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ForumForumProject Control...Project Control...Delay & Contrac...Delay & Contrac...How to reduce disputes in construction claims?How to reduce disputes in construction claims?
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 9/2/2010 5:45 PM
 

Would you be able to describe what you consider to be the events that lead to the occurrence of the construction claims and how and why you think it occurred?

What do you think could have been done to reduce disputes in construction claims?

New Post
 9/2/2010 5:49 PM
 

The one most important factor leading to Construction Claims is the biased aspect of the Contract Agreement which is more heavily weighed in favour of Contractee (Big Brother).. and the Contractor (Small Brother) is always at the receiving end. While FIDIC has been able toresolve that to a large extent, but issues still remain and also many orgs do not want to adopt FIDIC.
Another factor arises from unequal and unpredictable inflationary trends which leads to cost changes normally not correctly governed by escalation clauses. Hence, cost and profit being main component of any Contract, there are claims. In addition to above, below are few basic errors leads to such claims :

Failure to read/understand the contract when tendering.
2) Failure to read/understand the contract before signing it.
3) Failure to read/understand the contract during the works.
4) Failure to follow the contract.
5) Failure to properly progress the Works.
6) Lack of adequate design at various stages.
7) Information flow.
8) Variations
9) Architect/Employer's Agent/Engineer failing to properly administer the contract.

New Post
 9/2/2010 5:49 PM
 

In my experience, the biggest contributors to difficult claims are as follows:
1) quality contract documents: this to me is by far no. 1. Too many projects begin with a preliminary set of documsnts that eventually establish the means by which a contract is created. An experienced developer / owner who communicates well with the contractor can still complete the process claim frees if there is good communication and the understanding that the control estimate will change as the documents proceed from schematic, to design development to construction documents. Contingencies are key here but communication on the cost of the changes is critical. Even the best contractors cannot predict the final cost outcome of a project in the early stages of design but developer / owners are sometimes motivated by financing milestones and market conditions that often times push the schedule too aggressively.

2) communication: this is very general on its own but the lack of communication ( both oral and written) and the understanding of project scope and responsibility are no. 2 in creating the reason for difficult claims resolution. Weekly and monthly project reporting by the contractor to key owner /devloper personnel should identify at all times claims and or pending claims with specific background, potential cost and or time impact and need to reslove by a date. If this format is regulary practiced it is hard for either side to claim "I did not know".

Claims will always occur and they are just the first step to the implementation of good change order management. Claims are not a bad thing if understood by all that there is likely occurrence of change during the life a project.

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 9/2/2010 5:50 PM
 

Few more reasons why construction claims arises :
(1) Damages for breach of contract by employer, which are subdivided into
(a) Breaches affecting the performance of the contract, which neverthless proceeds to completion
(b) Breaches resulting in termination or recision of the contract before completion
(c) Breaches of employer's payment obligations
(2) Additional payment due under one or the other of contract provisions, sub divided into
(a) Sums due to variations
(b) Sums due to measurement in unit price contracts
(c) Sums due to other compensatory provisions in the contract

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