CLAIM ADMINSTRATIONS
Definition and Types of Claims
Dispute in simple terms is a difference in a line of thought.
Claim is mostly concerned with entitlements and liabilities
arising under, or as a result of, a legally valid contract.
A construction claim is therefore can be
a demand for payment of additional compensation,
adjustment of the parties‘ respective contractual obligations,
Extension of Time or compensating delay damages, or
any other change with regard to the contractual conditions
or terms.
Claims can be associated with three major categories that can
be understood as the different types of claims. These are:
Time Related Claims: Claims associated with delay or in time
completion of projects where either of the following six
Entitlements or Penalties are subjected to:
Time Extension only
Liquidated Damages only
Time Extension and Cost Compensation
Concurrent compensation
Bonus
Reliving of Obligation
Cost Related Claims: Claims associated with
monetary compensation where either of the
following entitlements or penalties are
entertained:
Additions requiring rate adjustments
Price Changes
Provisional sum adjustments
Default by Contracting Parties: Claims
associated with non performances of
contractual obligations such as:
Delay in Payment Certificates
Suspensions and Terminations
Quality Problem
Requirements for a Valid Claim
Know the different ways of how to deal with
claims and disputes together with their merit
and demerits, and
Know required procedures and avail necessary
documents to make a valid claim.
Following this two requirements, fair and valid claim
administration process requires:
Conducive environment such as Policies, Codes, Standards,
Rules and Regulations called “Macro Environments”.
Institutional capacity and capability to act as a good link
between Macro and Micro Environments such that
their requirements are aligned, developed and work for
better relationships called “Messo Environments”.
These can be considered as stakeholders relationships and
capacity related issue
Company specific issues that considered
internalizing factors with regard to claim
making called “Micro Environments”.
These can be considered as weaknesses of
construction companies. These include:-
Unhealthy Competition
Poor Information Management System
Claim Administration Processes
understood as the process for the
compensation of any damage, and/or changes resulted during
the implementation of Construction projects which are called
entitlements with quantum.
The claim administration process is then understood as the
process starting from a willful act of the claimant through
claim notification by either of the contracting parties up to
and including claims approval and acceptance by both the
Contracting parties for agreed or enforced compensations or
otherwise called claim enforcement.
Claim Submittal: This is a process by which the
claimant is obliged to claim within a
reasonable period of time (28 – 30 days in
most contracts) followed by :-
her/his preparation for all substantial
documents
and legal aspects supporting hers/his
entitlements for an official submittal.
Claim Processing: This process initiates
checking of the claim whether, it is legally or
contractually
supported or not;
documents provided are valid and reliable to
substantiate the claim for consideration or not;
and overall procedural requirements have been
followed or not.
The contractual parties will pass through
different dispute resolution system depending
on
their acceptance over the proposed
compensation varying from the simplest
mediation by the consulting engineer to the
final court ruling in the form of litigation
Claim Enforcement: This is a stage where the
approved claim is enforced and finally
becomes a closure therefore two sub
processes are included.
The claim enforcement process will entertain
the inclusion of the approved claim into
payment certificates where their enforcement
is due.
Contract Conditions related to Claims(MOWUD,1994)
The duties and power of the Engineer is limited such that it
required special approvals of the MoWUD (ERA in the case
of Road projects) in connection with claim clauses causing:
Repayment to contractors under clause 26.3,
Cumulative Time Extension Exceeding 15% of the contract
time under clause 44,
Fixing rates under clause 52.2,
variation exceeding 10% under clause 52.3,
Increase or decrease of costs under clause 70, and
Termination of contract under clauses 63 & 69.
Major Causes for Claims
Generally, deviations from performance
requirements among contractual stakeholders
whether it is related to :-
completion time,
construction cost,
The fulfillment of its quality and its intended
purpose,
safety, health and environmental consequences can
trigger claims in construction contracts.
poor or unclear tender and/or contract
documents,
poor or inadequate administration of
responsibilities by stakeholders, and
Unforeseen or uncertain situations during
execution
Claim causes can be presented into three
main categories:
Changed conditions
Additional works, and
Delay for cost overruns and time extension.
poor or unclear tender and/or contract documents;
They can be good causes for changed conditions that
incur both more time and additional expenses.
Long and slow decision making process,
Weak stakeholders’ relationships resulting from
unhealthy perceptions towards each other
Sub surface conditions that can not be
reasonably revealed; and
Unforeseen Political, Economical, Societal and
Technological uncertainties
