Claims Management

Claim Management is an inevitable process in Construction Project Management, to reach successfully the desired results. The requirement in first place is to avoid claim through managing the breeding grounds with all earnest, alignment of documents, and eventually entertaining an entitlement in an efficient and business like manner. Considerate approach for early settlement on issues between parties is always cheaper and leads to win/win results. The construction project, mostly a large undertaking, demands one to prevent stained relationship of parties, stalemates, delays, disputes, or loss of resources that cause or carry the potential force for litigious and arbitral action of the parties, for resolution in contract.

Claim is a management issue and the process needs efficient and effective management during the entire life cycle of a project.

Mostly claims relate to the encountered conditions or events, which occur during the construction phase. But the seeds of claim and nutrients essential for development are contained in the contract documentation and the information supplied or not supplied in pre-contract phase.

The greatest opportunity to Prevent Claims comes to an end once tender-documents are finalized and the contract is awarded.

There are two significant elements in the control of the employer and his professional-team. The first is the efforts expended in pre-contract preparation as regards the reliability and completeness of information, design and documentation aligned to purpose. The second is the development of scheme for risk distribution, plan for management, selection of Form of Contract, and procedure for dealing with emergent issues.

Some form of conflict is inevitable; the preponderance of opinion is that “Construction conflicts are endemic in the industry” for involvement of stakeholders, having varied requirements and expectations associated with project, for particular need. Further the tendency of contracts to generate dispute, because of externality of interpretation; a contract cannot “specify their own indexical” by providing how they will be read or used by parties and interpreted differently in conjunction with documents prepared by various parties. The majority view that the nature of the construction process makes conflict unavoidable in some form, to some extent, that can be characterized as “pragmatic” as contrasted with the “long term strategic”.

The major players are involved with varying interest and carry conflicting business requirements that lead to issues & disputes.

The problems fall into a series of broad categories. They can be grouped into two headings – those, which have their origin in the planning of the project, and those, which are caused by problems during the construction of works.

Therefore the logical processes for claim management at different phases of project are different.

Claim Management

The Management Processes that requires prevention or mitigation of construction claims and the expeditious handling when they do occur, for earliest settlement can be viewed from two perspectives: the party making the claim and the one defending against it. A claim is, “A demand for something due or believed to be due”, usually the result of an action or direction. In construction “something” is usually additional compensation for work claimed to be extra to the contract or an extension of time for completion or both. What distinguishes a claim from a change is the element of disagreement between the parties as to what is due or whether or not anything is due. If agreement is reached, then the claim disappears and becomes a change. If not, the claim may proceed to negotiation, mediation, arbitration, and finally, to litigation before it is ultimately resolved. Often claims are thought of in terms of the contractor making claims against the owner or other prime party and by subcontractors against the contractor. But claims can also originate from the owner/prime party who believes that some requirement of the contract is not being performed by the contractor.

The Endeavor here is not meant to be a primer on claims which is a very involved and complex subject that has plagued the construction industry for years and still does. Rather, it presents an outline of approach to claim management to stimulate a careful approach to manage contract, documents preparation and expeditious handling of claims should they arise.

Claim management processes overlaps and relates to all four phases of construction project.

We represent claims on behalf of client or contractor based on basic information of ambiguities fed to us.