Introduction about construction claims management

1. Chapter 1 :
Claims Management Framework

2. • Lets assume that during execution phase , you found some issues - not under your responsibility -
in your project ,that will hinder your progress or incurring you extra costs , but don't know how to
claim your rights , in that case you may loose your rights or may the work stopped completely .
• In addition , you may have some rights , but may you don’t know that you should ask for it , for
example if you found some issues in the project design , and you informed the owner (or consultant)
with these issues , but he asked you to make the redesign or to suggest a proposal , although , your
contract does not include design works , So , if you are not aware of claim management you will do
that and carry this responsibility for free , Hence the importance of Claims Management
1 - Introduction

3. • As per PMI , claim is defined as :
• A request, demand, or assertion of rights , by the contractor against the
owner , or by the owner against the contractor , for consideration,
compensation, or payment under the terms of a legally binding contract, such
as for a disputed change.”
• In simple words , we can say that , claim is a request from one of contract parties to be
compensated due to occurrence of certain events
2 – Claim Definition

4. 1 – Establish a strong Monitoring system
2 - Identify the root causes behind
claims occurrence
3 - Identify the claim type to determine
techniques that will be used
Event that
leads to claim
If you ask for Time conduct Delay
Analysis Techniques
If you ask for Cost conduct Cost
Analysis Techniques
Gather all supporting
documents
4 - Claim Preparation5 - Claim Settlement
3 – Claims Management Processes
Claim Approval

5. • What causes claims on construction projects?
• There are many kind of conflicts occur in construction industry between the
parties which mostly converts into the claims
• Understanding what causes construction claims is the first step in avoiding them.
• In general, There are many classifications of for construction claims reasons , For example
…..
4 – Causes of Construction Claims

6. • In 2003 (James Kerbs ) identifies possible claims reasons into 10 categories as follow
• Almost 46% of construction claims , resulted from design errors
Note That
4 – 1 - Classification according to (James E. Kerbs)
1 – Design errors and omissions 2 – Differing site conditions 3 – Contract changes
4 – Owner interference 5 – Poor subcontractor performance 6 – Schedule Delays
7 – Equipment / System failure 8 – Labor shortage 9 – Poor installation quality
10 – Construction accidents

7. • In 2001 (MPM Construction Engineering Group) found that the root causes of disputes are
universal for most projects , as follows
4 – 2 - Classification according to (MPM Construction Engineering Group)
1 – Uncertainty 2 – The Human element
3 – The significances changes 4 – Contract Limitations

8. • Claims due to contractor practices , in this case owner should
make a claim to be compensated .
• Claims due to owner practices , in this case contractor should
make a claim to be compensated .
Owner practices
Contractor practices
4 – 3 - Classification according to the responsible party

9. • For example , but not limited to
1 – Contractor failure to follow authorized procedures
2 – Poor planning and use of wrong equipment.
3 – Inadequate investigation before bidding.
4 – Delay in Supply of Shop Drawings.
5 – Contractor poor management and administration of the construction site .
4 – 3 - 1 - Causes due to contractor Practices

10. • For example , but not limited to
1 – Delay in Handing over the site
2 – Delay in payments .
3 – Inadequate Bid information.
4 – Change in work scope .
5 – Extra Items and variations.
6 – Owner poor management and administration of the construction site .
4 – 3 - 2 - Causes due to owner Practices

11. • We can divide reasons of construction claims according to the occurrence time , as follows .
2 – Claims during Construction Phase
1 – Claims during bidding phase
4 – 4 - Classification according to occurrence time

12. • For example , but not limited to
1 – Incomplete, Inaccurate, or Unclear Designs
2 – Deficient Site Investigation
3 – Insufficient Bid Time Allowance
4 – Ambiguous Plans and Specifications .
5 – Rejection of Bids .
7 – Unrealistic Scheduling Requirements .
6 - Lack of Communication with Subcontractors and Suppliers During the Bidding Stage
4 – 4 -1 Causes during Bidding Phase

13. • For example , but not limited to
1 – Lack of Control and Good Communication even by owner or contractor
2 – Changes in design and specification
3 – Force majeure
4 – Contractor failure to follow authorized procedures.
5 – Employer lack of construction knowledge.
7 – Delay in handing over of site from preceding contract work .
6 - Late notice to proceed or delay in making site available for next phase of work
4 – 4 -1 Causes during Construction Phase