Claims & disputes management

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 Resolution
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Claims & Disputes
Section 1:
What is and Why
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Section 1: What is and WhySection 1: What is and Why
 “Claim” is the general term used for the
affirmation of rights to money, property or a
remedy.
 In Construction, the term is used as an
application, request for entitlements under the
contract terms and conditions.
 It is usually a payment outside the terms of the
physically measured works or services provided
and includes those related to extension of time
but not limited to those related to prolongation,
interruption or disruption, acceleration or
crashing schedules, mitigation and the like.
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 Claims are generally made by the parties due to
or all the following situations:
– Entitlement for non fulfillment of one party to an
obligation 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 legal
preceding.
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 Claims are usually defined as a Paper War. That
usually can result in the following:
– Irrational responses and behavior and thus destroyed
personal relations.
– Increased costs.
– Loss of control on outcome.
– Waste of time while preparing and participating in
resolution and litigation.
– Overall loss of focus on what is important during the
life cycle of the project.
6

 Claims usually have the following life
cycle:
A. Problem identified
B. Disagreement arises
C. Result or action disputed
D. Paper war starts
E. Conflict
F. Litigation
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Claims & Disputes
Section 2:
Claim Types
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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
– Entitlement
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11--Changes by EmployerChanges by Employer
 These are usually referred to as Constructive and
Convenient changes, that are mainly due to Extra
Works, or Excessive Inspection of the works.
 They are usually initiated by an action or
inaction by the Employer or Engineer.
 They are usually resulting in a benefit to the
Employer that exceeds the deliverables of the
agreement.
 They tend always to increase the cost of the work
done.
10

11--Changes by EmployerChanges by Employer
 Extra Works:
– Engineer or Employer, Poor justification while Rejecting
material and equipment submittals.
– Engineer, Poor or uncoordinated response to RFI’s.
– Employer or Engineer Poor understanding of Drawings and
Specs.
– Employer Poor understanding of his privileges and deliverables
expected from second party under the agreement.
– Employer exceeds his rights to inspect the works, and inspector’s
performance.
– No tolerances or strictly low ones applied against those noted in
the contract.
11

22--DelaysDelays
Delay is defined to occur when an activity
takes longer than the planned duration to
complete.
To recover or mitigate the delay it is a
must to:
– Affect the critical path by either increasing
durations along the planned critical path or by
– Delaying the completion of non-critical
activities enough to create a new critical path.
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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 service
providers.
– Employer fails to obtain a bldg. permit.
– Employer fails to give right of way for
prescheduled activities.
13

22--DelaysDelays
Due to “Approvals”:
– Employer or his Consultant failure to provide
Submittal Approvals on time.
– Employer or his Consultant providing
Unreasonable or Poorly justified rejection of
submittals.
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22--DelaysDelays
Due to “Adverse Weather”:
– Weather Conditions are adverse or hostile.
– Weather conditions are unusual for the time of
year.
15

22--DelaysDelays
 Due to “Continued Changes”:
– These are usually initiated by a variation order or site
instructions.
– They are usually requests to proceed immediately and
in others after proper financial approval.
– Usually within physical limits due to subsequent
works.
– With all above Issuance of formal VO might also be
with delay.
– The impact of the works requested on the original
program of works.
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33--Interruptions and DisruptionInterruptions and Disruption
• It usually occurs when the performance
conditions expected at the time of tendering
materially/substantially defer from those
encountered during the actual execution to a
point that “cost of performance” for the
contractor is increased due to,
• Contractors plan of work alteration.
• Contractor work, equipment and crew hours is
increased.
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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 site
limited issues or contractual issues.
– Via delaying inspections.
– Via providing Employer furnished equipment or
accessories.
– Via delay or failure to respond to RFI’s.
– Via suspended manufacturing
– Via authorities not due to contractor negligence.
18

44--Acceleration of worksAcceleration of works
“Escalation” occurs when a task is
performed in a shorter time frame than
originally planned based on a request by
the client.
Escalation usually entails added overheads
due to increased resources.
It can also be due to:
 Increased extra work orders or VO’s without time
extension.
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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 those
indicated 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

66--Defective specificationsDefective specifications::
Defective Design:
 Elements of the project has been performed by the
contractor per the contract documents and
specifications but those elements “do not function
together” as required. i.e.
• In cases where drift is not accounted for especially
for high rise buildings.
• Thermal steel is not considered especially if Post
Tensioning method is adopted for slab construction.
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66--Defective specificationsDefective specifications::
Errors and Omissions:
Usually due to:
 Answers to questions arising from the documents
are not found within the contract documents.
 Provisions of the contract are not accurate.
 Contractor requests for information are responded
to with incorrect or contradicting replies.
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77--EntitlementEntitlement::
Executable but none compensable:
Usually due to:
 Acts of government orders or decrees without
compensation clearly stated.
 Fires, Floods, Epidemics, or quarantine
restrictions.
 Embargoes.
 Wars
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Executable and Compensable:
Usually due to:
 Shortfalls by the employer.
These usually entitle the contractor to both an
extension of time and an increase in the contract
price.
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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 specification
procurement even if the change is accepted by
Employer.
 Defective works.
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Claims & Disputes
Section 3:
Relation to Contract
Clauses
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Section 3: Relation to ContractSection 3: Relation to Contract
ClausesClauses
 The Legal Basis for Claims:
 Contractual Claims. This is under the contract clauses themselves.
 Land Law and Common Law Claims. Based on other predominant
laws that are in governance.
 Negligence or TORT Claims. This is usually when a party acts in
breach of a legal duty imposed by law, and so infringes on the
rights of the other party causing it foreseeable damages.
(negligence, fraud, slander, battery and assault)
 Quantum Meruit Claims: usually for works not controlled by
contract 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 or
merits. (hardship claims that only the employer can consider)
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ClausesClauses
 Continue, The Legal Basis for Claims:
As the law usually considers the contractor to be
experienced enough to foresee what is likely
required from him to perform under the contract,
thus and in order to establish a contractual claim
the contractor must be able to show that the work
he was doing or the conditions under which he
was performing differed from those what
normally would have been expected or should
have been expected at the making of the contract.
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ClausesClauses
 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 completion
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ClausesClauses
 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 decision
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ClausesClauses
 Clause 1.9 Delayed Drawings and or Instructions:
– The contractor must give a notice to the Engineer advising the
delayed documents and its impact.
– The contractor shall include all details of why and when it
should have been issued and the detail of the nature and amount
of 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 not
have to respond unless instructed by the Employer. Your
response must state that the delay notice was not formulated in
line with the contract requirements, and as such it is rejected.
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ClausesClauses
 Clause 2.1 Right of access to site:
– The employer must give the contractor right of access to and possession
of the site. All parts of the site must be in the possession of the
contractor within the time stated in the appendix to tender.
– The right of possession might not fully be with or exclusive to the
contractor, however the employer may with hold any such right or parts
of it until the performance security bond is received.
Usually claims result from prolonged denial of access or right of
possession even after submission of the bond and usually due to
negligence from the responsible Employer staff or the Consultant side.
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ClausesClauses
 Clause 4.6 Co-operation:
– The Contractor must and as specified by the contract
or as instructed by the Engineer allow appropriate
access and opportunity for carrying out works by:
 The Employer staff
 Any other contractor employed by the Employer and the
personnel of any legally constituted authorities.
Those who may be employed during the execution of the
works or towards the completion of the works on site or near
the site for any works that are not included in the contract or
included but require authorities inspections and approvals.
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ClausesClauses
 Clause 4.7 Setting Out:
– The contractor shall setout the works in relation to the original
points, links and levels, specified in the contract or advised by
the Engineer.
– The Employer shall be responsible for any of the errors in the
contract or information provided by the Engineer.
With the above stated the Contractor must exercise reasonable
effort to verify such information and advise the inaccuracy
before hand and within reasonable time to adjust, Otherwise he
will not be able to claim against.
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ClausesClauses
 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 all
reasonable effort to verify and raise before signing the
contract, and advise any variances before hand and
adjust his contract accordingly. In cases were
conditions are beyond those which can be considered
foreseeable the contract might be able to claim
against.
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ClausesClauses
 Clause 4.24 Fossils:
– Any and all fossils, coins articles of value, structures, remains, or
items of geological or archeological nature found on site shall be
placed under the care and custody of the Employer.
– Any delay caused to the works and the costs incurred of such
delay and from complying with this article are the responsibility
of the Employer.
With the above stated the Contractor must exercise all reasonable
effort to verify and raise to the attention of the Employer before
signing the contract. If that has been satisfied and the case arises
then the contractor must give notice to the Engineer.
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ClausesClauses
 Clause 5.1 Nominated Sub-Contractors:
– Any Contractor or Supplier nominated by the Employer or that
based on instructions from the Engineer under clause 13 to be
employed by the Main Contractor.
The Contractor though is required to coordinate and exercise all
efforts for better performance of works, and ensure that the
agreements he undertakes with those are of back to back nature
in relation to his contract with the Employer, but he could be
liable for a claim against any delays caused by those sub
contractors or against the quality of work done especially that
directly effecting his works where he employs extra resources to
overcome.
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ClausesClauses
 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 with
the rejection and request remedy within reasonable
time. The Contractor must receive such request and
remedy within the stipulated period or otherwise
advise promptly if he can not comply or meet the
target date. Failure in any of part of the process might
result in a claim from either party.
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ClausesClauses
 Clause 8.5 Delay caused by authorities:
– If the following conditions apply:
 The contractor diligently followed the procedures laid down
by 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 the
Engineer, the contractor would be entitled for a claim
of time extension and possibly financial
compensation.
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ClausesClauses
 Clause 8.9 Consequences of Suspension:
 The contractor suffered delays
 Or the contract incurred costs from complying to the
Engineer suspension of works under clause 8.8,
 Or the costs are related to none scheduled resumption of
works
Then and if prompt prior notice was advised to the
Engineer, the contractor would be entitled for a claim
of time extension and possibly financial
compensation.
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ClausesClauses
 Clause 10.2 Taking over part of the works:
 The Engineer and based on instructions from the Employer
requests partial handover of certain areas of the works,
 The Engineer issued a partial handing over certificate for that
part of the works,
 The contractor incurred costs as a result of this partial taking
over or usage of the area other than that use specified
originally in the contract conditions,
Then and if prompt prior notice was advised to the Engineer,
the contractor would be entitled for a claim for
compensation.
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ClausesClauses
 Clause 10.3 Interference with tests of
completion:
 Contractor is ready to conduct test on Completion
 The contractor has given amble proper advise
 The contractor has been prevented from performance for
more than 14 days by the employer
 The employer then is deemed to have received the works
without testing.
If for any reason the contractor suffers delay and or incurs
costs as a result of this delay, the contractor shall give notice
to the engineer and will be entitled for compensation both in
terms financial and time related.
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ClausesClauses
 Clause 11.2 Cost of Remedying Defects:
– While it is the responsibility of the contractor to complete the
works and remedy the defects and shall do that at his risk and
cost, it is a fact that a Variation notice should be issued to the
contractor by the owner or on his behalf by the Engineer in the
following situations:
 Any change or variance from a design that the contractor is
responsible for
 Any plant, material or workmanship not in accordance with the
contract
 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 claim
against remedy of works.
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ClausesClauses
Clause 11.8 Contractor to Search:
– The contractor shall if required by the
Engineer; search for the causes of defects.
Unless the cause of any defect is to be
remedied by the Contractor and at his cost
under the terms of clause 11.2, then the cost of
search exercise plus a reasonable OH & Profit
shall be agreed or determined by the Engineer,
or otherwise claimed against by the contractor.
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ClausesClauses
 Clause 12.3 Evaluation:
– Except as otherwise stated in the contract, the Engineer will
proceed in accordance to sub-clause 12.3 (Evaluation) and 3.5
(Determination) for evaluating the value for works that do not
have a specific rate defined in the contract nor there are similar
works that could be used to determine a fare value of the works
for 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.
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ClausesClauses
 Clause 13.3 Variations Procedures:
– Prior to instructing a VO the Engineer will ask for a proposal, the
contractor will respond to in writing; either declining the request with
proper reasoning, or by providing a quote complete with a full
description of the works and it’s financial evaluation complete with his
time frame to complete these works and its impact on his original work
schedule if any.
– The Engineer is expected to swiftly evaluate the quote and respond with
an approval or disapproval and advise the contractor to either proceed
with the works pending finalization of the financial and time impact or
not 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.
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ClausesClauses
 Clause 15.4 Payment After Termination:
– If a “Termination by Employer” under sub clause 15.2
is issued, and is in effect, the employer may:
 Proceed in accordance with sub clause 2.5 “ Employer
Claims” and
 Withhold any further payments to the contractor until all
costs of execution, completion and remedying of the works,
damages for delay in completion, and all other costs incurred
by the Employer has been established and recovered from
the Contractor.
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ClausesClauses
 Clause 16.1 Contractor Entitlement to Suspend the
works:
– If the Engineer fails to certify in accordance to sub clause 14.6
“Issue of interim payment certificates” or the employer fails to
comply with sub clause 2.4 “Employer Financial Arrangements”
or under sub clause 14.7 “Payment” then the contractor may and
after giving proper advance notice of 21 days “suspend the
works” or “reduce the rate of progress” until the contractor has
received the certified amounts or reasonable evidence of its
release.
– The contractor is in this case entitled to claim against all delays
that occurred and ask for both financial compensation and time
extension.
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ClausesClauses
Clause 17.4 Consequences of Employer
Risks:
– If to the extent that any of the risks listed in sub
clause 17.3 results in loss or damage to the works,
goods or contractor’s documents, the contractor and
after promptly notifying the Engineer shall rectify this
loss and/or damage to the extent required by the
Engineer.
– If the contractor suffers delay and/or incurs costs as a
result from rectifying the loss/damage and after
serving notice to the Engineer, the contractor will be
entitled for a claim to compensate those.
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ClausesClauses
 Clause 19.1 Definition of Force Majeure:
– Under this clause Force Majeure means an
exceptional event or circumstance which :
 Is beyond any parties control.
 No party could reasonably have provided against it before
entering into contract.
 Having risen, no party could have reasonably avoided or
overcome.
 Not substantially attributed to the second party.
– If for any reason there is any doubt about any of the
conditions above, either party could claim.
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ClausesClauses
 Clause 20.1 Contractor’s Claims:
– Under this and if the contractor considers himself to
be entitled to any extension of time and/or any
financial compensation, he shall give notice to the
Engineer:
 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 the
claim.
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ClausesClauses
Clause 20.2 Appointment of the Dispute
Adjudication board:
– Under this clause disputes must be adjudicated
by the DAB entity described in the contract
and in accordance to clause 20.4
– The parties shall jointly appoint a DAB by the
date stated in the Appendix to Tender.
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ClausesClauses
Clause 20.5 Amicable settlement:
– Under this clause any party and when
dissatisfied by the DAB results must issue a
Dissatisfaction notice and under clause 20.4,
and within the period stated. If that is the case
then,
 The parties shall attempt to settle the dispute
amicably and before reverting to Arbitration .
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ClausesClauses
 Clause 20.7 Failure to comply with the DAB
Decision:
– In the event of:
 Neither party has given notice of dissatisfaction per 20.5
above.
 DAB decision has become final and binding after the time
frame 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, may
refer the failure to Arbitration under sub clause 20.6
“ARBITRATION”.
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Claims & Disputes
Section 4:
Preparation and
Documentation
55

Section 4: Prep & DocumentationSection 4: Prep & Documentation
 Issue:
– Most of the claim submissions lack documents, programs, and
professional analysis.
– They use substandard formats and structure and are difficult to
follow.
 Solution:
– Logically organize your claim submissions with sufficient
documents, programs, and professional analysis explaining the
legal and factual basis of the claim and professionally calculate
the damages so as to permit proper review and assessment.
– The standard to which the documentation is issued depends
largely on the nature of the project and the professional
standards adopted by the consultant and or the project manager.
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EVIDENCE:
– IT is a must that the Claiming party
substantiates it’s claim. This is done via
providing proper evidence to demonstrate and
prove that entitlement for the amounts
claimed.
– The legal term “He who asserts must prove” is
the prevailing maxim and the standard of
proof is that on the balance of probabilities.
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FACTS:
– FACTS on site must be considered to
determine wither the occurrence claimed
against has affected the operations critical to
the claiming party to complete his works.
– It is not enough that the claiming party show
that it is, they must prove relevance to
activities and dependencies.
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 The following are a guideline for the minimum
contents and format of a claim submission:
1. Content
a. Tender Details:
Copies of the following documents related to each claim heading:
 Cost Breakdown for tender rates
 Clarifications and addenda
 Details of any discounts made
b. 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 number
related and signatures/seal therein)
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c. Program of work:
Copies of the following documents related to each
claim heading:
 Contractual Program ( tender stage )
 Detailed Base Program (post contract program of
Clause 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 detailed
base program
 Progress of Work S-Curve (planned vs actual)
 As built CPM program
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d. Resources:
Copies of the following documents related to each
claim heading:
 Site overheads planned vs. actual identifying the
specific resources related to the event
 Project direct resources planned vs actual again
directly related to the event and includes
equipment, 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 between
planned vs. actual
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e. Background (contractual):
Event Must be linked to a contractual background that relates
to 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 his
claim and those used by the consultant.
 Details of any non standard contract clauses.
 Cause and effects analysis.
 Clear differentiation between Disruption, Delay or
Acceleration.
 Analysis of the Compliance with the claims notice.
 Analysis of the compliance with government
regulations.
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f. Further provide the following:
• Chronological record of correspondences and related
copies
• 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 personnel
listings
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f. Continues:
• Partial/substantial completion certificates
• Variation orders record
• Payment records
• Procurement and delivery records
• Lab test results
• Site safety records
• NOC and approval records
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g. 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 with
impacted activities as applicable
• Summary of required action be it time or
compensation claimed
• Possible mitigation measures and future mitigation
measures if applicable.
• Appendices.
65

Claims & Disputes
Section 5:
Claims Avoidance
Techniques
66

Section 5: Claims avoidanceSection 5: Claims avoidance
 Overview:
– Claim Avoidance is a strategy that can preserve the
Employer/ Contractor relationship & save Time and
Money
– Claim avoidance strategies must be set before, during
and after construction in agreement between the
Employer, Contractor and Engineer.
– As a minimum A Claims avoidance strategy must
include promptly handling of the issues once they
arise, and reinforce the aim of resolving issues with
no disputes, in the earliest time and the lowest
management level possible.
67

Claims Avoidance Strategies:
– A good strategy focuses on the following
common milestones:
 Design Phase
 Procurement Phase
 Construction Phase
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 Claims Avoidance – Design stage:
– Focus on providing Full, Detailed, Concise and well Coordinated
contract documents. Which can be achieved by:
 Careful screening of consultants.
 Clear Specific Project Information based on Clear Project Charter
and business requirements.
 Knowing the contract and assuring constructability of all works
therein.
 Having a clear concise cost estimate
 Periodic auditing of design phases
 Conducting Risk analysis to identify potential risks and addressing
those
 Always make sure that you are drafting for Clarity not confusion
and use a list of definitions to assure consistency
 Allow enough time for construction
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 Claims Avoidance – Procurement Phase:
– Focus on calling for competent contractors who will undersatnd
the 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 current
engagements
 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 period
70

 Claims Avoidance – Construction phase:
– Focus on identifying and resolving potential claim events
promptly 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 on
time
 Know contractor responsibilities and enforce them and request the
schedule, submittals, daily reports.
 Understand the scope of works and know the elements required by
Law or adopted codes.
 Know the elements that are required by function, purpose or design.
 Identify elements that can be deleted, added or altered.
71

 Know when your action or inaction will constitute a change order
or will constitute acceleration or disruption of the works and
accordingly 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 are
not acceptable
– Understanding what the contract believes to be the limits of the
contract
– 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. (Too
little against much changes might cause acceleration claims).
72

 Always read your received mail and other
communications 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

 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 and
suggest a settlement
– If you disagree, make sure that you resolve promptly by
correcting defects on your side first.
 Keep accurate records
 Maintain Proper records
 Keep your management will informed and
communicate
74

Claims & Disputes
Section 6 :
Claims Resolution
75

Section 6: Claims ResolutionSection 6: Claims Resolution
The three levels of Claims Resolution are:
Adjudication
Arbitration
Litigation
But before addressing those, it is vital to promote again
the avoidance techniques, and in this case Partnering
76

Partnering:
A system of operation that transforms the construction environment from one
with deception to one with open communication and frankness. It is a
commitment between the parties to achieving a business requirement while
respecting and recognizing own and other party rights, privileges, common
goals and expectations.
It opens way for trust and dedication, and helps align objectives, doing away
with unrealistic expectations and improves communications thus reducing
misunderstandings and inducing team work.
It is not a step in dispute resolution but it set the way for an open on going
joint problem solving process that results in harmonious resolution and
settlement all during the project cycle.
77

Partnering:
It is established via:
Developing a common project charter
Conducting joint inspections and meetings
Developing assessment sessions for both parties key staff and
subcontractors
Perusing shared savings via value engineering
Agree to a resolution process (conflict management plan) that is
based on the understanding of the common goals and interests
of parties involved
78

Partnering:
Projects are sometimes classified based on the partnering level and as
such those are:
Competitive, with no common goals, little trust, low
communication levels, defensive attitudes, short term focus, no
shared risks, and usually result in disputes.
Cooperative,
Collaborative,
Synergistic, with total alignment of common goals, high trust
levels, excellent communication, responsibility sharing attitude
that looks for solutions, fully focused, shared risks, and usually
results in no to minimal disputes
79

Now 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 helping
each party understand the other
 Propping for unrevealed facts
 Narrowing the issues and differences
 Measuring receptiveness to conciliation
 Structuring a resolution
80

 Arbitration:
It is defined to be “a referral of a dispute to one or more impartial
persons for final and binding resolution or determination. It is usually
quick, practical and in a way economical” it could be in deferent
forms, i.e. baseball type or shadowed type (similar to baseball type but
the mediator is present).
 Litigation:
It is defined by meaning to be “a referral to a court of law” when all
other efforts fail.
81

Finally and based on FIDIC 2005 the hereunder time
table summarizes the process:
82

Claims & disputes management

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