Contractor claims don’t start as disputes—they start as small control failures that quietly drain cash flow and lender confidence. Left unchecked, they can derail even well-funded construction projects.
This Checklist for Project Controllers is built for 2026’s tighter funding and audit environment. It gives project controllers, PMC teams, and developers a clear, practical system to validate and control contractor claims early—before they turn into cost overruns, drawdown delays, or financing risks.
Why Contractor Claims Need Tight Control
Unchecked claims can:
- Inflate project cost beyond approved budgets
- Delay project loan disbursements (Learn more about RBI’s Project Finance Directions 2025)
- Trigger additional equity requirements for construction financing
- Reduce lender confidence and impact your credit score
For projects backed by project loans or construction financing, claim discipline is as important as construction progress itself.
The Contractor Claim Management Checklist for Project Controllers
1. Contract & Scope Validation
Before reviewing any claim, confirm:
- Original contract agreement and BOQ
- Approved drawings and scope definition
- Contract clauses covering variations and escalation
👉 If the scope is not contractually defined, the claim is weak. Proper documentation for loan against property principles apply here too—clarity prevents disputes.
2. Written Instruction Verification
Every valid claim must be supported by:
- Engineer’s written instruction
- Approved change order
- Site instruction with date and signature
Verbal approvals are not claims. This is similar to how banks require proper documentation for all financial transactions.
3. Time Impact Analysis
For delay-related claims:
- Check approved baseline schedule and project milestones
- Verify delay responsibility
- Review extension-of-time (EOT) approvals
Unverified delays should never convert into cost claims—just like how HDFC Bank evaluates construction projects based on milestone completion.
4. Cost Breakdown Review
A claim should clearly show:
- Labour, material, and equipment breakup
- Rate justification (contract or market-based)
- Supporting invoices and measurements
Lump-sum claims without breakup are high-risk. Think of this like submitting income proof for business loans—transparency is essential.
5. Funding Alignment Check
Before approval, assess:
- Is the claim within sanctioned project cost?
- Is lender approval required?
- Will this affect future construction financing tranches?
Claims must be aligned with funding structure—not just site urgency. Understanding RBI’s Project Finance Guidelines helps maintain this discipline.
How Contractor Claims Impact Project Loans
Banks and NBFCs treat claims as cost overruns unless justified. According to Reserve Bank of India guidelines, frequent or poorly documented claims can:
- Delay loan disbursement
- Reduce future drawdowns
- Increase interest during construction
- Affect your company’s credit report (CCR)
This is why claim control is critical for project loan continuity and maintaining healthy relationships with lenders like SBI and HDFC Bank.
Using Home Improvement Financing for Minor Claims
For small scope changes or upgrades:
- Home improvement loans or structured home improvement financing may work
- Suitable only for limited-value, clearly defined works
Major variation claims must be routed through project funding approvals and proper loan documentation processes.
Common Claim Red Flags Project Controllers Must Stop
 Claims raised without written instructions or proper documentation
 Backdated approvals
 Repeated claims for same scope
Claims submitted near billing cut-offs
Stopping these early protects both cash flow and lender trust—critical factors evaluated by institutions like HDFC Bank and SBI during project reviews.
Best Practices for Claim Control
Maintain a live claim register with proper documentation
Review claims monthly, not at project end
Separate site urgency from financial approval processes
Keep lenders informed on major variations—transparency matters for construction finance relationships
Strong controls prevent disputes and funding shocks, ensuring compliance with RBI’s regulatory framework.
Frequently Asked Questions –Managing Contractor Claims
What are contractor claims in construction projects?
Contractor claims are requests for additional payment or time due to variations, delays, escalation, or unforeseen conditions during construction. They must follow proper loan documentation standards.
Why should project controllers strictly manage contractor claims?
Because uncontrolled claims increase project cost, delay funding, and reduce lender confidence—especially in project loan-funded developments. RBI guidelines emphasize this discipline.
What documents are mandatory for a valid contractor claim?
Approved drawings, written instructions, change orders, cost breakup, and measurement records are essential—similar to business loan documentation.
How do contractor claims affect construction financing?
Banks treat claims as overruns. Poor claim control can delay disbursement or force additional equity infusion, affecting your project financing arrangements with lenders like SBI or HDFC.
Can home improvement loans be used for contractor claims?
Only for small, clearly defined improvements. Major claims must follow project funding approval processes and proper loan documentation.
What is the biggest red flag in contractor claims?
Claims without written approval or proper cost justification—this violates standard lending practices and can jeopardize your relationship with financial institutions.
Need Expert Construction Finance Guidance?
At CreditCares, we help developers navigate complex project financing scenarios. Whether you need guidance on construction finance, loan against property, or managing lender relationships, our team of experienced loan consultants in Kolkata can assist you.
Contact us today or explore our loan DSA partner program to learn how we can support your construction projects with reliable financing solutions.
Disclaimer: This blog is for informational purposes only and does not constitute financial or legal advice. Please consult with qualified professionals for your specific project financing needs.
