Management Issues, Common Type of Claims
can be defined as a request by either party to the contract, usually the Contractor, for compensation for damages caused by failure of the other party to fulfil his part of obligations as specified in the contract. The compensation is usually in the form of the additional payment or an extension of time (EOT).
Construction claims are a major hassle, and the only good construction dispute is one that is avoided. Spending time and money on arbitrators, or even worse, on a lengthy and painstaking litigation process, is sure to throw a wrench in your budgetary plans for the year. This article looks at the different types of construction claims and how to stay far away from them. We’ll also share a few thoughts on how to negotiate disputes when they do come up, and how to reach a fair resolution for both parties without wasting time and money with lawyers.
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.
The Most Common Types of Construction Claims
To get started, let’s look at the types of construction claims that you’re most likely to encounter. This list is by no means exhaustive but should get you thinking about the major sources of disagreement between construction firms and their clients.
The client files a claim because the project is taking longer than was agreed, and this is resulting in a financial or productivity loss on the part of the customer.
Price Acceleration Claims
From time to time, contractors will be required to exceed project budgets to complete a project on time or ahead of schedule. Price acceleration claims arise from disagreements between the contractor and client on who is legally required to bear the costs of accelerating work.
Change of Work Order Claims
These claims are related to the scope of work and whether a required change falls within the preexisting scope of work or not.
Different Site Conditions Claims
These claims arise out of differences between the actual condition of the job site and the way it is represented by the client in the contract. For example, if the job site is meant to be a grass field, but the contractor arrives and finds a gravel pit, it will be costlier to dig a foundation and the contractor can file a claim for different site conditions.
Contractors occasionally damage property while completing a construction job and may be held liable for such by the client through the filing of a damage claim against the contracting company.
1. In the contract the rights and responsibilities of the contractors as well the rights and responsibilities of the owners and engineer should clearly defined.
2. Give reasonable time to the design team to produce clear and complete drawings, bills of quantities, and specifications with no or minimum error and discrepancies.
3. Careful preparation of the contract documents helps to avoid disputes. Therefore, the documents will help to avoid disputes. Therefore the contractor should ask the owner to write the change orders instead of giving oral change orders.
4. Contractor should have signed change (variation) orders before starting doing any change in work on site.
5. Provide a proper mechanism for processing and evaluating change (variation) orders that pay for direct costs, indirect costs, and loss of productivity associated with any changes.
6. The contractor should take care of his work superiority by getting skilled labour and using good management techniques.
7. The government should create a set of procedures to control the quality of the construction work. Also, it should develop licensing contractors to make it more difficult to get certified.
8. The most excellent solution to claim lies in establishment of partnership between the owner and the contractor. Each party should try to solve the problems from the first moment they arise.
9. Use software like MSP, Primavera etc. to make bar charts, critical paths, planning, scheduling, cost control, productivity analysis and most importantly the project progress report to control the delay of the project.