Claims & disputes management


Published on

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Claims & disputes management

  1. 1. Claims & Disputes1
  2. 2. SectionsSections:: Section 1: What is and Why Section 2: Types Section 3: Relation to Contract Clauses Section 4: Preparation and Documentation Section 5: Claim Avoidance Techniques Section 6: Claims Resolution2
  3. 3. Claims & DisputesSection 1:What is and Why3
  4. 4. Section 1: What is and WhySection 1: What is and Why “Claim” is the general term used for theaffirmation of rights to money, property or aremedy. In Construction, the term is used as anapplication, request for entitlements under thecontract terms and conditions. It is usually a payment outside the terms of thephysically measured works or services providedand includes those related to extension of timebut not limited to those related to prolongation,interruption or disruption, acceleration orcrashing schedules, mitigation and the like.4
  5. 5. Section 1: What is and WhySection 1: What is and Why Claims are generally made by the parties due toor all the following situations:– Entitlement for non fulfillment of one party to anobligation under the terms of the agreement.– Entitlement to additional funds.– Entitlement to the recovery of incurred costs.– Entitlement for an extension of time.– Entitlement against additional payments due to legalpreceding.5
  6. 6. Section 1: What is and WhySection 1: What is and Why Claims are usually defined as a Paper War. Thatusually can result in the following:– Irrational responses and behavior and thus destroyedpersonal relations.– Increased costs.– Loss of control on outcome.– Waste of time while preparing and participating inresolution and litigation.– Overall loss of focus on what is important during thelife cycle of the project.6
  7. 7. Section 1: What is and WhySection 1: What is and Why Claims usually have the following lifecycle:A. Problem identifiedB. Disagreement arisesC. Result or action disputedD. Paper war startsE. ConflictF. Litigation7
  8. 8. Claims & DisputesSection 2:Claim Types8
  9. 9. Section 2: Claim TypesSection 2: Claim Types Claims are usually classified by “Cause” and“Entitlement”:– Major Changes by Employer– Delays– Interruptions and disruptions– Accelerations– Differing Site Conditions– Defective Specs and Design Shortfalls– Entitlement9
  10. 10. 11--Changes by EmployerChanges by Employer These are usually referred to as Constructive andConvenient changes, that are mainly due to ExtraWorks, or Excessive Inspection of the works. They are usually initiated by an action orinaction by the Employer or Engineer. They are usually resulting in a benefit to theEmployer that exceeds the deliverables of theagreement. They tend always to increase the cost of the workdone.10
  11. 11. 11--Changes by EmployerChanges by Employer Extra Works:– Engineer or Employer, Poor justification while Rejectingmaterial and equipment submittals.– Engineer, Poor or uncoordinated response to RFI’s.– Employer or Engineer Poor understanding of Drawings andSpecs.– Employer Poor understanding of his privileges and deliverablesexpected from second party under the agreement.– Employer exceeds his rights to inspect the works, and inspector’sperformance.– No tolerances or strictly low ones applied against those noted inthe contract.11
  12. 12. 22--DelaysDelaysDelay is defined to occur when an activitytakes longer than the planned duration tocomplete.To recover or mitigate the delay it is amust to:– Affect the critical path by either increasingdurations along the planned critical path or by– Delaying the completion of non-criticalactivities enough to create a new critical path.12
  13. 13. 22--DelaysDelaysDue to “Failure to commence”:– Employer fails to hand over the site.– Employer fails to complete the designs.– Employer fails to coordinate with serviceproviders.– Employer fails to obtain a bldg. permit.– Employer fails to give right of way forprescheduled activities.13
  14. 14. 22--DelaysDelaysDue to “Approvals”:– Employer or his Consultant failure to provideSubmittal Approvals on time.– Employer or his Consultant providingUnreasonable or Poorly justified rejection ofsubmittals.14
  15. 15. 22--DelaysDelaysDue to “Adverse Weather”:– Weather Conditions are adverse or hostile.– Weather conditions are unusual for the time ofyear.15
  16. 16. 22--DelaysDelays Due to “Continued Changes”:– These are usually initiated by a variation order or siteinstructions.– They are usually requests to proceed immediately andin others after proper financial approval.– Usually within physical limits due to subsequentworks.– With all above Issuance of formal VO might also bewith delay.– The impact of the works requested on the originalprogram of works.16
  17. 17. 33--Interruptions and DisruptionInterruptions and Disruption• It usually occurs when the performanceconditions expected at the time of tenderingmaterially/substantially defer from thoseencountered during the actual execution to apoint that “cost of performance” for thecontractor is increased due to,• Contractors plan of work alteration.• Contractor work, equipment and crew hours isincreased.17
  18. 18. 33--Interruptions and DisruptionInterruptions and Disruption Another form of disruption is the actual“Suspension of works”:– Via issuing a Stop work order be it based on sitelimited issues or contractual issues.– Via delaying inspections.– Via providing Employer furnished equipment oraccessories.– Via delay or failure to respond to RFI’s.– Via suspended manufacturing– Via authorities not due to contractor negligence.18
  19. 19. 44--Acceleration of worksAcceleration of works“Escalation” occurs when a task isperformed in a shorter time frame thanoriginally planned based on a request bythe client.Escalation usually entails added overheadsdue to increased resources.It can also be due to: Increased extra work orders or VO’s without timeextension.19
  20. 20. 55--Deferring Site ConditionsDeferring Site Conditions Best Practice: is a term used always in contracts to: Reduce bid conditions. Allocate risk of site conditions to the Employer. Encourages bidders to rely on the information provided. Almost always actual site conditions differ from thoseindicated in the contract, i.e. and for example: Presence of Rock or boulders while not shown on documents. Underground utilities presence in areas not predefined. Actual Elevation of natural ground compared to Datum. Actual plot limits defer than those on demarcation certificate.20
  21. 21. 66--Defective specificationsDefective specifications::Defective Design: Elements of the project has been performed by thecontractor per the contract documents andspecifications but those elements “do not functiontogether” as required. i.e.• In cases where drift is not accounted for especiallyfor high rise buildings.• Thermal steel is not considered especially if PostTensioning method is adopted for slab construction.21
  22. 22. 66--Defective specificationsDefective specifications::Errors and Omissions:Usually due to: Answers to questions arising from the documentsare not found within the contract documents. Provisions of the contract are not accurate. Contractor requests for information are respondedto with incorrect or contradicting replies.22
  23. 23. 77--EntitlementEntitlement::Executable but none compensable:Usually due to: Acts of government orders or decrees withoutcompensation clearly stated. Fires, Floods, Epidemics, or quarantinerestrictions. Embargoes. Wars23
  24. 24. 77--EntitlementEntitlement::Executable and Compensable:Usually due to: Shortfalls by the employer.These usually entitle the contractor to both anextension of time and an increase in the contractprice.24
  25. 25. 77--EntitlementEntitlement::None Executable and None Compensable:Usually due to: Poor Performance. Poor Coordination and Planning. Late performance by subcontractors. Delay in procurement and/or out of specificationprocurement even if the change is accepted byEmployer. Defective works.25
  26. 26. Claims & DisputesSection 3:Relation to ContractClauses26
  27. 27. Section 3: Relation to ContractSection 3: Relation to ContractClausesClauses The Legal Basis for Claims: Contractual Claims. This is under the contract clauses themselves. Land Law and Common Law Claims. Based on other predominantlaws that are in governance. Negligence or TORT Claims. This is usually when a party acts inbreach of a legal duty imposed by law, and so infringes on therights of the other party causing it foreseeable damages.(negligence, fraud, slander, battery and assault) Quantum Meruit Claims: usually for works not controlled bycontract and named alternatively as “reasonable value of services”.(enrichment or benefitting from works not contracted) Ex-Gratia Claims: Those are claims made without legal grounds ormerits. (hardship claims that only the employer can consider)27
  28. 28. Section 3: Relation to ContractSection 3: Relation to ContractClausesClauses Continue, The Legal Basis for Claims:As the law usually considers the contractor to beexperienced enough to foresee what is likelyrequired from him to perform under the contract,thus and in order to establish a contractual claimthe contractor must be able to show that the workhe was doing or the conditions under which hewas performing differed from those whatnormally would have been expected or shouldhave been expected at the making of the contract.28
  29. 29. Section 3: Relation to ContractSection 3: Relation to ContractClausesClauses Contract Clauses that govern Claims :– Clause 1.9 Delayed drawings or instructions– Clause 2.1 Rights of access to site– Clause 4.6 Cooperation– Clause 4.7 Setting out– Clause 4.12 Unforeseeable physical conditions– Clause 4.24 Fossils– Clause 5.1 Nominated subcontractors– Clause 7.5 Rejection (testing)– Clause 8.5 Delays caused by authorities– Clause 8.9 Consequences of suspension– Clause 10.2 Taking over parts of the works– Clause 10.3 Interference with tests on completion29
  30. 30. Section 3: Relation to ContractSection 3: Relation to ContractClausesClauses Continue: Contract Clauses that govern Claims:– Clause 11.2 Cost of remedying defects– Clause 11.8 Contractor to search– Clause 12.3 Evaluation– Clause 13.3 Variation Procedures– Clause 15.4 Payment after termination– Clause 16.1 Contractor’s entitlement to suspended works– Clause 17.4 Consequences of employer risks– Clause 19.1 Definition of force majeure– Clause 20.1 Contractor’s claims– Clause 20.2 Appointment of dispute adjudication board– Clause 20.5 Amicable settlements– Clause 20.7 Failure to comply with dispute adjudication board decision30
  31. 31. Section 3: Relation to ContractSection 3: Relation to ContractClausesClauses Clause 1.9 Delayed Drawings and or Instructions:– The contractor must give a notice to the Engineer advising thedelayed documents and its impact.– The contractor shall include all details of why and when itshould have been issued and the detail of the nature and amountof delay or disruption it will cause if the delay continues.If a claim is presented to you not in line with the above you do nothave to respond unless instructed by the Employer. Yourresponse must state that the delay notice was not formulated inline with the contract requirements, and as such it is rejected.31
  32. 32. Section 3: Relation to ContractSection 3: Relation to ContractClausesClauses Clause 2.1 Right of access to site:– The employer must give the contractor right of access to and possessionof the site. All parts of the site must be in the possession of thecontractor within the time stated in the appendix to tender.– The right of possession might not fully be with or exclusive to thecontractor, however the employer may with hold any such right or partsof it until the performance security bond is received.Usually claims result from prolonged denial of access or right ofpossession even after submission of the bond and usually due tonegligence from the responsible Employer staff or the Consultant side.32
  33. 33. Section 3: Relation to ContractSection 3: Relation to ContractClausesClauses Clause 4.6 Co-operation:– The Contractor must and as specified by the contractor as instructed by the Engineer allow appropriateaccess and opportunity for carrying out works by: The Employer staff Any other contractor employed by the Employer and thepersonnel of any legally constituted authorities.Those who may be employed during the execution of theworks or towards the completion of the works on site or nearthe site for any works that are not included in the contract orincluded but require authorities inspections and approvals.33
  34. 34. Section 3: Relation to ContractSection 3: Relation to ContractClausesClauses Clause 4.7 Setting Out:– The contractor shall setout the works in relation to the originalpoints, links and levels, specified in the contract or advised bythe Engineer.– The Employer shall be responsible for any of the errors in thecontract or information provided by the Engineer.With the above stated the Contractor must exercise reasonableeffort to verify such information and advise the inaccuracybefore hand and within reasonable time to adjust, Otherwise hewill not be able to claim against.34
  35. 35. Section 3: Relation to ContractSection 3: Relation to ContractClausesClauses Clause 4.12 Unforeseeable physical conditions:– It includes all site conditions be it surface or sub-surface and including those of hydrological nature.– It excludes the Climatic Conditions.With the above stated the Contractor must exercise allreasonable effort to verify and raise before signing thecontract, and advise any variances before hand andadjust his contract accordingly. In cases wereconditions are beyond those which can be consideredforeseeable the contract might be able to claimagainst.35
  36. 36. Section 3: Relation to ContractSection 3: Relation to ContractClausesClauses Clause 4.24 Fossils:– Any and all fossils, coins articles of value, structures, remains, oritems of geological or archeological nature found on site shall beplaced under the care and custody of the Employer.– Any delay caused to the works and the costs incurred of suchdelay and from complying with this article are the responsibilityof the Employer.With the above stated the Contractor must exercise all reasonableeffort to verify and raise to the attention of the Employer beforesigning the contract. If that has been satisfied and the case arisesthen the contractor must give notice to the Engineer.36
  37. 37. Section 3: Relation to ContractSection 3: Relation to ContractClausesClauses Clause 5.1 Nominated Sub-Contractors:– Any Contractor or Supplier nominated by the Employer or thatbased on instructions from the Engineer under clause 13 to beemployed by the Main Contractor.The Contractor though is required to coordinate and exercise allefforts for better performance of works, and ensure that theagreements he undertakes with those are of back to back naturein relation to his contract with the Employer, but he could beliable for a claim against any delays caused by those subcontractors or against the quality of work done especially thatdirectly effecting his works where he employs extra resources toovercome.37
  38. 38. Section 3: Relation to ContractSection 3: Relation to ContractClausesClauses Clause 7.5 Rejection of works:– Usually as a result of examination, inspection,measurement or testing of plant equipment, materials .The Engineer must promptly advise the contractor withthe rejection and request remedy within reasonabletime. The Contractor must receive such request andremedy within the stipulated period or otherwiseadvise promptly if he can not comply or meet thetarget date. Failure in any of part of the process mightresult in a claim from either party.38
  39. 39. Section 3: Relation to ContractSection 3: Relation to ContractClausesClauses Clause 8.5 Delay caused by authorities:– If the following conditions apply: The contractor diligently followed the procedures laid downby the authorities, Theses authorities delayed or disrupted the works, The delay or disruption was unforeseen by the contractor.Then and if prompt prior notice was advised to theEngineer, the contractor would be entitled for a claimof time extension and possibly financialcompensation.39
  40. 40. Section 3: Relation to ContractSection 3: Relation to ContractClausesClauses Clause 8.9 Consequences of Suspension:– If the following conditions apply: The contractor suffered delays Or the contract incurred costs from complying to theEngineer suspension of works under clause 8.8, Or the costs are related to none scheduled resumption ofworksThen and if prompt prior notice was advised to theEngineer, the contractor would be entitled for a claimof time extension and possibly financialcompensation.40
  41. 41. Section 3: Relation to ContractSection 3: Relation to ContractClausesClauses Clause 10.2 Taking over part of the works:– If the following conditions apply: The Engineer and based on instructions from the Employerrequests partial handover of certain areas of the works, The Engineer issued a partial handing over certificate for thatpart of the works, The contractor incurred costs as a result of this partial takingover or usage of the area other than that use specifiedoriginally in the contract conditions,Then and if prompt prior notice was advised to the Engineer,the contractor would be entitled for a claim forcompensation.41
  42. 42. Section 3: Relation to ContractSection 3: Relation to ContractClausesClauses Clause 10.3 Interference with tests ofcompletion:– If the following conditions apply: Contractor is ready to conduct test on Completion The contractor has given amble proper advise The contractor has been prevented from performance formore than 14 days by the employer The employer then is deemed to have received the workswithout testing.If for any reason the contractor suffers delay and or incurscosts as a result of this delay, the contractor shall give noticeto the engineer and will be entitled for compensation both interms financial and time related.42
  43. 43. Section 3: Relation to ContractSection 3: Relation to ContractClausesClauses Clause 11.2 Cost of Remedying Defects:– While it is the responsibility of the contractor to complete theworks and remedy the defects and shall do that at his risk andcost, it is a fact that a Variation notice should be issued to thecontractor by the owner or on his behalf by the Engineer in thefollowing situations: Any change or variance from a design that the contractor isresponsible for Any plant, material or workmanship not in accordance with thecontract Any failure by the contractor to comply with any of his obligations.Failure to issue such a Variation notice under the terms of Article 13.3(variation Procedure) in time, will allow the contractor to claimagainst remedy of works.43
  44. 44. Section 3: Relation to ContractSection 3: Relation to ContractClausesClausesClause 11.8 Contractor to Search:– The contractor shall if required by theEngineer; search for the causes of defects.Unless the cause of any defect is to beremedied by the Contractor and at his costunder the terms of clause 11.2, then the cost ofsearch exercise plus a reasonable OH & Profitshall be agreed or determined by the Engineer,or otherwise claimed against by the contractor.44
  45. 45. Section 3: Relation to ContractSection 3: Relation to ContractClausesClauses Clause 12.3 Evaluation:– Except as otherwise stated in the contract, the Engineer willproceed in accordance to sub-clause 12.3 (Evaluation) and 3.5(Determination) for evaluating the value for works that do nothave a specific rate defined in the contract nor there are similarworks that could be used to determine a fare value of the worksfor and in the following situations: Any change or variance of an item by more than 10 %. Any item that does not have a specific rate in the BOQ.Failure to issue such determinations under sub-clause 12.3 and 3.5(Determination) will lead to a claim by contractor.45
  46. 46. Section 3: Relation to ContractSection 3: Relation to ContractClausesClauses Clause 13.3 Variations Procedures:– Prior to instructing a VO the Engineer will ask for a proposal, thecontractor will respond to in writing; either declining the request withproper reasoning, or by providing a quote complete with a fulldescription of the works and it’s financial evaluation complete with histime frame to complete these works and its impact on his original workschedule if any.– The Engineer is expected to swiftly evaluate the quote and respond withan approval or disapproval and advise the contractor to either proceedwith the works pending finalization of the financial and time impact ornot to proceed unless those are finalized.– In both cases the contractor shall not delay any works.– If the Engineer fails to respond, then the contractor is entitled to Claim.46
  47. 47. Section 3: Relation to ContractSection 3: Relation to ContractClausesClauses Clause 15.4 Payment After Termination:– If a “Termination by Employer” under sub clause 15.2is issued, and is in effect, the employer may: Proceed in accordance with sub clause 2.5 “ EmployerClaims” and Withhold any further payments to the contractor until allcosts of execution, completion and remedying of the works,damages for delay in completion, and all other costs incurredby the Employer has been established and recovered fromthe Contractor.47
  48. 48. Section 3: Relation to ContractSection 3: Relation to ContractClausesClauses Clause 16.1 Contractor Entitlement to Suspend theworks:– If the Engineer fails to certify in accordance to sub clause 14.6“Issue of interim payment certificates” or the employer fails tocomply with sub clause 2.4 “Employer Financial Arrangements”or under sub clause 14.7 “Payment” then the contractor may andafter giving proper advance notice of 21 days “suspend theworks” or “reduce the rate of progress” until the contractor hasreceived the certified amounts or reasonable evidence of itsrelease.– The contractor is in this case entitled to claim against all delaysthat occurred and ask for both financial compensation and timeextension.48
  49. 49. Section 3: Relation to ContractSection 3: Relation to ContractClausesClausesClause 17.4 Consequences of EmployerRisks:– If to the extent that any of the risks listed in subclause 17.3 results in loss or damage to the works,goods or contractor’s documents, the contractor andafter promptly notifying the Engineer shall rectify thisloss and/or damage to the extent required by theEngineer.– If the contractor suffers delay and/or incurs costs as aresult from rectifying the loss/damage and afterserving notice to the Engineer, the contractor will beentitled for a claim to compensate those.49
  50. 50. Section 3: Relation to ContractSection 3: Relation to ContractClausesClauses Clause 19.1 Definition of Force Majeure:– Under this clause Force Majeure means anexceptional event or circumstance which : Is beyond any parties control. No party could reasonably have provided against it beforeentering into contract. Having risen, no party could have reasonably avoided orovercome. Not substantially attributed to the second party.– If for any reason there is any doubt about any of theconditions above, either party could claim.50
  51. 51. Section 3: Relation to ContractSection 3: Relation to ContractClausesClauses Clause 20.1 Contractor’s Claims:– Under this and if the contractor considers himself tobe entitled to any extension of time and/or anyfinancial compensation, he shall give notice to theEngineer: Describing the event and circumstances and particulars, Within 28 days from becoming aware of the event and Send further interim claims at monthly intervals advising the,– Accumulated delay and or amount claimed and– Further particulars that the Engineer may reasonably require.If the contractor fails to do so, he loses his entitlement for theclaim.51
  52. 52. Section 3: Relation to ContractSection 3: Relation to ContractClausesClausesClause 20.2 Appointment of the DisputeAdjudication board:– Under this clause disputes must be adjudicatedby the DAB entity described in the contractand in accordance to clause 20.4– The parties shall jointly appoint a DAB by thedate stated in the Appendix to Tender.52
  53. 53. Section 3: Relation to ContractSection 3: Relation to ContractClausesClausesClause 20.5 Amicable settlement:– Under this clause any party and whendissatisfied by the DAB results must issue aDissatisfaction notice and under clause 20.4,and within the period stated. If that is the casethen, The parties shall attempt to settle the disputeamicably and before reverting to Arbitration .53
  54. 54. Section 3: Relation to ContractSection 3: Relation to ContractClausesClauses Clause 20.7 Failure to comply with the DABDecision:– In the event of: Neither party has given notice of dissatisfaction per 20.5above. DAB decision has become final and binding after the timeframe has elapsed. One or both parties has failed to comply to the decision,then:– The other party and without prejudice to any of its rights, mayrefer the failure to Arbitration under sub clause 20.6“ARBITRATION”.54
  55. 55. Claims & DisputesSection 4:Preparation andDocumentation55
  56. 56. Section 4: Prep & DocumentationSection 4: Prep & Documentation Issue:– Most of the claim submissions lack documents, programs, andprofessional analysis.– They use substandard formats and structure and are difficult tofollow. Solution:– Logically organize your claim submissions with sufficientdocuments, programs, and professional analysis explaining thelegal and factual basis of the claim and professionally calculatethe damages so as to permit proper review and assessment.– The standard to which the documentation is issued dependslargely on the nature of the project and the professionalstandards adopted by the consultant and or the project manager.56
  57. 57. Section 4: Prep & DocumentationSection 4: Prep & DocumentationEVIDENCE:– IT is a must that the Claiming partysubstantiates it’s claim. This is done viaproviding proper evidence to demonstrate andprove that entitlement for the amountsclaimed.– The legal term “He who asserts must prove” isthe prevailing maxim and the standard ofproof is that on the balance of probabilities.57
  58. 58. Section 4: Prep & DocumentationSection 4: Prep & DocumentationFACTS:– FACTS on site must be considered todetermine wither the occurrence claimedagainst has affected the operations critical tothe claiming party to complete his works.– It is not enough that the claiming party showthat it is, they must prove relevance toactivities and dependencies.58
  59. 59. Section 4: Prep & DocumentationSection 4: Prep & Documentation The following are a guideline for the minimumcontents and format of a claim submission:1. Contenta. Tender Details:Copies of the following documents related to each claim heading: Cost Breakdown for tender rates Clarifications and addenda Details of any discounts madeb. Contract Documents:Copies of the following documents related to each claim heading: Drawings (showing number and revision and approval date) Specifications (Showing reference number and page numberrelated and signatures/seal therein)59
  60. 60. Section 4: Prep & DocumentationSection 4: Prep & Documentationc. Program of work:Copies of the following documents related to eachclaim heading: Contractual Program ( tender stage ) Detailed Base Program (post contract program ofClause 14 or 8.2 one) Revisions if any Conditions of the program if earlier provided Consultant report on the detailed base program Any minutes of meeting in relation to the detailedbase program Progress of Work S-Curve (planned vs actual) As built CPM program60
  61. 61. Section 4: Prep & DocumentationSection 4: Prep & Documentationd. Resources:Copies of the following documents related to eachclaim heading: Site overheads planned vs. actual identifying thespecific resources related to the event Project direct resources planned vs actual againdirectly related to the event and includesequipment, labor and materials Contract cash flow planned vs. actual Record of any delay in receipt of materials,equipment or deployment of labor Production rate records and comparison betweenplanned vs. actual61
  62. 62. Section 4: Prep & DocumentationSection 4: Prep & Documentatione. Background (contractual):Event Must be linked to a contractual background that relatesto each claim heading: A list of contract conditions that relates to each event. Extracts of all relevant conditions. Extracts of the clauses that the contractor used in hisclaim and those used by the consultant. Details of any non standard contract clauses. Cause and effects analysis. Clear differentiation between Disruption, Delay orAcceleration. Analysis of the Compliance with the claims notice. Analysis of the compliance with governmentregulations.62
  63. 63. Section 4: Prep & DocumentationSection 4: Prep & Documentationf. Further provide the following:• Chronological record of correspondences and relatedcopies• Drawings register• Technical submittals• Written instructions• Resource records• Site diaries• Time sheets• Cost records• Photographs• Monthly progress reports• Minutes of meeting (all related)• Project Management structure and key personnellistings63
  64. 64. Section 4: Prep & DocumentationSection 4: Prep & Documentationf. Continues:• Partial/substantial completion certificates• Variation orders record• Payment records• Procurement and delivery records• Lab test results• Site safety records• NOC and approval records64
  65. 65. Section 4: Prep & DocumentationSection 4: Prep & Documentationg. Claim Package Format:• Executive Summary• Related Clauses and alignment of entitlement• Statement of Claim• Nature of Claim• History of Events• Narrative on Program and delay analysis withimpacted activities as applicable• Summary of required action be it time orcompensation claimed• Possible mitigation measures and future mitigationmeasures if applicable.• Appendices.65
  66. 66. Claims & DisputesSection 5:Claims AvoidanceTechniques66
  67. 67. Section 5: Claims avoidanceSection 5: Claims avoidance Overview:– Claim Avoidance is a strategy that can preserve theEmployer/ Contractor relationship & save Time andMoney– Claim avoidance strategies must be set before, duringand after construction in agreement between theEmployer, Contractor and Engineer.– As a minimum A Claims avoidance strategy mustinclude promptly handling of the issues once theyarise, and reinforce the aim of resolving issues withno disputes, in the earliest time and the lowestmanagement level possible.67
  68. 68. Section 5: Claims avoidanceSection 5: Claims avoidanceClaims Avoidance Strategies:– A good strategy focuses on the followingcommon milestones: Design Phase Procurement Phase Construction Phase68
  69. 69. Section 5: Claims avoidanceSection 5: Claims avoidance Claims Avoidance – Design stage:– Focus on providing Full, Detailed, Concise and well Coordinatedcontract documents. Which can be achieved by: Careful screening of consultants. Clear Specific Project Information based on Clear Project Charterand business requirements. Knowing the contract and assuring constructability of all workstherein. Having a clear concise cost estimate Periodic auditing of design phases Conducting Risk analysis to identify potential risks and addressingthose Always make sure that you are drafting for Clarity not confusionand use a list of definitions to assure consistency Allow enough time for construction69
  70. 70. Section 5: Claims avoidanceSection 5: Claims avoidance Claims Avoidance – Procurement Phase:– Focus on calling for competent contractors who will undersatndthe scope of works and: Careful screening of bidder organization charts. Audit previous experience lists Audit equipment lists for relevancy Determine capacity to accept new work given the currentengagements Review their claims history. Be blunt ask for it Examine Financial and Credit standing Encourage pre bid site visits Conduct pre bid conference and explain site access limitations,utility locations, noise and environmental limitations etc. Answer tender questions promptly If appropriate extend the bidding period70
  71. 71. Section 5: Claims avoidanceSection 5: Claims avoidance Claims Avoidance – Construction phase:– Focus on identifying and resolving potential claim eventspromptly and in the shortest time frame possible, accordingly: Know your contract. Coordinate utilities relocation if required Obtain all relevant permits well in time Obtain right of way Furnish materials or equipment that is supplied by employer ontime Know contractor responsibilities and enforce them and request theschedule, submittals, daily reports. Understand the scope of works and know the elements required byLaw or adopted codes. Know the elements that are required by function, purpose or design. Identify elements that can be deleted, added or altered.71
  72. 72. Section 5: Claims avoidanceSection 5: Claims avoidance Know when your action or inaction will constitute a change orderor will constitute acceleration or disruption of the works andaccordingly make sure that the Engineer is:– Receiving RFI’s– Understanding clearly the RFI’s– Responding promptly to RFI’s– Responding Clearly and Accurately to RFI’s– Listening to the contractor and considering his suggested solutions– Giving a clear direction to the contractor if the solutions suggested arenot acceptable– Understanding what the contract believes to be the limits of thecontract– Advising the contractor with the true limits of his obligations– Fare in giving the contractor a change order when it is due– Check the time extensions given and if it is fare and appropriate. (Toolittle against much changes might cause acceleration claims).72
  73. 73. Section 5: Claims avoidanceSection 5: Claims avoidance Always read your received mail and othercommunications properly and check for the“BUZZ” words:• In Acceleration:- Overtime request- Extra shifts at ..- Slowed down in ..- Speed up of ..- Early completion of ..• In Changes:- Unwritten request such as..- Additional work such as ..- Over inspection of ….- Defective specifications …• In Differing site conditions:- Subsurface or buried- Concealed or hidden- Different soils- Excessive ground water- Higher / lower levels• In Delays:- Late approval of…- Late deliveries while …- No access / Partial access- Disruption of works- Abortive works- Bad weather occurrences- Interference from ….73
  74. 74. Section 5: Claims avoidanceSection 5: Claims avoidance Manage Potential Claims issues proactively by:– Talking to the contractor and detecting potential claims– If you know that it has merit then initiate the change andsuggest a settlement– If you disagree, make sure that you resolve promptly bycorrecting defects on your side first. Keep accurate records Maintain Proper records Keep your management will informed andcommunicate74
  75. 75. Claims & DisputesSection 6 :Claims Resolution75
  76. 76. Section 6: Claims ResolutionSection 6: Claims ResolutionThe three levels of Claims Resolution are:AdjudicationArbitrationLitigationBut before addressing those, it is vital to promote againthe avoidance techniques, and in this case Partnering76
  77. 77. Section 6: Claims ResolutionSection 6: Claims ResolutionPartnering:A system of operation that transforms the construction environment from onewith deception to one with open communication and frankness. It is acommitment between the parties to achieving a business requirement whilerespecting and recognizing own and other party rights, privileges, commongoals and expectations.It opens way for trust and dedication, and helps align objectives, doing awaywith unrealistic expectations and improves communications thus reducingmisunderstandings and inducing team work.It is not a step in dispute resolution but it set the way for an open on goingjoint problem solving process that results in harmonious resolution andsettlement all during the project cycle.77
  78. 78. Section 6: Claims ResolutionSection 6: Claims ResolutionPartnering:It is established via:Developing a common project charterConducting joint inspections and meetingsDeveloping assessment sessions for both parties key staff andsubcontractorsPerusing shared savings via value engineeringAgree to a resolution process (conflict management plan) that isbased on the understanding of the common goals and interestsof parties involved78
  79. 79. Section 6: Claims ResolutionSection 6: Claims ResolutionPartnering:Projects are sometimes classified based on the partnering level and assuch those are:Competitive, with no common goals, little trust, lowcommunication levels, defensive attitudes, short term focus, noshared risks, and usually result in disputes.Cooperative,Collaborative,Synergistic, with total alignment of common goals, high trustlevels, excellent communication, responsibility sharing attitudethat looks for solutions, fully focused, shared risks, and usuallyresults in no to minimal disputes79
  80. 80. Section 6: Claims ResolutionSection 6: Claims ResolutionNow back to the three levels of Claims Resolution:Adjudication (mediation):The purpose of Mediation is to, Reducing hostility between parties Opening path for discussion Communicating opinions in understandable terms and helpingeach party understand the other Propping for unrevealed facts Narrowing the issues and differences Measuring receptiveness to conciliation Structuring a resolution80
  81. 81. Section 6: Claims ResolutionSection 6: Claims Resolution Arbitration:It is defined to be “a referral of a dispute to one or more impartialpersons for final and binding resolution or determination. It is usuallyquick, practical and in a way economical” it could be in deferentforms, i.e. baseball type or shadowed type (similar to baseball type butthe mediator is present). Litigation:It is defined by meaning to be “a referral to a court of law” when allother efforts fail.81
  82. 82. Section 6: Claims ResolutionSection 6: Claims ResolutionFinally and based on FIDIC 2005 the hereunder timetable summarizes the process:82