumptions just to reduce the price. A fair and honest tender not only protects your profit, it sets the tone for a healthier project.
Why These Claims Are Common, But Not Inevitable
UK construction is under increasing pressure to deliver faster, cheaper, and to higher standards, all while managing tighter margins.
It is no surprise that claims continue to be a regular feature of projects across the country.
However, most of these claims come down to process, not misfortune.
The government continues to emphasise better planning, clearer contracts, and digital records as ways to prevent disputes before they begin.
Contractors who adopt these habits are in a far better position to finish projects with profit intact and relationships intact.
If these problems sound familiar to you, now is the time to take a closer look at your programme, your paperwork, and the way information flows across your team.
Prevention costs less than claims, every time.
We support contractors, developers, and project teams with hands-on advice and practical systems that actually work.
From helping you manage change more clearly, to improving your record-keeping and protecting your payment position,
We are here to make sure you are not losing profit to issues that can be fixed.
If you’re ready to take control of your risk and keep more of what you earn, get in touch.
