In construction adjudication, cost substantiation means proving that the money claimed by a Contractor is real, necessary, and contractually allowed. Adjudicators carefully review whether the claimed costs are properly supported and justified under the contract, especially in FIDIC projects.
The first thing an adjudicator checks is contract entitlement. This means confirming whether the Contractor actually has the right to claim cost under the contract, such as from a variation, delay, or Employer instruction. If there is no contractual basis, the claim will usually fail regardless of the cost evidence.
Next, the adjudicator looks at the supporting documents. This includes invoices, payroll records, equipment logs, and site reports. Strong, clear, and contemporaneous records increase the credibility of the claim, while missing or unclear documents weaken it.
The adjudicator also checks causation, which means whether the claimed cost was directly caused by the specific event. If the cost would have been incurred anyway, or if it is due to Contractor inefficiency, it will not be accepted.
Another important step is reviewing whether the costs are reasonable and properly classified. The adjudicator will check if costs are correctly divided into direct costs, overheads, or prolongation costs, and whether the amounts claimed are realistic and not inflated.
Finally, the adjudicator ensures that all costs comply with the contract procedures and notice requirements, as failure to follow FIDIC rules can reduce or eliminate entitlement.
In summary, adjudicators evaluate cost substantiation by checking contract entitlement, evidence, causation, reasonableness, and compliance. Only costs that meet all these requirements are likely to be approved.
