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Chapter Seven Claims & Disputes: Construction Management

This document discusses claims and disputes that can arise during construction projects. It defines a claim as an assertion of a right to payment, money, or remedy under a construction contract. Claims can involve demands for additional compensation, changes to obligations, or extensions of time. Common causes of claims include deviations from the contract regarding time, cost, quality, or safety. Claims can be time-related, cost-related, or due to defaults by contracting parties. The document provides examples and classifications of different types of claims and discusses methods for avoiding, presenting, evaluating, and resolving claims and disputes.

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310 views20 pages

Chapter Seven Claims & Disputes: Construction Management

This document discusses claims and disputes that can arise during construction projects. It defines a claim as an assertion of a right to payment, money, or remedy under a construction contract. Claims can involve demands for additional compensation, changes to obligations, or extensions of time. Common causes of claims include deviations from the contract regarding time, cost, quality, or safety. Claims can be time-related, cost-related, or due to defaults by contracting parties. The document provides examples and classifications of different types of claims and discusses methods for avoiding, presenting, evaluating, and resolving claims and disputes.

Uploaded by

Refisa Jiru
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Jimma UNIVERSITY

JIMMA INSTITUTE OF TECHNOLOGY

SCHOOL OF CIVIL AND ENVIRONMENTAL ENGINEERING

CONSTRUCTION MANAGEMENT

CHAPTER SEVEN
CLAIMS & DISPUTES

240 Lecture Notes By: Ahmed N.


Definition of claim
 “A claim is an assertion of a right to property, money or a remedy ”

 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:

 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.

241 Lecture Notes By: Ahmed N.


Causes for Claims
 Causes for claims may be the occurrences of deviations from

the promises made under the construction contract during the


performance of the Construction Contract.

These deviations may reflect themselves in terms of :

 completion time;

 construction cost;

 quality performance; and

 safety requirements.

242 Lecture Notes By: Ahmed N.


The following factors may also cause claims.
 Poor or unclear tender and/or contract documents;
 Poor or inadequate administration of responsibilities by
stakeholders; and
 Unforeseen or uncertain situations during execution of the
Construction Project;

The following categories of factors may also contribute to the


emergence of claims.
 Changed conditions;
 Additional works;
 Delay for cost overruns & time extension;

243 Lecture Notes By: Ahmed N.


Major categories of claim

 Time Related Claims:

 Cost Related Claims

 Default by contracting parties

244 Lecture Notes By: Ahmed N.


 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:
 Extension of Time only

 Liquidated Damages only

 Time Extension and Cost Compensation

 Concurrent Compensations

 Bonus

245 Lecture Notes By: Ahmed N.


 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

246 Lecture Notes By: Ahmed N.


Time related claims
 Contract Time of a Project:
 Date of Contract Agreement
 Date of handing over of the site
 Mobilization period
 Date of start of construction works (Commencement date)
 Date of completion time
 Justified and Agreed Supplementary or Extension of
Time.
 Time Delays and Overruns
 Time delays can occur in components of a project or trades of works, but
when their cumulative effect makes the actual completion time beyond
the contract completion time, it is called time overrun.
 Contractors in some instances accelerate projects in order to avoid
liquidated damages.

247 Lecture Notes By: Ahmed N.


 Generally, Time delays can be classified into the following
three categories:
 Concurrent delays
 Justifiable & non-justifiable delays
 Compensable & non Compensable delays

248 Lecture Notes By: Ahmed N.


Compensable delay
 A compensable delay is one where a contractor is entitled to financial

recovery in the form of direct and indirect time related costs arising from
an employer risk event.

 Some examples include

 scope changes,

 late supply of owner materials or information,

 impeded site access, out of sequence

 work requested by owner,

 and differing site conditions.

249 Lecture Notes By: Ahmed N.


Concurrent or parallel delay
 Concurrent or parallel delays occur when there are two or more
independent delays during the same time period.
 Concurrent delays are significant when one is an employer risk event
and the other a contractor risk event, the effects of which are felt at
the same time.
 When two or more delay events arise at different times, but the
effects of them are felt (in whole or in part) at the same time, this is
more correctly termed „concurrent effect‟ of sequential delay events.
(For instance, if a project owner agreed to supply material and
irrespective of its delay, if the project faced adverse weather
condition;)

250 Lecture Notes By: Ahmed N.


Critical delay
 A delay to the progress of any activity on a critical path of a
project which causes delay to the project completion.

251 Lecture Notes By: Ahmed N.


Justifiable (Excusable) delay
 Excusable delay is a delay for which a contractor will have relief
from damages (extension of time) and potential financial entitlement
depending on contractual circumstances.
 delays that occurred due to causes which are beyond the control of
project doer.
 If delays are caused by project owners, the contractor or the
consultant or the supplier is directly justified for the effects on delay
of the project.
 Force Majeure will also be one of the causes for justifiable delay.
 Force majeure contract clauses refers to occurrences which are
beyond the reasonable control of any party to the construction
contract. These are stated as "Acts of God" or "Unavoidable
Casualty." Claims for a time extension are usually permitted. These
claims are due to severe weather, floods, fire, sabotage, and so on.

252 Lecture Notes By: Ahmed N.


Non-Justifiable (Non-excusable) delay
 Delay caused by contractor.

Global delay claim (total time claim)


 A claim for the total project over-run, calculated by comparing the actual
completion date with the planned completion date, where there has been
no discrete causal link established between the delay claimed and the
individual
 Employer risk events relied upon.

Local delay
 A delay to a group of isolated activities which are not on a critical path
and which do not impact upon the planned completion date.

253 Lecture Notes By: Ahmed N.


Records that may support a claim
 Tender and contract
 Drawing register

 Correspondence
 Programmes
 Minutes of meetings

 Records of conversations
 Diaries

 Photographs

254 Lecture Notes By: Ahmed N.


Presentation of claims

 Facts
 Corroboratory evidence

 Written records countersigned

 Witnesses
 Engineer‟s records

 Statements

255 Lecture Notes By: Ahmed N.


Elements of claims

 Introduction
 Contractual basis

 Narrative
 Evaluation
 Appendices

256 Lecture Notes By: Ahmed N.


Evaluating claims
 In Evaluating delay claims, five aspects must be taken into account:

 The effective duration of delay

 The effect of delay on work intended to be done

 The costs attributable to the delay

 The nature of costs / expenses

 The resources and acceleration / expediting measures

257 Lecture Notes By: Ahmed N.


Claims Avoidance
 producing comprehensive, accurate, contract documents constructability

review

 clear understanding of contract requirements prior to bidding

 having good administrative procedures in place

 open and honest communication

 timely troubleshooting

 Claims avoidance begins in the pre-construction phase

 Contract documents need to be clear, accurate, comprehensive, and fairly

distribute risk

258 Lecture Notes By: Ahmed N.


Dispute Resolution
 Early settlement between parties

 Alternative depute resolution (ADR)

 negotiation – arbitration (1 or 3 members)


 mediation – neutral advisors
 Dispute Review Board (DRB)

 3 or more odd number of board members selected evenly by both sides

 Litigation

 sometimes unavoidable; usually undesirable; but sometimes best

method

259 Lecture Notes By: Ahmed N.

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