All project owners want to increase their return on investment and bring projects online faster. To achieve this, completion dates are brought forward so that assets become profitable more quickly. The impact of this is that best practices in planning and design becomes subordinate to program acceleration.
Contracts are awarded on incomplete designs and are based on unrealistically optimistic construction programs. These circumstances make variations and claims inevitable, which is why it is paramount that organizations have a discernable claim management strategy when embarking on a major project. The consequences of not having a claim management strategy in place at the outset of a project is almost always underestimated.
Claim strategies will vary from project to project, and an employer’s needs will differ from those of a contractor. For an employer or a contractor, a claim strategy needs to be tackled holistically, with a set of systems and processes providing a roadmap to negotiate and resolve contentious issues. It will facilitate open discussions between the parties on difficult issues during the project and it will provide visibility throughout every stage of the project, promoting a better understanding, so that better decisions can be made moving forward.
A claim strategy cannot be based on hearsay, sound bites, or speculation; a good claim strategy must embrace data collection and presentation of facts, and has to be able to provide a willingness to explain the causal relationship between the event and its effect on the project. For example, if you are the party seeking compensable extension of time, your strategy must allow for producing a program delay analysis and quantum assessment.
Claims can only be determined through the collection of facts and data, so the claim strategy must ensure that the following documentation can be (or is) produced:
When the real facts, events, and circumstances are known, it is essential to have the technical knowledge and expertise to interpret the project information and assess the contractual entitlements (or liabilities). When analyzing the position and avoiding emotive issues, facts are key. The contractual position needs to be articulated in writing through correspondence, claims, and other documentation, explaining the event, its cause, effect, and entitlement.
A claim management strategy will not provide relief from a bad bargain or onerous provisions of a contract; however, it will provide an approach to ensure that entitlements have been interpreted correctly. This will build a culture of (valid) entitlement recognition and a mindset that claims are a natural part of the project execution process, needing to be managed accordingly.
As claims and contentions get closer to a resolution, the claim management strategy should have enabled the required documentation to be in place to settle all the issues. In doing so, it should have identified and brought attention to each individual event, item by item, considering the following:
If your organization has been involved in the construction of a major project, the chances are you have already been through the claim/dispute resolution and settlement process. To a greater or lesser extent, claims are inevitable on all major projects. If you are involved in a major construction project, it is essential that you have a claim management strategy, as well as the people with the right skill set to manage the strategy, in place from day one in order to ensure a successful outcome.
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