The Global Construction Disputes Report 2018 stated the three prominent causes for disputes in 2017 were (1) Inadequate or improper contract administration, (2) Inadequately drafted or unsubstantiated claims, and (3) Inadequate understanding of contracting Parties obligations or non-compliance with contractual obligations. Source
Standard forms of contract such as FIDIC® and NEC®3 or NEC®4 provide contractual mechanisms that a party shall follow should circumstances arise that provide entitlement under the contract. The success of a claim will directly depend on a Parties ability to demonstrate their entitlement and loss under the contract, in a clear and logical manner, and by applying industry accepted principles to claims and delay analysis.
Issues inevitably occur under the performance of a contract; however, these issues may only give rise to entitlement as defined by the contract. It is important to be proactive with legitimate claims and the onus is on the asserting party to demonstrate its entitlement.
So, how to be more effective in claims management?
- Be knowledgeable on the form of contract and time-barring provisions.
- Develop an effective claims management system and procedures that capture the notice and submission requirements of the contract, and that define your internal action (i.e. what, how, when and by whom).
- Be effective in contract administration.
- Maintain excellent records of the works and site activity. It really is records, records, records.
- Ensure your resources are knowledgeable, competent, and experienced in pre-contact management, post-contract claims preparation and management, and claims avoidance.