THE PREPARATION AND PRESENTATION OF CONSTRUCTION CLAIMS
Unfortunatelyparties to aother.
"Claims"contract
theeach
is an emotivetake sides and
wordthink
which makesthe worst of
All parties involved in the construction business must acceptthat construction projects are susceptible to a variety offactors that may result in time and/or cost increases for whichlegitimate extras should be allowed.
Everyone connected -ur lt n construction projects needs a betterunderstanding of all parties rights and obligations underConstruction Contracts. Employers and their consultants alsoneed a better understanding of contracting firms and the risksthey can be properly expected to undertake. In turn contractorsmu st stop' looking for excuses every time something goes wrongand accept their own errors.
All parties must recognise their own faults - if the contractordoes something wrong he must ex pec to put it right if theEmployer/Consultant is at fault he must face the financialconsequences.
General Concepts
Any unresolved matter between the parties represents a claim.Claims can be about the following.
- What is to be done.
The time in which it is, or has had, to be done.
- What. i::>to be paid.To ask for an' entitlement underclaim unless agreement cannot bethe entitlement.
a ·contractreached as
is not aamount of
clauseto the
Whenever anything happens that affe~tsshoul~ always register-notice of arequired by the contract. The not iceif no entitlement is forthcoming.'
a contract the contractorpossible entitlement ascan always be witharawn
We all need to understand the underlying Nature of Claims.This un~erstanding helps in three main areas:
- Helps to establish grounds for claims-i-elpsto. determine the consultants power to deal with the
Claim
- Helps to determine the ~asis of evaluation
It is genera 11 y accept ed that the re are th ree ma in ca tego r ie sof claims.
Contd 2/-~------------------------~
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- Contractual Claims
- Extra Contractual Claims
- Ex-grat~a Claims
Contractual Claims
This is wherethe event ora remedy.
the specific construction contract provides forcircumstance being complained of and prescribes
This should always be the first line ofis usually within the cnnau Lt ant s powerContractual Claims on behalf of the client.'
consideration. Itto settle valid
Extra Contractual Claims
This is wherefor the event.seek other meansto Common Law.
the cont ract do·es not ma ke express prov is ionIn these circumstances the injured party mustto recover his loss. This usually means going
The clients consultant will not usually have the power to aealwith such claims, though his Terms of Engagement can be amendedat an y ti ill E'" b ya gre e 111e~n t , t 0 p~r0 vi d~ the .requi red .powe rs .
Ex~gratia Claims
These claims have no grounds in law as a contractual obligatior:lhas not been broken by either party.
Their only basiq is that a loss has been made due to an eventoutside the control of both parties and that something tangible."is sought, not just sympathy.
Anything paid is an "Act of Grace" andacknowledgement of a moral, obligation.matter f(fr the Employer uho: may welladvice.
at very best anSuch payments are a
seeW' his consultants
Such a claim should only be entered into as a last resort.
General Principles of Glaims
Feeling that you have the right to a cliam is one thing, provingit "is another. Most construction contracts put the onus ofproof onto the claimant.
Most people agree that a properly prepared claim which is wellpresented helps to resolve the dispute. However, even" todaytoo many claims are badly presented.
Gontd •.•••.• 3/-
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Claims should be formally presented and theypersuasive, objective and positive. They shouldverbosity, repetition and emotive statements.
should bealso avoid
III
I
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The main faults with claims is that they do not establish anycon t r act ua 1 bas is,. the y i n c 1uden 0 fa c t ua 1 r e cor d san d the ymake no attempt to link the liability and the quantificationof the claim.
The preparation for a claim begins as soon as you start onsite with the setting up of efficient record keeping systems.For. any claim to succeed at a later date' it must be based onfa c t uaIr e cor d s . The c 1aim will ne (d to draw 0naIl the - p r oJ ec tfiles and documents. \
Claim Presentation'
All claims should follow a logical order and should move almostautomatically from one section to the next.
It is generally better if the claim is divided into two parts- the entitlement or liability and the quantum or evaluation.
The following are some suggested logical sections for a claim.
1. Establish Contract Particulars.
Too often we think that we. know what is included in the contractand all the relevant dates and amounts.
You must check all the contractual details and make sure youunderstand the contractual base for your claim.
2. Record All the Matters Affecting the Contract
In this section identify all the matters that affected theexecution of the Works and have any bearing on the claim.
This is the story of what happened, what actions were taken,and by whom, and how they affe~ted the Works.
You nee d t 0 ba c k u P yo u r s t or ydocumentation. Also use graphs,to illustrate you points, theyword.
with factual records andcharts tables and schedules
are better than the written
Any lack of records will come to light at this time when itis really too late.
3. Establish Contractual Grounds
It is only after you have established all the facts thataffected the ocntract that you can establish the grounds ofyour claim and identify the particular clauses which give youthe power to ask ~or additional time and/or payment •
•
'.Contd ••.••••• 4/-
This is often not totally clear cut and you will have to 'relyon more that one clause for a particular point. There mayalso be fault on both sides.
This should be .acknowledged and the details left to theevaluation.
4. Establish any Extension of Time'
Apart from claims for higher rates virtually all ~laims includesome time delay. As some of the additional cost may be timerelated you must obviously establish the extension of timebefore you can calculate the additional tim~_related paym~nts.
It is Lmportant that you do not try to prove a total time delayif not all of the delay is relevant to the Employer.
Establishing a time delayuse visual presentations.as they are only lineal,progress against time.
is another area where you shouldBar charts are usually not enough
it is better to use graphs plottingv,
5. Evaluate the Claim
In addition to the directwill need to evaluate thecir,d disruption.
costs ofindirect
actual workcosts of the
executed youprolongation'
Prolongat ion costs come under the following headings- and a reoften knrrun as the Heads of Claim. They should be the costsat the time of delay and not the Bill of Quantity costs.
1.1 Site Establishment
1. Site staff and non-productive labour (Agent, Foreman,Gangers, Eng ineers, Bu r-ve vor-a, Accountant s, Clerks,
6. Vehicles (Site Vehicles, Buses, Cars, Etc. excludingany Plant).
7. Transport charges (Air Fares, Taxis, Etc.).
8. Sundry Expenses.
-Cnnt d ••••••• 5
• t Y'{.
1.2 Plant, equipment and temporary works (Tower Cranes, Hoists,Sc a ff0.1din g , Dew ate r in g E qui pm ent , Sun dry PIa nt , Et c .) .Major items of Plant specifically related to particularactivities are probably best included in the 'Disruption'section of the Claim.
1.3 Increased costs (Labour, Materials,price -ccrrt r ac t s or non-adjustablefluctuation contracts.
Plant,element
Et c . ) .of
Fixedprice
1.4 Insuarance Premiums (Fire, Injury to Persons and Damageto Property, ECG or similar, Etc.).
1.5 Head office overheads and profit.
1.6 Financing CHarges (Interest on Retentions, Funding Bondsand Guarantees, Interest on Additional Works, Etc.).
2.0 Disruption Costs
2.1 Labour and Plant (Standing Time, Reduced Output, Etc.).
