Causes of Claims On Road Projects

CAUSES OF CLAIMS ON ROAD PROJECTS
A case study in Ethiopia
BY: ABEBE NIGUSSIE

FENTAHUN FEKADU
KIDANEMARIAM TESFAYE
A THESIS SUBMITTED TO
ADDIS ABABA UNIVERSITY
FACULITY OF TECHNOLOGY-SOUTH
DEPARTMENT OF
CONSTRUCTION TECHNOLOGY AND MANAGEMENT
IN PARTIAL FULFILMENT OF
THE REQUIRMENT FOR THE DEGREE OF BSc IN
AUGUST 2006
APPROVED BY BOARD OF EXAMINER:
____________________
____________________
ADVISOR
____________________
______________________
EXAMINER
Causes of Claims on Road Projects in Ethiopia
CAUSES OF CLAIMS ON ROAD PROJECTS

A case study in Ethiopia
BY: ABEBE NIGUSSIE

FENTAHUN FEKADU
KIDANEMARIAM TESFAYE
A THESIS SUBMITTED TO
ADDIS ABABA UNIVERSITY
FACULITY OF TECHNOLOGY-SOUTH
DEPARTMENT OF
IN PARTIAL FULFILMENT OF
THE REQUIRMENT FOR THE DEGREE OF BSc IN
AUGUST 2006
Addis Ababa University, Department of Construction Technology and Management Augest, 2006 I
ABSTRACT
Current practice of the construction industry shows that it is a rare

event most construction projects are completed on the scheduled time,
budgeted cost, and desired quality. The main reason behind is that
construction projects are unique in nature and they are full of
uncertainties. As a result, claims and disputes become common
phenomena especially on large civil engineering contracts.
This thesis addresses the causes of claims on road projects in Ethiopia

as one important input for delivering quality projects. Understanding
the causes will be useful to managing claims in terms of recognition,
mitigation and early resolution.
The study has two main sections: the first part is an overview and
discussions of concepts and contextual practices of claims. In the
second part, a case study and questionnaires are made primarily to
assess the causes of claims in Ethiopian road projects. In addition, this
study (especially the survey questionnaires) also assesses the current
practices of the construction firms and clients in mitigating and/or
administering claims.
This study concludes that the causes of claims in Ethiopian road

projects are many and the major causes are actions/inactions of
Employer’s/Engineer’s and Third parties and deficiency in contract
documents. Hence this thesis gives recommendations anticipatory
approaches that help to minimize the incidence of claims and improve
the management of construction claims.
Key words Claim, causes of claims, claim administration, changed

conditions, deficiencies in contract document, dispute resolution, force
majeur, third party, and variations
Addis Ababa University, Department of Construction Technology and Management Augest, 2006 II
ACKNOWLEDGMENTS
We wish to express our gratitude to those who made this thesis work of
great success. We are greatly thankful to our advisor Ato Ismael
Ibrahim from MH Engineering for his continuous supervision and
support. We also would like to thank Dr. Wubishet Jekale Mengesha for
his invaluable support in providing documents and guidance through
out the whole process; without him it would have been very difficult to
prepare this thesis.
Our special appreciation goes to all engineers in contract administration
division and workers of legal service division documentation department
of the Ethiopian Road Authority/ERA/ for their assistance in providing
documents. We would also like to thank all those who were kind enough
to give replies to our survey questioners scarifying their precious time.
Finally, our deepest gratitude goes to our friends Dereje Hassen,

Kassaw Bediru, Mesfin Hailu and Yehyes Dereje for their support
during the time of writing this thesis.
Abebe Nigussie
Fentahun Fekadu
Kidanemariam Tesfaye
Addis Ababa University, Department of Construction Technology and Management Augest, 2006 III
ABSTRACT........................................................................................... II
ACKNOWLEDGMENTS........................................................................III
LISTS OF ACRONYMS.........................................................................VI
PART ONE - INTRODUCTION AND METHODOLOGY
1. Introduction..................................................................................... 1
1.1 Background ....................................................................................................... 2
1.2 Aim and Objective ........................................................................................... 4
1.3. The study Scope and Limitations ............................................................. 4
1.4 Problem Identification.................................................................................... 5
2. Methodology .................................................................................... 7
2.1. Study methodology ........................................................................................ 7
2.2. Study strategy ................................................................................................. 7
2.3. Orientation of the survey questionnaires............................................... 8
PART TWO - LITRATURE REVIEW
1 Claim Perspective............................................................................ 10
1.1 Definitions .............................................................................. 11
1.2 Valid claims ............................................................................ 12
1.3 Contents of a claim ................................................................. 12
1.4 Classification of claims ............................................................ 13
1.5 Impacts of claims .................................................................... 14
2. Causes of claims .................................................................................................. 15
2.1 Principal causes of claims ....................................................... 15
2.2 Remedial rights ....................................................................... 24
3 Provisions of standard conditions of contracts on claims ................. 25
3.1 MoWUD, 1994 provisions on claims ....................................................... 25
3.2 FIDIC, 1987 provisions on claims............................................................ 28
3.3 Standard bidding document for the procurement of works............ 31
by PPA, 2006 .......................................................................................................... 31
4. Claim Administration and Mitigation.............................................. 36
4.1 Claim Administration Process................................................................... 36
4.2 Mitigation ......................................................................................................... 38
4.2.1 What to be done before work begins...................................... 38
Addis Ababa University, Department of Construction Technology and Management Augest, 2006 IV
4.2.2. Work to be done after work begins ....................................... 39

5. Claim awareness in Ethiopian construction industry...................... 41
5.2 Study on causes of claims.......................................................................... 42
5.3 Impacts of claim on the Ethiopian construction industry ......... 43
5.4 Claim and local contractors....................................................................... 44
PART THREE - CASE STUDY AND QESTIONNAIRIES ANALYSIS
1. The Case Study Projects................................................................. 45
1.1 Causes of claims experienced in the case study projects ................ 47
1.2 Analysis of the case study projects ......................................................... 52
1.2.1 Analysis of the causes of claims............................................ 52
1.2.2 Extent of cost And time claims ............................................. 55
2. Analysis of the survey questionnaires............................................. 59
2.1. Profile of the questionnaires..................................................................... 59
2.2. The respondents ........................................................................................... 59
2.3. General information from the survey questionnaires ...................... 60
2.4. Causes of claims experienced by the surveyed firms. ..................... 60
2.5. Impacts and mitigation of claims............................................................ 63
PART FOUR - CONCLUSIONS AND RECOMMENDATIONS
Conclusions and Recommendations ................................................... 67
1 Conclusions......................................................................................................... 67
2 Recommendations............................................................................................. 70
APPENDIXES
LISTS OF FIGURES
Figure 1 Simplified Problem Tree (Identification of Study Problem) ....... 6
Figure 2 Study structure..................................................................... 9
Figure 3: Claim Administration Process.............................................. 36
Figure 4 Percentage of major category of claim factors....................... 55
Figure 5- Relative Percentage of Claimed and Granted Time and Cost 58
Addis Ababa University, Department of Construction Technology and Management Augest, 2006 V
LISTS OF TABLES
Table 1 source of claims.................................................................... 23

Table 2: Claim clauses in SCC for construction of civil work projects,
MoWUD, 1994 ..................................................................... 28
Table 3 clauses of contractor’s entitlements ....................................... 30
Table 4 - clauses for employer’s recovery of money from contractor .... 31
Table 5: Standard bidding document for the procurement of works .... 34
Table 6 summaries of the causes of claims on the selected projects .... 51
Table 7 Frequency distribution of major category of claim factors ..... 54
Table 8 summaries of claimed and granted time and cost................... 56
Table 9 Summary on the response rate of questionnaires ................... 60
Table 10 average rate of causes of claims ........................................... 61
Addis Ababa University, Department of Construction Technology and Management Augest, 2006 VI
LISTS OF ACRONYMS
AACRA Addis Ababa City Road Authority

CPD Continuing Professional Development
CRBC China Road and Bridge Construction
DAB Dispute Adjudication Board
DNP Defects Notification Board
DRB Dispute Review Board
ERA Ethiopian Road Authority
EOT Extensions of Time
FIDIC Federation International Des Ingenieurs Coseils
ICB International Competitive Bidding
ICC International Chamber of Commerce
MOF Ministry of Finance
MoWUD Ministry of Works and Urban Development
PPA Public procurement agency
QA Quality Assurance
QC Quality Control
RSDP Road Sector Development Program
SCC Standard Condition of Contract
VE Value Engineering
Addis Ababa University, Department of Construction Technology and Management Augest, 2006 VII
PART ONE
INTRODUCTION AND METHODOLOGY
Addis Ababa University, Department of Construction Technology and Management Augest, 2006 1
1. Introduction
This paper has two major parts. The first part reviews conceptual and
contextual review of causes of claims in road projects and the second
part deals with a practical case study on the causes of claims on road
projects in Ethiopia.
Chapter one of this paper presents the background, aim & objective,
scope & limitation, and problem identification of this study. While the
second chapter briefly describes the study methodology and strategy
followed in writing this paper. Chapter three of this study is a literature
review on causes of claims and related issues such as classifications,
impacts, remedial rights, claim administration process and mitigation,
and claim awareness in Ethiopian construction industry. It also reviews
MoWUD, FIDIC and PPA standard conditions of contracts, which are
related to this study. Chapter four and five are the case study and
analysis of questionnaires part of this paper respectively and Chapter
six is discussion on the findings of the case study and results of the
survey questionnaires. Conclusion and few recommendations are
provided in the last chapter.
1.1 Background
Within the last decade, road sector development has been one of the
priority public investment areas for the success of the envisaged
Ethiopian economic recovery program. The free market economic
practice in Ethiopia has created a better opportunity for participation of
local and foreign investors in the construction activities. However,
achieving the required quality and completing projects within overall
budget and allocated time have been difficulties experienced during the
implementation of most road projects. Projects are unique and
complicated by their nature. High levels of art and craft are required to
translate an owner’s vision into plans and specifications, then into real
structures, one that fits the needs of the individuals and the public. In
addition to technical skills, the ability to coordinate the diverse efforts of

many individuals is crucial to success. The participants on any
construction project include the owner, architect, engineer, project
manager, prime contractor, several subcontractors, suppliers of
materials and equipments, materials manufacturers, insurance
companies, banks, owner’s lender, financers, etc. In most instances,
these partakers arrive at the project as a member of a staff or crew of
distinctly different companies.
Problems crop up during construction projects due to delay, unexpected
additional or extra work, defective work, cost overruns, structural
failure and accidents, late information, interpretation of documents,
unforeseen circumstances, etc. If these causes are not addressed, they
result in claims and disputes that will involve more people, additional
time, and higher costs. Claims related to construction projects are
inevitable and there is no way of eliminating all project risks, as some
are unforeseeable. However, if a contract document is well designed i.e.
duties are clearly defined, risks are fairly shared, uncertainties are
considered, claims are anticipated, and a comprehensive resolution
process are agreed upon, it provides significant protection to both
parties.
This paper attempts to assess causes of claims in road projects by

giving some theoretical backgrounds. In addition, the experiences of the
Ethiopian Road Authority (ERA) and the Addis Ababa City Road
Authority (AACRA) construction claims have been investigated as the
case study in this paper. The claim submittals of six ERA and one
AACRA projects have been studied as a sample. The dominant types of
claims encountered and their root causes have been studied through
questioners and documents study of representative projects.
1.2 Aim and Objective
The aim and objective of this thesis is to analyze the causes of claims in
road projects and forward recommendations for future action that helps
in mitigating claims. The study focuses on the root causes of claims.
The study also addresses types of claims, claim administration process,
impacts of claims and review of the conditions of contract. The cases
selected have been analyzed with the objective of identifying the root
causes of construction claims and enhance the management of claims
for efficient project deliveries. As a conclusion the thesis suggests
procedures and practices that seek to minimize the incidence of claims.
1.3. The study Scope and Limitations
The scope of a research can be built using four different parameters.

These included: Significance, Delimitations, Definitions and Limitations of
the study (Creswell, 2003 as quoted in Wubishet, 2004). This thesis
has therefore used these parameters in determining its scope.
Practice shows that it is a rare event construction projects are

completed as per scheduled time, budgeted cost and desired quality. We
believe that most of the factors that contribute to the above truth are
related to the frequent claims that arise in many projects. The
significance of this thesis is to enhance the quality of project delivery by
addressing the causes of claims as one issue.
The following two major issues were delimited in this thesis. These
delimitations were related to the focus of the research problem. The two
main focuses are:
• The causes of claims
• Road projects.
Usually limitations are encountered during conducting, processing and

writing a research. The following limitations were encountered in this
study:
• Limited time to do the thesis,
• Lack of timely response of some of the construction firms &
the clients for the distributed questionnaires.
• Difficulty to access full documents of claims for case study
1.4 Problem Identification
This study attempts to identify causes of claims in road projects in

Ethiopia and “what should be done to mitigate claims”. The simplified
tree below (fig. 1) illustrates the research problem identification for the
study.
Mitigation
Impacts of claims
Causes of claims in
Ethiopian road projects
Causes of claims on
road projects
Figure 1 Simplified Problem Tree (Identification of Study Problem)
2. Methodology
2.1. Study methodology
The methodology followed in this paper is inductive in nature. It

explores relevant factors, which are the causes of claims in road
projects, by taking sample projects as a case study and using
questionnaires. The sample projects are taken from ERA (six) and
AACRA (one).
2.2. Study strategy
The study strategy followed in this study is carried out after the
identification of the problem as a case to be studied. The six major steps
that are used in this case study is:
• Literature review on the trends and practices used in the
construction industry with respect to construction claims is
assessed as theoretical background. The literature survey
includes definitions, classifications, causes, impacts, mitigating
factors, provision of the MoWUD, FIDIC and PPA conditions of
contract and claim awareness in the Ethiopian construction
industry,
• Questionnaires are designed and distributed to those who take
part in the industry (clients, consultants and contactors). Some of
these questionnaires are filled in the form of interviews and some
are distributed with introduction on the topic as objective of the
research. The questionnaires are structured to address causes,
consequences, and current practices of the firms in minimizing
and/or administering claims. Moreover, their opinion on other
additional techniques were collected,
• Identification and Analysis of case study projects; these projects
were recognized and analyzed while processing the questionnaires
with clients, contractors and consultants. Analysis of the claim
cases of seven selected projects was carried out through
document study,
• Analysis of the experience of stakeholders was carried out

through questionnaires; the analysis was carried out based on
the responses of the participants, giving special attention to the
causes of claims,
• Discussions are made on the analysis made on the gathered data
to draw conclusions answering the question “what are the causes
of claims in road projects how to mitigate them?” and
• Conclusion is produced from the analysis made in the research

and recommendations are given for mitigating and/or
administrating claims. In addition some areas of further research
are suggested.
The study strategy is summarized and shown in the following

diagram.(Figure 2)
2.3. Orientation of the survey questionnaires
The questionnaires are specific and adapted for an assessment on the

causes of claims in road projects. The questionnaires are detailed ones
and classified into three sections, and include the following areas:
Section I: - General information (profile, experience in
construction contracts and construction claims) of the
construction firms and clients.
Section II: -Causes of construction claims in road projects and the
type of contractual claims that occur.
Section III: -The impacts of claims and their mitigation in road
projects.
Thesis
Proposal
Literature
Review
Research Case
Instrument Identification
Data collection Case

& Analysis analysis
Conclusions
Recommendations
Figure 2 Study structure
The document study and questionnaires were used to gather

information on the causes of claims and their impacts in road projects.
In general, the data collected in both ways has been used to:
• Identify the root causes of claims in road projects,
• Assess the practice in use by the construction firms and clients in
mitigating claims, and
• Collect the response of the practitioners on mitigation of claims.
PART TWO
LITRATURE REVIEW
1 Claim Perspective
1.1 Definitions
Before dealing with literatures definition it is perhaps best to begin with

a dictionary definition of claim. Claim in Oxford advanced learner’s
dictionary, 2001 is defined as:
• To say something is true although it has not been proved and
other people may not believe it
• To demand or ask for something because you believe it is your
legal right to own or to have it
Different writers define construction claim on their own ways ;
• A claim is a defined as a demand or assertion by one of the
parties seeking, as a matter of right, adjustment or interpretation
of contract terms, payment of money, extension of time or other
relief with respect to the terms of the contract. (Sung II Kim, et al
2003)
• A claim is mostly concerned with entitlements and liabilities
arising under, or as a result of, a legally valid contract (Hughes &
Barber, 1992).
• A construction claim is a demand for payment of additional
compensation, adjustment of the parties' respective contractual
obligations, or any other change with regard to the contractual
conditions or terms. (Wubishet, 2006)
• Claim in practice can also be understood in different ways based
on the perceptions held by contractual stakeholders. R. Max
Wideman, 2001 provide the following suggestions:
- A claim is a disguised form of blackmail
- A claim is the last chance to bail out of a losing job
- A claim is an assertion to a contractual right
1.2 Valid claims
Valid claims are referred to those claims that the contractor is entitled
to. All parties involved in the contract (particularly the owner) should be
aware of the causes of valid claims. It often happens that claims that
might otherwise be valid are rejected because:
• Timely notice was not given,
• The claim is late,
• Contract procedures were not followed,
• Proper records were not kept
• The claim does not establish any valid entitlement under the
contract,
• Inadequate information is available or provided to verify the claim
or support its quantification. (Abera Bekele, 2005)
1.3 Contents of a claim
It is essential that for every claim, the contractor provide to the engineer
appropriately documented claims. K.L Scott, 1992 suggests the
following points to be included in claim documents.
Introduction: - describing the parties to the claim, giving brief details of
the project and those elements that have given rise to the claim. The
introduction should conclude with a statement to the effect that the
contractor is seeking reimbursement of direct loss and/or expense.
Contract details: - including the form of contract employed with the
appropriate amendments, the date of possession of site, date for
completion, date of practical completion and rate of liquidated damage,
etc. More importantly, all those express terms of the contract upon
which the contractor is to rely and any implied terms that may be
promoted should be set down. Any common law principles such as
misrepresentation should be highlighted.
A narrative: - describing in chronological order those elements which

give rise to the claim. It will be necessary to link this back to the
contract details showing how, when and where the breach occurred. All
written applications for reimbursement of direct loss and/or expense
should also be identified here and referred to and contained in
appendices at the back of the submission. The contractor includes a
certain impact documents such as schedule of events.
Quantum: - this section will include all those calculations of building
up to the direct loss and/or expense with all necessary evidential
example, time sheets, invoices, etc… being referred to an appendix.
Appendix: - each document or series of documents should be given an
appendix reference that will coincide with the relevant reference in the
narrative, etc…
1.4 Classification of claims
Having arrived at the definition, it is necessary to look at the various

types of claim to better recognize a claim situation as it is happening. In
addition it helps to arrive at some reasoned basis for such claims.
Claims can be classified based on their type and entitlements.
1.4.1 Classification by type
Contractual claims: - These claims, sometimes referred to as claims in

the contract, concern matters which have a basis in the contract itself
where particular provision can be quoted as giving rise to entitlement.
They have particular clauses in the contract that define the basis of
valuation to be adopted and stipulate who (employer, contractor or
consultant) is to do what. (Houghs & Barber, 1992)
Extra- contractual / Quantum Merit claims: - In the absence of

express contractual provisions dealing with entitlements and
adjustments, common law remedies may be available. The essential
point is that a party wishing to benefit from a common law remedy must
assert his right by claiming it, but the engineer has no implied authority
to settle such claims. (Houghs & Barber, 1992)
Ex gratia: - These sort of claims are not covered under the contract but
can be paid in a sense of “fairness” or equity. (A Continuing Professional
Development (CPD) study pack, 1995)
1.4.2 Classification based on entitlement
This classification mainly deals with the parties’ entitlement in claim

administration process. Stuart J. Einbinder Esq, 2004 classified claims
into two primary types based on entitlements, but substantially overlap.
Non-Time Related Claims – Claims that seek additional cost (and

usually profit and overhead) to perform changed scope-of-work.
Time Related Claims - these claims are usually related to:
• Delay
• Disruption
• Acceleration
1.5 Impacts of claims
Claims have considerable damage to the construction industry; at best

claims are undesirable. Besides incurring unwanted legal expenses,
they strain the relationship between the parties to the contract and
affect the working atmosphere. Each party may see the other as an
adversary, which affects the future of the work, and can result in the
parties being defensive. In such atmosphere more claims may be
inevitable. This eventually affects the work and may result in many
types of impacts. Tesfaye Ayele, 2004 in his Masters thesis has listed
some of these impacts as:
¾ Inefficient project delivery in terms of cost, time and quality;
¾ Takes much time of the policy makers;
¾ Reduces trust on public- private partnership for development;

¾ Reduces creative and innovative competition among the
corporate; etc…
2. Causes of claims
There are many reasons for claims to arise on a construction project.

Deviations from performance requirements among contractual
stakeholders whether it is related to completion time, or construction
cost, or the fulfillment of its quality and its intended purpose, or safety,
health and environmental consequences can trigger claims in
construction contracts. In addition unforeseen political, economical,
social and technological uncertainties can also be the major factors
causing claims.
2.1 Principal causes of claims
Different writers classify causes of claims differently depending on the

particular issues they address. Most of the classifications are related to
contract documents and changed conditions.
Wagner, et al classified causes of claims as:
• Constructive changes
• Acceleration and disruption
• Changed conditions
• Schedule change
• Delays
• Miscellaneous
2.1.1 Constructive changes
Changes resulting from acts attributable to the owner, which cause

more work or more time on the job than planned, but for which the
owner refuses to execute formal Change orders. The followings are listed
in ‘Construction Claims Guide’ by Wagner, et al,
1. Variations
Variations are a fact of life in the construction industry and give rise to
many problems, whichever form of contract is used (Vincent Powel
Smith, 1990). The 4th edition of the FIDIC International Conditions of
contract (1987) defines variations as:
• Increase or decrease of the quantity of work included in the
contract;
• Omissions of such work;
• Changes in the character, quality or kind of the work;
• Changes in the levels, lines, positions and dimensions o any part
of the works;
• The execution of additional work of any kind necessary for the
completion of the works;
• Changes in any specified sequence of timing of construction of
any part of the works.
All the standard form of contracts contains variations clauses because,
without an express power to direct departure from the original contract
work, the employer would have no power to order it.
2. Changes in design and specifications, and defective drawings
This includes errors, omissions, changes or ambiguities occurring in the
contract documents.
Errors, omissions and changes: - An incomplete, inaccurate or poorly
coordinated design inevitably will produce a project with conflicts and
unanticipated costs and delay. An accurate and complete design will
help in minimizing the risk of misunderstanding and litigation, and
provides more protection for the owner. (Greenberg Traurig, 2004).
Ambiguities: -Ambiguities and discrepancies can arise between
documents or within a given document. The legal rules for constructing
contracts operate to resolve ambiguities, but the answer provided by the
rules might not be satisfactory as regards what is actually to be built. A
discrepancy might even invalidate the contract if could not be resolved.
Accordingly most forms of contract provide powers to resolve

ambiguities and discrepancies as regards work to be executed, but
subject to possible adjustment of entitlement to payment. Errors or
alleged errors in bill of quantities are a profile source of argument, if not
a dispute or possibly a claim. (Reg Thomas, 2001)
3. Non-Disclosure
Failure to provide all available information. Usually relates to
information known by the designers but not made a part of the contract
documents.
4. Over Inspection
Inspector demands work quality higher than normal industry standard
or requires special operations.
5. Work out of Sequence
Work in a different order than originally planned.
6. Changes in Method
A change in the way of doing the work on a project.
7. Higher Standards
Requires higher quality work than called for in the specifications.
8. Impractical or Impossible
Work physically impossible to perform or economically impractical.
2.1.2 Accelerations
Acceleration
When the owner orders completion of the project sooner than required
by the contract or orders work finished on the original completion date
failing to grant time extensions, which are due. Wagner, et al, xxxx
classified accelerations as direct and constructive.
Directed: - When projects delay or when projects are required to be
completed before its time, project doers are obliged to accelerate their
services or works to satisfy the requirements. The project doer is
entitled to compensation and time extension, if and only if delays are

justified and at the same time compensable (Wubishet, 2006)
Constructive: - Contractor must complete project without an adjusted
progress schedule when the owner wrongly refuses to grant a time
extension for an excusable delay. The acceleration of projects will only
serve to relieve project doers from liabilities they should cover to the
project owners.
2.1.3 Changed conditions and Unusually Sever Weather Conditions
1. Changed conditions
Changed conditions are conditions other than what a wise person would
have expected. This includes:
• Subsurface of latent physical conditions differing materially from
those indicated in the contract.
• Unknown physical conditions at the site, of an unusual nature,
differing materially from those ordinarily encountered in work of
the character provided for in the contract (Wagner, et al,)
2. Unusually Sever Weather Conditions

Under a rule-of-thumb evaluation, any weather that results in an ability
to perform work at the site, and which is in excess of the average
annual rainfall over a historic period of say, 5 or 10 years, might be
taken as unusually sever weather condition. However no matters how
sever or destructive, if the weather is not unusual for the particular
time and place, or if the contractor should have reasonably anticipated
it, the contractor is not entitled to relief (Greenberg Traurig, 2004).
2.1.4 Schedule change
This refers changes in the time or sequence of the schedule to complete

a project. The following two are described in clauses 40 and 65.8 of
FIDC condition of contract red book, 1987.
1. Suspension
Suspension is work stoppage for the benefit of one of the parties in the
contract. In construction contracts the engineer has the authority to
suspend the progress of the whole or any part of the works. In such
cases the contractor is entitled to time extension and additional costs
incurred unless such suspension is provided for in the contract by
default or breach of contract by the contractor, by reasons of climatic
conditions or necessary for the proper execution or safety of the works.
If the employer fails to pay the contractor the amount due under
payment certificates, the contractor can suspend the work or reduce the
rate of the work.
2. Termination
Either or both parties have the right to terminate contract under certain
circumstances. However, before termination parties should describe the
contract events that trigger the termination of the contract under
certain conditions. In additions, there should be a description of the
methods of giving notice of exercise of the termination right and
whether the breaching party must be given an opportunity to cure the
breach before the other party can terminate the contract.
2.1.5 Delays
Stuart J. Einbinder Esq, 2004 have classified delays in to three types

as:
1. Excusable – Excusable delays are those delay-causing events that

are unforeseen and outside the contractor’s control. Contractor is
typically entitled to time extension and possibly extra compensation.
2. Non-Excusable – Any delay owing to the fault of a contractor or its
subcontractors, which does not merit extra compensation or time
extensions.
3. Compensable – Delays which the owner or the owner’s
representatives, entitle the contractor to receive extra compensation in
addition to time.
Delays can also be dealt as described by Wagner, et al, xxxx as: delays
which are the responsibility of the owner, contractor, consultant, and
delays that are beyond the control of either party.
1. Owner Caused
Possession of site: - before award of the contract, the employer and the
contactor should agree on the period of notice to commence, in order to
allow for mobilization and the taking of records and photographs
showing the condition of access of the site prior to possession by the
contractor. (Reg Thomas, 2001)
Owner interference / Disruption: - an event that increases the cost of
performance but does not necessarily delay the whole project.
Disruption is also referred to as hindrance or interference. Contractors
alleging that acts on the part of owners have impeded their ability to
perform the job in an efficient manner bring most disruption claims
Payment terms: - untimely payment for completed works is one of the
problems causing project delays. It is a major concern for contractors
and as it affects their financial situation, which intern will directly have
an effect on the progress of the work. The time it takes for the owner to
effect payment from the date the payment has been submitted must be
specified. If the owner does not pay as per the specified time range in
the contract it can lead to a potential claim.
Directed slowdown and reduction in resource
2. Designer Caused
Late shop drawing approval,
Design error,
Failure to accept
3. Contractor Caused.
Rework,
Lack of productivity,
Procurement failures
4. Force Majeure
FIDIC condition of contracts, 1987 defines force majeur as “an
exceptional event or circumstance:
• Which is beyond the parties control
• Which such party could not reasonably have provided against before
entering into the contract
• Which, have arisen, such party could not reasonably have avoided
or overcome
• Which is not substantially attributable to the other party.”
Reg Thomas, 2001 has listed factors that cause force majeur
• Hurricanes,
• Tornadoes,
• War
2.1.6 Miscellaneous
Claims, which do not fall into any of the above categories, are listed by
Wagner, et al,
1. Project Delivery Systems

Driven by market forces, recent decades have seen the use of innovative
project delivery systems and contract forms reflecting those systems
which affect the risk of conflicts regarding such fundamental issues as
scope, time, money and risk allocation that leads to potential claims.
Such conflicts are usually the result of ambiguities regarding which
party is responsible for management of the construction work and
which is responsible for the design.
2. Refusal to Accept Completed Work
Owner refuses to takeover completed work and Contractor is forced to
maintain and protect the work.
3. Early Occupancy
Owner moves into facility and interferes with the Contractor.
4. Changes in Scope
Project’s purpose is altered or increased significantly.
5. Cardinal Change
Owner alters a project radically
6. Material Breach Violation of an important contract obligation
The different factors that give rise to claims are similar and repetitive in
nature. The following table summarizes these factors based on their
sources. (Table 1)
Owner Caused Contractor Caused

-Changes in designs and -Unbalanced bidding
specifications -Inadequate investigation before bidding
-Untimely payment -Non-compliance with contract document
-Failure to provide possession of -Schedule updates not done
site -Not following engineer’s instructions
-Extra work -Change in construction methods
-Termination -Termination of contracts
-Inadequate bid information -Lack of expertise
-Suspension -Delay in completion time
-Late removal of obstruction -Subcontractor’s delays
Third party Caused

Consultant Caused -Change in legislation
-Instructions for additional work -License for importation of equipments,
-Delayed approval of schedules, explosives…etc
work orders, samples, lab. tests -Obstructions by customs
-Late instructions -Labor strike / unrest
-Impractical or impossible -Shortage & problem on delivery of materials
instructions
-Higher standards
-Delayed supply of drawings Differing conditions
-Lack of expertise -Landslides
-Sever weather condition
Contract Document -Shortage of suitable quarry
-Ambiguity and discrepancies
among documents forming
contract
-Conflicts in designs and Force Majeur
specifications -Flood
-Non availability of survey -Site security problems
benchmarks -War & hostilities
-Errors and omissions
Table 1 source of claims
2.2 Remedial rights
Remedial rights are entitlements for non performances of the

contractual obligation by the contracting parties. Such rights can be
entertained considering the efforts sustained by the contracting parties
in lieu of their duty to mitigate the non performances. The following
remedial rights are used in the construction industry.
1.Time extension
Time extension is a provision for justified time delays. Time extensions
may or may not be entitled for compensation using critical path
method; it is only justified delays that occur on the critical path that is
compensable. The effect of time extension is to relieve liabilities of delay
damages such as liquidated damage. (Wubishet, 2006)
2. Liquidated damage
If the contractor fails to comply with the time completion in accordance
with contract document, then the contractor shall pay to the employer
the sum stated in the appendix to the tender to the tender as liquidated
damages (FIDIC, 1987). However, if the owner caused the delay the
liquidated damages provision will not be enforced. The followings are
the amount of liquidation damage the contractor has to pay in the
current practice of our construction industry.
For Buildings ----- 1/1000 birr of delayed amount per calendar delay
days
For Road projects ---- 50,000 -100,000 birr per calendar delay days
3. Cost compensation
Damages can involve additional costs incurred by the extended duration
of its performance. Damages typically include costs of idle labors and
equipment, higher costs of performance during the late period of time
and extended general conditions. (Wubishet, 2006)
Other remedial rights include
• Time extension and cost compensation at the same time

• Bonus
• Relieving of obligation
3 Provisions of standard conditions of contracts on

claims
3.1 MoWUD, 1994 provisions on claims
Wubishet in procurement and contract administration, 2006 listed out

claim clauses which are set out in the MoWUD’s standard conditions of
contracts for construction of civil work projects in Ethiopia, 1994 is
given in the following table. (Table 2)
Clause
No. Description of claims Entitlement Due to
Ambiguities or discrepancies among Additional Cost+ The

5.2 several documents forming the contract Time Extensions Contractor
Failure or inability to issue Engineering

drawings with in reasonable time causing Additional Cost + The
6.4 disruption of progress. Time Extensions Contractor
Physical conditions or artificial Additional Cost + The

12 obstructions which can not be predictable Time Extensions Contractor
Additional boreholes or exploratory Additional Cost + The

18 excavation Profit Contractor
Repairs due to damages, loss or injury Additional Cost + The

20.1 from any of the excepted risks Profit Contractor
Repayment The
25 Contractor's failure to insure. successively Employer
Compliance with statutes, Regulations, The

26.3 etc. Additional Cost Contractor
Obstructions such as archeological and The

27 geological interests or structures Additional Cost Contractor
30.2 & Protection or strengthening due to special Additional Cost + The

30.4 loads to highways or bridges Profit Contractor
30.3 & Damages due to extraordinary traffic Repayment The

30.4 claims successively Employer
Use of constructors belongings for other Additional Cost + The

31 purposes by the Employer Profit Contractor
Tests additional to provided in the The

36.4 contract Additional cost Contractor
Uncovering and making openings to inspected The

38.2 works Additional cost Contractor
Clause
Repayment The
39.2 Removal of improper work & Material successively Employer
Additional Cost + The

40.1 Extra cost due to suspension Time extension Contractor
Failure on the part of the Employer for Additional Cost + The

42.1 possession Time Extension Contractor
The
47.1 Delay in completion time Liquidated damage Employer
Cost due to remedy works other than Additional cost + The

49.3 contractors responsibility Profit contractor
The
49.4 Remedy on contractor's failure Repayment Employer
Searching for defects, imperfections, or Additional cost

50 faults +Profit
The
contractor
/ The
52.1 Valuation of variations +/- cost Employer
63.1 & Costs incurred by the Employer due to The

63.3 default by the contractor Repayment Employer
Urgent remedial work made by the The

64 Employer Repayment Employer
Additional cost + The

65.3 Damage due to special risks profit Contractor
65.5 Increased costs due to special risks Additional cost

Contractor
Additional cost /
65.8 Payment after termination Repayment Employer
Clause
Additional cost + The

69 Default by the Employer Time Extension Contractor
The
contractor
70.1 - Additions / / The
70.2 Changes in Cost & Legislation Omissions Employer
Table 2: Claim clauses in SCC for construction of civil work projects, MoWUD,
1994
3.2 FIDIC, 1987 provisions on claims
There are certain clauses, which provide the contractor with opportunities for
increasing the contract price, and certain clauses that entitle the employer to
receive payments from the contractor. These clauses are listed in tables 3 and
4. (FIDIC digest, 1990)
Clause
No. Clause title Entitlement
Ambiguities or discrepancies among several documents Additional Cost+

5.2 forming the contract Time Extensions
Additional Cost +
6.3 & 6.4 Delay in engineering drawings with in reasonable time Time Extensions
Physical conditions or obstructions which can not be Additional Cost +

12.2 predictable Time Extensions
Additional Cost +
17.1 Setting out(errors based on incorrect data) Profit
Additional Cost +
18.1 Exploratory boreholes Profit
Additional Cost +
20.3 Repairs and employer’s risks Profit
Additional Cost +
27.1 Fossils, antiquities, structures Time Extensions
Additional Cost +
31.2 Opportunities to other contractors Profit
Additional Cost +
36.5 Additional tests Time Extensions
38.2 Uncovering and making openings to inspected works Additional cost
Additional Cost +
40.2 Suspension Time extension
Additional Cost +
42.2 Employer’s failure to give possession Time Extension
Additional cost +
49.3 Cost of remedying defects Profit
Clause
No. Clause title Entitlement
50.1 Search for defects Additional cost
Additional cost +
52.1 Variations Profit
52.1& Additional cost +

52.2 Extra payment for variation orders Profit
52.3 Fifteen percent reduction or decrease + Cost
Additional cost +
65.3 Damage to works by special risks profit
65.5 Increased costs arising from special risks Additional cost
Additional cost +
65.8 Termination of contract profit
Additional cost +
69 Default by the Employer Time Extension
70.1 Increase or decrease in cost By formula
70.2 Changes in legislation + Cost
Additional cost +
71 Currency and rate of exchange profit
Table 3 clauses of contractor’s entitlements
Clause
number Clause title Notice
25.3 Contractor’s failure on insurance No notice
30.3 & 30.4 Damages to highways and bridges Consult
37.4 Rejection of materials and plants Engineer’s notice
Contractor’s failure to obey engineer

39.2 (improper work and materials) Engineer’s notice
46.1 Rate of progress Engineer’s notice
Failure to complete on time(liquidated

47.1 damage) Engineer’s notice
49.4 Failure of the contractor to do repairs Engineer’s notice
failure to prove payment to sub-

59.5 contractors Engineer’s notice
63.3 Default by the contractor Engineer’s notice
64.1 Urgent remedial work Engineer’s notice
65.8 Payment on termination Engineer’s notice
Table 4 - clauses for employer’s recovery of money from contractor
3.3 Standard bidding document for the procurement of works

by PPA, 2006
The following table revises claim clauses provided in the new standard
condition of contract by public procurement agency.
Clause No. Description of claims Entitlement
A. General
Discrepancies among several documents of Additional Cost

the contract. +
2.3 Time Extensions
The contractor shall not assign the sub-

contractor without the approval of the Liquidated
7.1 Employer in writing damage
8.1 Cooperation with other contractors Additional Cost
Repairs due to damages, loss or injury from

11.2 any of the excepted risks Additional Cost
Repairs due to damages, loss or injury from

12.1 any of the Employer’s risks. Time Extensions
13.3 Contractors failure to insure Repayment
Cost
+
Execution of the work in accordance with Release from
16.1 the specifications and drawings performance
The contractor to comply with third parties

18.4 approval for the design of temporary works. Additional Cost
Additional Cost +
20.1 Historical or other interest discoveries Time Extensions
Additional Cost +
21.1 Possession of site Time Extensions
B. Time control
Updates of program submittals including

27.1&27.3 change to sequence. - cost
28.1&28.2& Additional Cost +

29.2 Variation and delay due to variation Time extension
29.1 Acceleration Additional Cost
Additional Cost +
30.1 Delayed orders by the Engineer Time extension
C. Quality control
33.1 Identify defects and uncover the works Additional Cost
34.1 Additional tests instructed by the Engineer Additional Cost
35.1 Correction of defects Time extension
36.1 Uncorrected defects Repayment
D. Cost control
Changes in the bill of quantities (adjustment

38.1 of rates) Cost +/-
39.1 Variations +/- Cost
Additional cost
43.1& 43.2 Interest on delayed payment
Employer affects other contractor who is

under the contract by modification of
44.1 b schedules Additional cost
Delay on drawings, specifications, or

instructions required for execution of the
44.1 c work on time Cost
45.1 Tax adjustments by the Engineer Cost
46.1 Currency restriction Cost
49.1 Liquidated damage Cost
49.2 Overpayment of liquidate damage Cost
Bonus to the contractor at the rate per

50.1 calendar date Cost
51.1-3 Delay on advance payment Cost
Operating and maintenance manuals as

58.1 required Repayment
Termination of contract if the total amount

due to the Employer exceeds any payment
60.1 due to the contractor Cost
60.2 Termination of contract Cost
Repayment/termin
61.1 Contractor’s default ation
Release from
62.1 Frustration like war performance
Table 5: Standard bidding document for the procurement of works

by PPA, 2006
The provisions of the three standard condition of contract is more or less the
same except the following points
• PPA condition of contract studies under the classification general, time

control, quality control, cost control, finishing of the contract.
• PPA condition of contract has separately listed those events that are
compensable under clause 44.
• The description of each clause is given under different clause numbers
• MoWUD and FIDIC condition of contracts are almost similar
4. Claim Administration and Mitigation

4.1 Claim Administration Process
Wubishet in procurement and contract administration, 2006 described claim

administration process 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. This is because claims require
establishing both the liabilities as well as the damages incurred in any
construction contract. Construction contracts allow that all contracting parties
will be entitled to make claims. He further categorizes the process into three
major functions. These include Claim Submittal, Claim Processing and Claim
Enforcement. (Figure 2).
• Claim Notification
• Claim Enforcement
• Claim Preparation
• Claim Submittal • Claim Closure
Claim Claim Claim

Submittal Processing Enforcement
• Claim Handling
• Dispute Resolution
• Claim Approval
Figure 3: Claim Administration Process
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. This constituted that a claim
has been filed for its consideration if all these three sub processes called Claim
Notification, Claim Preparation and Claim Submittal are fully undertaken by the
claimant.
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. After verifying the validity of the claim
proper computations and evaluations will be carried out to present the
proposed compensation for the contractual parties the claim is applicable to.
Generally the sub process that undertakes these requirements is termed as
Claim Handling.
The contractual parties will pass through different dispute resolution system
(DRS) 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.
Once this compensation or entitlement is due in accordance to the approved

claim and its enforcement requirements, then it is concluded for its closure. In
order to account for such an administration process contracts provide claim
clauses with in their provisions in their conditions of contract.
4.2 Mitigation
For the successful delivery of the project all parties of the project are required
to adopt a policy of claim minimization / mitigation clear identification of
things to be done before and after the work commences, will minimize claims
and assist claim administration process
4.2.1 What to be done before work begins

Planning and open communication: owners should provide complete and up
to date information concerning site conditions and project requirements so as
to allow contractors to more accurately bid on a project. Owners should also
invest more resources in the design and engineering process to resolve
problems during pre- construction phase. (Stuart J Einbinder Esq, 2004)
Partnering / team building: partnering increasingly facilitates
communication between the various parties involved in the project, which
reduces claims and disputes. The parties in the project create a process that
will allow the parties to work in a non-adversarial manner. (Stuart J Einbinder
Esq, 2004)
Type of contract to be adopted – different contract pricing methods have
varying degrees of risks. It should be dealt properly. (Stuart J Einbinder Esq,
2004)
Enhanced quality of contract document: careful attention has to be devoted
during drafting, implementation, and interpretation of contract document. It is
the conditions and terms of the contract that continues to control the
relationship. A contract in which duties are clearly defined, risks are fairly
shared, claims are anticipated and a comprehensive resolution process are
agreed up on, provides significant protection to both parties (Tesfaye Ayele,
2004).
Constructibility review – the optimum use of construction knowledge and

experience in planning, design, procurement and operations to achieve over all
project objectives. It primarily focuses on the construction practicability of the
nearly completed contract document. (Construction industry institute: 1993 as
quoted by Tesfaye Ayele).
Value engineering: - it can be done during early design stage and during
construction. It is maximizing the functional value of a project by engineering
its evolution and development from the concept to completion through the
comparison and audit of all decisions against a value system determined by
the client.
Design review: - to correct errors and omissions. (Construction industry
institute, 1993 as quoted by Tesfaye Ayele)
Irin E Ritcher 1983 has underscored additional points as follows.
• Use of appropriate method of procurement
• Carry out proper subsoil/ and geotechnical survey
• Fair and balanced liability
4.2.2. Work to be done after work begins

Open communication and partnering: - to discover and address problems
and questions that arise during a project. Regular scheduled meetings are
usually more effective than conducting a battle of correspondence. (Stuart J
Einbinder Esq, 2004)
Record keeping: - is key element in administering construction claims and
disputes. Widman, 2003 has listed some pointes to be included in site records:
• Original contract tender documents
• Instructions to contractor
• Contemplated change notices issued by the owner, change estimates, and
change orders received
• Shop drawings, originals, all revisions and re-submissions
• Daily time records (material use/delivery, equipment use/delivery)
• Short-term schedules and up-dates, actual cost reports, weekly or monthly,

including exception reports.
• Productivity reports/analyses
• Inter-office correspondence, including memos and faxes, telephone records (all
filed by topic).
• Minutes of meetings
• Notice of claims for delays and/or extra cost by contractor
• Inspection reports (Government, consultant)
• Accident Reports
• Progress Reports & Photographs, weekly, monthly or quarterly
Response to submittals: - the owner or owner’s representative should

promptly respond to all submittals as soon as possible. Contractors often
assert that an owner’s late response to submittals delayed completion. (Stuart
J Einbinder Esq, 2004)
Review schedules: - Actively review schedules on a going forward basis to
identify problems as they arise (Stuart J Einbinder Esq, 2004) .
Careful inspection: - Inspect carefully & thoroughly, but do not direct the
contractor how to do the job. The contractor is responsible for means and
methods of the works. Over inspection can lead to disruption interference /
lost productivity claim. (Stuart J Einbinder Esq, 2004)
5. Claim awareness in Ethiopian construction industry

5.1 General
The construction industry in Ethiopia has been in the process of

transformation. This transformation is based on improving the
competitiveness of the construction industry and enhancing its ability to fulfill
the national development demands (Wubishet, 2004). Road being the
dominant mode of transportation in Ethiopia, road sector development has
been one of the priority public investment areas for the success of the
envisaged economic recovery program. However, both its quality and quantity
had been extremely low and become impeding to the government’s effort in
reviving the economy. (Country poverty alleviation paper, 2002 as quoted by
Tesfaye Ayele, 2004).
The free market economy practice in Ethiopia has created a better opportunity
for participation of local and foreign contractors in the construction industry
activities with in the last decade. However, domestic construction companies
are not competitive enough with their international counterparts. In general,
Wubishet, 2004 has stated the reasons why the state of the domestic
construction industry is low as follows:
• Inadequate capital base, specifically to construction contractors,

• Old and limited number of equipment and their low levels of utilization,
• Deficiencies in human resource with regard to technical, managerial,
financial and entrepreneurial skills and
• Very limited experience and participation in private sector for road, bridge,
and water related construction works and provisions of consulting service.
Despite all this, over 1400 local contractors of different categories have now
registered by the government authority; the financial, technical and
managerial capability of the major of them is, however limited. (Abebe Dinku
and Girmay Kassay, 2003)
5.2 Study on causes of claims
There is no as such a detailed study in the causes of claims on road projects in

the Ethiopian construction industry. However, some studies on related issues
have tried to identify the causes of claims in their researches.
• Abebe Dinku and Girmay kassay, 2003 in their research work has
attempted to assess the claim causes in the country. In their findings the
major causes are delay and disruption, variation and breach of contract.
• Abdissa Dessa examined 15 completed projects in different regions of the
country has shown the delay-encountered ranges from 200-300 % of the
original contract time.
• Tesfaye ayele, 2004 tried to asses the major causes of claim on the
Ethiopian Road Sector Development Program / RSDP projects, which are
under the owner and program implementing agency of Ethiopian Road
Authority ( ERA).
The assessments made on eleven projects of RSDP as to the type of claims
arisen are of 69 factors, which can be expressed as:-
1. Administrative authority or his representative actions / inaction
2. Third party action /inaction
3. Deficiency in the contract, design, specifications and
documentations.
4. Changed conditions / differing site conditions.
5. Force majeur.
5.3 Impacts of claim on the Ethiopian construction industry
Financial impact of claims

The legal expenses allotted to claims are considerably high which affects the
parties in the contract. The most significant effect of claims in local and
international projects in Ethiopia has been the financial impact. In some
projects there have been financial claims reaching up to 200-300% of the
project cost. If this could have been avoided it would have meant a significant
saving of public money. (Abebe Dinku and Girmay Kassay in journal of EEA
2003)
Impact on project completion time
The other effect of claims on project execution involve time extensions, which
affect project completion in the various local and international projects being
carried out in Ethiopia, there appears to be a common perception of accepting
time extensions more favorably than increased financial expenses.
The result of some surveyed projects shows that, none have been completed on
time. Rather all of them have been granted a time extension. Whilst time
extensions may appear to be necessary in some cases few if any professionals
view the issue of time extensions as a serious claim case. In this aspect it is
necessary to introduce in minds of the practicing Engineers and consultants
that time extension do also incur additional cost where the income or revenue
that may have been obtained from a timely completed project is lost. (Abebe
Dinku and Girmay Kassay, journal of EEA, 2003)
Other effects of claims

Another significance effect of the claim process is the effect it may have on the
project execution itself. Once the claim issues are referred to arbitration, the
parties begin to see each other as opponents resulting an adversarial
relationship between them that will have a far greater impact, probably more
sever than the financial impact may have on the total project life. (Abebe
Dinku and Girmay Kassay, journal of EEA, 2003)
5.4 Claim and local contractors
Wubishet, 2004 in his report to the civil engineering association summarized

the major factors that hinder local contractors from making claims in six sub
categories following the three requirements developed based on the theoretical
review on claims. These included:
1. Policy and Regulation related issues

Following this categorical classification, the following are considered major
contributory factors for inability to make claims:
• Lack of Construction Industry Policy

• Lack of Clear Claim Administration and Dispute Resolution
System
2. Stakeholders Relationships & Capacity Related Issues
• Weak Stakeholders Relationships
• Weak Organizational Capacity
3. Weaknesses of Construction Companies

• Unhealthy Competition
• Poor Information Management System
PART THREE
CASE STUDY AND QESTIONNAIRIES ANALYSIS
1. The Case Study Projects
Road sector development has been one of the priority public investment areas
for the success of the envisaged economic recovery program. Road being the
dominant mode of transportation in Ethiopia, both its quality and quantity
had extremely low and became impending to the governments effort in reviving
the economy. (Country poverty alleviation paper, 2002 as quoted by Tesfaye
Ayele). In order to change such sever situation of road infrastructure in the
country so that the transport sector could facilitate the national economic
development efforts, the government has launched a major Road Sector
Development Program (RSDP) in 1997.The program undertook a rapid
assessment of road network and established a phased program for
rehabilitation and upgrading of property segments.
Among others, effective management of many international contracts that lead

to frequent claims has been quiet a challenge to ERA. As a result many
projects fail to meet their original time and cost schedules. (RSDP I Mid Term
Review Report, Feb.2001)
The evaluation of RSDP implementation made by the ERA and the program
inspection office reveals that the weakness experienced by the ERA, during the
implementation of the program is the following.
• Lack of in- house experience in construction contracts
• Defective design works by the design contractors / deficiency in the
contract documents
• Lack of proper design reviews during the design stage of the projects
• Lack of coordination and delay in response by other government
institutions / streamlining
• Poor performance of contractors
• Claimant attitude / claimsmanship / by contractors, etc…
As a result of the above weakness, ERA has received a lot of contractual

claims, which have taken a lot of management time and affected the project
objectives in terms of quality, cost and completion time.
1.1 Causes of claims experienced in the case study projects
The assessment made on the seven projects (their profile is attached in

appendix B) depicts that the majority of the claims emanates from deficient
contract management. Lack of contract documentation, inadequate design,
inefficient management of the whole project…etc can be considered as the
major sources of claims.
The following table (Table 6) shows the causes of claims of the seven projects
as collected from the claim documents submitted by contractors.
No
Project Name Contractor Factors giving rise to claims
1 Woldiya- China 1-Delayed possession of site and access

Adigrat– Wanbao there to
Zalambessa Engineering 2-Disruption to the work program caused by
Road Corporation war
upgrading 3-Delayed supply of engineers drawing or
project design
Contract No.
4-Failure by the engineer to supply survey
1
control points
Betemariam –
5-Lack of complete possession of site
Wukro
6-Changing of cut slope
7-Application of new rates in terms of
Clause 52
8- Construction of new bridge
2 Awash – 1-Iinitaial delays due to hand over site of

Hirna – China road and non-availability of benchmarks.
Dengego & and Bridge 2-Increase in quantity of material pipe,
Dire Dawa – Construction culverts, earth work and sub-base
Dengego -
3-variation orders
Harrar
4-Possesion of site
Contract No.
1 5-Interpretation of the specification
Awash - Hirna • Plinth/ building area of Engineer’s
establishments
• Fill material to replace removed top soil
• Backfill to culverts& shoulders Formation
No
3 Awash – 1-Exceptionally adverse weather condition.

Hirna – Keangnam 2-Employer’s alleged failure to give
Dengego & Enterprise possession of site
Dire Dawa – Ltd. Of 3-Increadsed quantity of work and additional
Dengego - Korea
work
Harrar
4-Ccontractor’s disagreement with engineer’s
Contract No.
measurement and valuation of works
2
Hirna - 5-Illegal labor strike
Kulubi
4 Modjo- Awash 1-Dealys and additional costs incurred due

– Mile Road Keangnam to variation
Rehabilitation Enterprise 2-Shortage of suitable quarry to produce
Project Ltd. Of aggregates for asphalt work
Contract No. Korea 3-Site security
1
4-Inturraption of importation of
Modjo –
construction materials due to Ethio- Eritrea
Awash
war
Arba
5-Delays in possession of site
6- late instruction
7- Delays in Engineer’s approval of
contractor’s request for approval
No
5 Addis Ababa 1-Dealys related to side work construction

Ring Road CRBC 2-Delay in possession of site
Contract No
3-Late provision of design details
4- Changed condition
5-DExistance of sewer lines, Tele cables,
etc…
6- Delayed approval of redesigns
7- Design changes to highway cross sections
8- obstructions
9- Delayed relocation before site hand over
10-Lack of adequate working space
6 Chida Sodo SALINI 1-Dealys due to lack of design information

Contract 2-Delay in possession of site
No.1&2
3- Increases in quantity of works
4-Addtional works due to landslide
5- Delayed approval for release of spare
parts and equipments
6- Delayed advance payments
7- Late instruction and approval by the
Engineer
8- Obstruction by local farmers
9-Exceptionally severe weather condition
10-Impractical & Uneconomical design
No
7 Mile Assab 1-Default by subcontractor

Contract No. SOGEA 2-Problem with the import of vehicles, plant
1,2&3
& material
3- Problem with crossing the Ethio –Eritrea
war
4- Problem with obtaining the explosive
license
5- Problem with obtaining the radio license
6- Problem with the survey and design of
works
7- The break down of Law and Order
8- The increased volume of traffic on the
existing road
9- ERA’s interference with the progress and
administration of the works and its failure to
cooperate
10-LEmployer’s/ Engineer’s interaction to
accelerate
11- the increase in scope of works
12- The administrative breaches
Table 6 summaries of the causes of claims on the selected projects
1.2 Analysis of the case study projects
1.2.1 Analysis of the causes of claims
The different factors giving rise to the claims of the seven studied projects are
totally twenty-seven factors. Those factors with high frequency are considered
to be predominant claim factors, as they are repeatedly occurring. Failure to
give possession of site and variations are predominant claim factors in almost
all projects. The twenty-seven factors can be regrouped into the following five
major categories based on their sources.
1. Employer’s / Engineer’s actions/ inactions: -factors included in this
category are:
• Failure to give possession of site
• Delayed supply of shop drawings
• Removal of obstructions
• Untimely advance payment
• Interference with the works
• Administrative breach
• Late instruction by the Engineer
• Delayed Engineer’s approval
• Failure to supply survey control points
2. Third party’s actions/ inactions: -this category includes factors that are
out of the control of the contracting parties. These factors are actions/
inactions that are caused by external parties like the government, local
peoples of other agencies act that affect the contract.
• Illegal labor strike
• Problem with imported materials
• Problems with crossing borders
• Problem with obtaining license
• Break down of law and orders
• Increased volume of traffic on existing roads
3. Deficiency in contract documents: -the followings are factors that are

included in this category
• Variations
• Contractor disagreement with Engineer’s measurements and
valuation of works
• Delay due to lack of design information
• Design changes
• Impractical or impossible
4. Changed conditions/ differing site conditions: -these are changes to

what has been assumed during the design and tender document preparation
stages. This category includes
• Exceptionally adverse climatic conditions
• Shortage of suitable quarry
• Land slides
5. Force Majeur: - factors included in this category are

• War
• Site security
Most of the above factors are similar and repeat themselves in the studied
projects. The relative frequency distribution of the twenty-seven factors that
are grouped in the above five categories are shown below. (Table 7)
Frequency %
No Major category of factors
1 Employer’s / Engineer’s action/ inaction 22 36.7
2 Deficiency in contract documents 22 36.7
3 Third party actions/ inactions 8 13.3
4 Changed conditions/ Differing site 5 8.3

conditions
5 Force Majeur 3 5
Total 60 100%
Table 7 Frequency distribution of major category of claim factors
The above relatively frequency distribution table of the twenty-seven claim

factors in the seven studied projects can also be summarized in, the following
pie-chart.
percentage of major claim factors
Changed Force major,

Employer's/
condition, 5%
Enginners
8.3% action/
inaction,
36.7%
Third party
action
/inaction,
13.3%
Deficiency in
contract
document,
36.7%
Figure 4 percentage of major category of claim factors
The result of the analysis of the seven studied projects reveals that the three
major reasons in the road projects that represent 86.7 %( fig, 3) of the causes
are:
• Employer’s / Engineer’s actions / inactions
• Deficiency in contract documents
• Third party actions / inactions
1.2.2 Extent of cost And time claims
The following analysis can be made from the information given in the table
below (Table 8) excluding the ring road project.
Original
Cost Cost
Original Time Time Contract
Project Claimed Granted
Contract Claimed Granted amount
Name (Million (Million
Period (Months) (Months) (Million
Birr) Birr)
Birr)
Woldiya-
Adigrat –
Zalambessa 36 30.35 24.13 203.41 4.75 1.00
Hirna-
Kulubi 30 24.53 4.4 188.08 443.6 62.013
Awash -
Hirna 36 26.63 16.23 256.54 91.72 Nill
Modjo –
Awash –
Mile 36 Nill 33 227.45 375.743 26.024
C1 –
C1 - 24 9.25
Mile – Assab C2 –
*C 1,2&3 C2 - 36 10.5 5.7 285.9 179.6 17.1
C1 – C1-
Chida – C1 - 36 43.9 C1-20.04 93.325 C1-84.5
Sodo C2 – C2–
C 1,2 C2 - 39 29.2 C2 – 2.8 110.60 C2-70.6 57.80
Total 273 174.33 106.30 1365.305 1250.51 163.937
* C-Contract
Table 8 summaries of claimed and granted time and cost
Analysis of Claimed Vs Granted time extensions

• Average extension of time (EOT) claimed for the six projects as a percentage
of total contract period
174.33 * 100 = 63.86 %
273.00
• Average extension of time (EOT) granted as a percentage of total contract
period
106.3 * 100 = 38.94 %
273.00
• Average extension of time (EOT) granted as a percentage of claimed
extension of time (EOT)
106.3 * 100 = 60.98 %
174.33
Analysis of Claimed Vs Granted additional cost

• Average compensation cost claimed as a percentage of the original contract
amount
1250.513* 100 = 91.6 %
1365.31
• Average compensation cost granted as a percentage of the original contract
amount
163.937* 100 = 12.01%
1365.31
• Average compensation cost granted as a percentage of the claimed
compensation cost claimed by the contractor
163.937* 100 = 13.1 %
1250.51
Generally, cost variations up to 15% is a common practice in majority of
international civil engineering construction projects (Tesfaye Ayele, 2004), but
cost increments up to 50% or more indicates that the project planning
process has some deficiencies and there is inefficiently in the overall project
management process of the project.
The results of the above analysis can be summarized using the bar chart as
follows:
Relative Percentage of Claimed and Granted Time and Cost
100
80
Percentage
60
40
20
0
Time Cost
Remedial Rights
Time & cost claimed Time & cost granted
Figure 5- Relative Percentage of Claimed and Granted Time and Cost
From figure 4, the following points regarding the claim situation in studied
projects shows that:
• The amount of extension of time claimed by the contractors (63.86 % of
contract period) is relatively higher than the amount granted by the
employer (38.94% of contract period).
• An average claim amount of 91.6% of the contract amount has a very big
difference to the initial contract budget. The average granted claim amount
of 12.01% of the contract amount, which is 13.1% of the claimed amount,
indicates the claimed amount is more exaggerated.
2. Analysis of the survey questionnaires

2.1. Profile of the questionnaires
As discussed in the methodology part of this case study, the second approach to
asses the causes of claims on road projects is the use of survey questionnaires to
gather the opinion of the practitioners. The questionnaires were designed to
collect data regarding the experience of construction firms with respect to the
causes, mitigation measures and early resolution practices of claims.
The questionnaires were grouped into three major sections. The three sections
and their area of assessment are the followings:
• Section one is related to the profile of the construction firms and their
experience in construction claims. In addition the practice of the firms
with regards to the use of different types of conditions of contracts has
been assessed.
• Section two is tailored to asses the relative occurrences of the various
claim factors /causes/in construction firms. Also it tries to asses the
occurrences of claims as time related and cost related claims.
• Section three of the survey questionnaires assesses the impact of
claims, the practice of the firms and clients in claim record system, the
culture of the firm to minimize and/or administer claims and it also
assesses the opinion of the respondents on what to do to reduce the
number of severity of claims or administer claims.
2.2. The respondents
A total of 20 respondents were received from 27 asked. It has a response rate

of 74.07 %( table 9). The respondents have been asked to respond on
questions requesting for factual practice/custom, opinion and view of their
own as practitioners on causes of claims in road projects and other related
questions. The majority of the respondents are the right persons to provide the
required data.
Construction Distributed Collected Response

party questions questions rate (%)
Contractors 13 11 84.6
Consultants 11 7 63.6
Clients 3 2 66.7
Table 9 Summary on the response rate of questionnaires
2.3. General information from the survey questionnaires
The respondents to the questionnaires are rated in the following form. 66.7%
of the respondents have won/awarded 10-20 contracts for the last ten-
years.41.7% of the respondents to the surveyed questioners rated the projects
they are involved has none to five claim cases.
16.7 % of the respondents to the surveyed questionnaires rated successful

completion, 16.7% lack of claim administration process, 8.3 % lack of
construction industry policy and 8.3 % lack of claim experts as their
experience for not making claims.
On the question regarding the use of conditions of contract by firms surveyed,
22.2 % of them use only FIDIC, 77.8 % of them use MoWUD only and 66.7 %
of them use both FIDIC red book and MoWUD.
2.4. Causes of claims experienced by the surveyed firms.
Analysis of the causes of claims was made by taking an average percentage of

the ratings over all the factors listed under owner caused, contract documents
caused, consultant caused, third party caused, differing site conditions caused
and force majeur. The ratings are summarized in the table as shown below
(table 10).
Very Do not
often Often Sometimes occur
Category of causes in % in % in % in %
Owner caused 10.1 19.7 43.3 25.7
Contractor caused 9.4 15.3 40.1 29.1
Consultant caused 7.4 26.3 43.3 23.0
Third party caused 10.8 16.7 63.3 9.1
Contract document
caused 10.1 25.3 64.6 0
Differing conditions 8.1 13.5 59.4 19.0
Force majeur 0 14.8 40.7 48.2
Table 10 average rate of causes of claims
The result of the average rate of claim factors shows that the majority of the
claim factors occur sometimes. In addition among the factors those occur often
and very often, the following three causes as the major claim causes that
occur frequently.
• Owner caused and consultant caused (29.8% & 34.7%)
• Deficiency in contract documents (35.4%)
• Third party actions / inactions (27.5%)
In addition, further detailed analysis of the percentage of the ratings over all
the factors listed as the causes of claims in road projects was carried out and
the following two major results were obtained.
1. The major causes of claims in road projects were identified based on the
higher percentage given by the respondents in each category.
Owner caused
• Failure to give possession of site (53.9%)
• Changes in designs and specifications (53.3%)
• Extra work (50.0%)
Contractor caused
• Delay in completion time (71.5%)
• Inadequate investigation before bidding (42.9%)
Consultant caused
• Instruction for additional work (85.7%)
• Delayed approval of schedules, work orders, samples, laboratory tests,
etc… (41.6 %)
Third party caused
• Obstruction by local people (50%)
• Shortage and problem on delivery of materials (42.9%)
Contract documents caused
• Non availability of survey benchmarks (50%)
2. The attitude of the respondents towards certain specific claim factors was
clearly shown from the frequency distribution of the claim causes.
From the factors listed under the owner caused claims, almost all of the
respondents agree that termination and suspension do not occur in the
projects they experience.
From the factors listed under the contractor caused claims, most of the
contractor’s response towards unbalanced bidding, and not following
instructions was that these factors do not occur in their projects. However, the
response of the consultants and clients towards the above mentioned factors
was often and sometimes respectively.
From the factors listed under the contract document caused claims, most of
the contractor’s response towards non availability of bench marks was that
this factor occurs very often in their projects. In the contrary, the response of
the clients and consultants towards this issue was that this factor only occurs
sometimes.
On the question regarding on the type of claims that usually occur in road
construction projects, the reply of the respondents was:
• Time claims only: 18.75%
• Both cost and time claims: 81.25%
2.5. Impacts and mitigation of claims
Impacts
The respondents to the questionnaires reported about the impacts of claims on

their firms. The majority of the respondents referred claim impacts on project
completion time, financial impacts and both. They also forwarded points like
inefficient delivery of projects in terms of quality and claim affects the
relationship among parties.
Firm’s experience in claim mitigation
On the questions regarding the experience of firms to minimize and/or

administer claims, the respondents’ rate is arranged in decreasing order of
percentage of the responses and presented as shown below. The points are
grouped as techniques that are used before work begins and after work begins.
Before work begins

• Design review (18.1%)
• Planning and open communication (16.7%)
• Constructability review and proper geotechnical survey (12.5% each)

• Enhanced quality of contract documents; and partnering & team building
(11.1%)
• Value engineering (9.7%)
• Appropriate method of delivery system (8.3%)
After work begins

• Record keeping (19.4%)
• Open communication and partnering (18.1%)
• Careful inspection and review schedules (16.7% each)
• Response to submittals (12.5%)
• Design quality assurance and quality control (11.1%)
• Orders that prevent constructive changes (5.6%)
The results of the above analysis suggests that design review before the
construction work begins and recording keeping during the construction
process are the major types of mitigation methods. Further the results shows
that open communication and partnering is an important mitigation method
that should be practiced from the inception to completion of a project.
The respondents were also requested to indicate the value of the use of
different techniques in reducing the incidence of and/or severity of
construction claims. Their response is shown below.
• Some of the techniques that are rated as very valuable with higher
frequencies are:
- Pre- construction/ pre- design investigation
- Construction scheduling
- Clear contract documents
- Roles and responsibilities of parties
- Design quality assurance/ quality control
- Careful inspection
• Some of the techniques that are rated as valuable with higher frequencies
are:
- Partnering/ team building
- Planning and open communication
- Value engineering
- Construction meetings
- Constructability review
In addition to the techniques and anticipatory approaches listed in the

distributed questionnaires that are useful in minimizing construction claims,
some of the respondents were able to forward the followings as very valuable
techniques.
• Availability of construction material at reliable importers, sellers
• Standards should be respected to perform various types of projects both for
consultants and contractors
• Clients must evaluate the capacity of the consulting engineers
• The reason for any slippage must be identified
• Prequalification of consultants and contractors
On the questions regarding the use of claim documentation system, which has
a very important input in administering claims, only 55.6% of the respondents
rated they have claim documentation system.
PART FOUR
CONCLUSIONS AND RECOMMENDATIONS
Conclusions and Recommendations
This part of the thesis provides conclusions based on the findings form the
case study and questioners. It also contains recommendations of methods and
techniques that help in mitigating those claims that are taken as the major
sources of claims.
1 Conclusions
• The root causes of claims on road projects are,
• Employer’s/engineer’s actions/ inactions,

• Deficiency in contract documents and
• Third party actions/ inactions
Both results of the analysis reveal that most of the factors that give rise to
claims are sourced out from the above mentioned categories. Most of the
conditions of contracts describe in their clauses that these major causes of
claims are the responsibilities of the employer fully or partially.
• Claims submitted by the contractors are exaggerated.
The results of the analysis of the studied projects show that there is a big
difference between the claimed and granted time extensions and additional
costs. This further shows that contractors are claim oriented and employers
are claim conscious, especially in claims for additional cost. (Refer section
1.2.2 of Part III)
• Contracting parties do not understand their duties and
responsibilities
The analysis of the data collected through questionnaires shows that the
employer’s, consultant’s and the contractor’s responses to some of the causes
of claims is contradicting. It seems that the responses are meant to avoid the
responsibility of their own faults.
• Claim has a considerable impact on the construction industry

Claim has considerable impacts on road projects. These are financial impact,
impact on project completion time, efficient delivery of projects in terms of
quality, and it also weakens the synergy among parties.
• Some local contractors do not make claims.

Some local contractors do not make claims this is due to lack of
construction industry policy, lack of clear claim administration process,
weak organizational capacity, successful completion etc…
• Practices of the employer and construction firms in minimizing

and/or administering claims is not satisfactory
The current practice of employers and construction firms in minimizing
and/or administering claims is not satisfactory; this could be as a result of
poor project planning, lack of expertise in the firms, lack of clear claim
administration process etc…
• Documentation systems currently used by the construction firms is

not satisfactory.
The results obtained from the distributed questionnaires shows that the
current practice of construction firms regarding the documentation of
claim submittals of different types of projects they participated is poor.
• There is a substantial overlap between claims for additional cost and

extension of time
The results of the questionnaires show that all claims for additional cost
are accompanied by claims for extension of time. This shows that there is
a substantial overlap between claims for additional cost and extension of

time.
• Claims submittals on road projects are more frequent

Generally, the claims amount and their frequency with projects completion
delays are becoming disappointing circumstances which indicate either the
clients’ project planning or the implementation of the project process is
inefficient or the contractor’s assessment of their claims is exaggerated.
On the basis of information gathered for this paper, the following research
topics have been identified as areas for further study:
• Techniques of enhancing quality of contract documents
• Enhancing claim management
2 Recommendations
The purpose of the following recommendation is not to deeply address areas
that need improvement. The intention is only to point out some major issues
that need consideration to enhance the current practice of claim management.
It indicates what the current construction industry can learn from
construction claims submitted on the reviewed projects.
Both the analysis of the case studies and the questionnaires has identified
Employer’s / Engineer’s actions / inactions, Deficiency in contract documents,
and Third party actions / inactions are the major causes of claims on road
projects in Ethiopia. Hence the following recommendations are focused
towards improvements to be made on these causes.
Improvement in contract documents
• Knowing the areas where conflict is likely to arise from experience and
carefully planning to address them,
• The design process has to be given adequate time and more investigation
has to be made during design reviews. A highly qualified and experienced
group of professionals has to make design reviews, constructability reviews
and value engineering studies on the final design before going to tendering.
These review tasks can also be given to the design review consultant if
there is lack of qualified in-house staffs.
• A standard checklist has to be prepared with all necessary details for
reviewing the completeness of designs, plans, specifications and tender
documentations. Accordingly documentations have to be checked before
floating the tender. The contract documentation problem areas
encountered or design deficiencies on projects undertaken previously can
be used to develop the checklist;
• The client has to make sure that the contract documentation is free of
ambiguous terms of contract; errors and omissions; plans and
specifications are adequately referenced and coincide with the terms of
references before entering in to contract. Design consultants’ liability has
to include fitness for the purpose of the design work.
• During adopting any type of standard conditions of contract, care should be
taken on clauses to be added or amended with sufficient knowledge of their
implications.
• Clearly specification of expressed terms up on which the contractor is to
rely and implied terms which may be prompted should be set down
appropriately
Improvement in Employer’s /Engineer’s actions/inactions
• Owners should be informed, and even participate, in the setting of the

baseline statements, which will influence how the risk of the subsurface
conditions is allocated between the owner and the contractor,
• Knowing the duties and responsibilities of the parties
• Contractor have to get adequate clarification on procedures and
arrangements in the employer’s country on practical issues like customs,
licenses and other local norms so that they could take into account in their
offers. These procedures could be included in the tender documents and
procedures have to be streamlined.
• Design consultants have to cover (indemnity) the additional costs that the
client incurs due to incorrect designs or insufficient data supplied by them
and this has to be clearly included in the service contract agreement.
• Owners should remove obstruction, which are in the right- of-way before
handing over of the site.
• Adequate time should be given for designers and design consultants for the
preparation of design work with fair fee
• Engineers should give instructions, approvals of schedules, work orders,
samples, laboratory tests, etc… at the right time.
• Adequate compensation should be given to the local peoples who will be
affected by the projects.
Improvement in Third party actions/inactions
• Prepare alternate roads to avoid excessive traffic before operation starts.

• The regulatory bodies should take part in the development of the
construction industry by enhancing the current licensing regulation and
regulations that are related to importing of construction materials.
• Participation of all bodies (regulatory and local people) in the delivery of the
project by removing existing structures, which obstruct the completion of
the project on time.
REFERENCES
1. Reg. Thomas, 2001; construction contract claims 2nd Edition, Palgrave,

Page 78, New York.
2. Eileen M. Diepenbrock & Chris A. Mccandless, July 2002; Allocating
risks of unexpected site conditions,
3. Abera Bekele, July 2005; Alternative dispute resolution methods in
construction industry: an assessment of Ethiopian construction
situation, Addis Ababa University Masters thesis
4. W Trench F. June 1995; Claim and claim avoidance, A CPD study pack
5. Edward R. Fisk, 2000; Construction project administration
6. R.Max Widman, 2001; Construction Claims
7. Christopher & Seppala, April 2005; Contractor’s claim under the FIDIC
contracts for major works,
8. Public Procurement Agency (PPA), 2005; Condition of contracts
9. MoWUD, 1994; Conditions of contract by
10. Study pack, 1995; Continuing Professional Development (CPD)
11. Wagner, et al; Construction claims guide,
12. Construction Industry Institute
13. Country poverty alleviation paper, 2002
14. Dealing with unforeseeable events under the FIDIC contract form, ICC-
FIDIC conference Paris conference, 2005
15. Tesfaye Ayele 2004; Enhancing the management of construction
contract claims, Addis Ababa University Masters thesis
16. FIDIC,1987; Conditions of Contract for Works of Civil Engineering
Construction
17. Greenberg, Traurig, 2004 ; (http// www. gtlaw.com/biographis)
18. How to Effectively Mitigate Claims & Resolve Disputes
19. Hughes & Barber, 1992; Claims perspective
20. Journal of the Ethiopian engineers and architects, Volume 20, 2003
21. K.L.Scott, 1992; Managing contractual claims
22. TCRP Synthesis 28, 1998; Managing Transit Construction Claims,

Washington DC,
23. NCHRP,1983; Synthesis of Highway Practice authored at the university
of California, Berkely
24. Wubishet, 2004; Performance for Public Construction Projects in (least)
Developing Countries.
25. Vincent Powell Smith, 1990; Problems in construction claims
26. Wubishet, 2005; Procurement and Contract Management.
27. Road Sector Development Program Mid- Term review Report.
February, 2001
28. Sung II Kim, et al , 2003.
29. John G. Sawyer & C. Arthur Gillot, 1990; The FIDIC Digest.
Appendix A
Study title; Causes of claims on road projects in Ethiopia

The questions below are related to your agency profile and experience in
construction claims.
Please indicate by filling the blank or by putting mark in the appropriate box.
The answers you provide are used for academic purpose only.
NB. Consultants respond to the questions in asterisk
SECTION ONE: - General Information
*1. Your agency profile (optional)

Name __________________________________________
Grade / Class __________________________________________
*2. Type of agency
Owner Consultant Contractor
3. How many contracts have you awarded / won within the last ten years?
1-5 5-10 10-20 20-40
>40
4. How many of the above awarded / won contracts have claims?
0-5 5-10 10-20 20-40
>40
5. If your firm did not make claims, what was the reason?
Successful completion
Lack of construction industry policy
Lack of claim administration process
Lack of claim experts within your firm
Others, please specify____________________________________________________
6. Which standard condition of contract does your firm use?

MOWUD FIDIC
Other, please specify_______________________________________________
SECTION TWO: - Causes of Claims
*1. What were the major causes of claims?

Please indicate on the boxes using the following criteria
1. Very often 2. Often 3.sometimes 4.not occurred
Owner Caused
Changes in designs and specifications
Untimely payment
Failure to provide possession of site
Extra work
Termination
Inadequate bid information
Suspension
Late removal of obstruction
Contractor Caused
Unbalanced bidding
Inadequate investigation before bidding
Non-compliance with contract document
Schedule updates not done
Not following engineer’s instructions
Change in construction methods
Termination of contract
Lack of expertise
Delay in completion time
Subcontractor’s delay
Consultant Caused
Late instruction additional work
Delayed approval of schedules, work order, samples, lab. tests
Late instructions
Impractical or impossible
Higher standards
Lack of expertise
other please specify________________
Third party Caused

Change in legislation
License for importation of explosives, equipment ,etc
Obstructions by local people
Labour strike
Shortage & problem on delivery of materials
Other please specify________________
Contract Document
Ambiguity and discrepancies among documents forming contract
Conflicts in designs and specifications
Non availability of survey benchmarks
Errors and omissions
Differing conditions
Landslides
Sever weather condition
Shortage of suitable quarry
Other please specify_______________
Force Majeur
Flood
Site security problems
War & hostilities
*2. Which type of contractual claims usually occurs?

Time related claims Cost related claims Both
Section Three: - Claim Impacts and Mitigation
*1. Identify the potential impacts of claims

Financial impacts
Others, please specify __________________________________________
*2. Does your agency maintain history /records of project claims?
Yes No No information
*3. What steps does your firm take to minimize claims?
Before work begins

Planning & open communication
Partnering / team building partnering
Enhanced quality of contract document
Constructability review
Value engineering
Design review
Appropriate method of delivery system
Proper subsoil and geotecnical survey
After work begins
Open communication& Partnering
Record keeping
Review schedules
Careful inspection
Design quality assurance/ quality control
Orders that prevent constructive changes
Response to submittals
*4. Please indicate the value of the use of the following techniques in reducing
the number of severity of claims or resolving claims

1. Very valuable 2. Valuable 3. Not valuable
Roles and responsibilities of parties
Pre design / pre construction investigation
Internal professional managers
Construction / program management consultants
Design quality assurance / quality control
Construction meetings
Construction scheduling
Clear contract document
Keeping records
Choosing appropriate delivery system
Partnering / team building
Value engineering
Design review Proper
subsoil and geotecnical survey
Careful inspection
Other please specify____________________________________________________
----------------------- // -----------------------
Thank you
Appendix B
Description / profile of the selected projects.
Project 1
Project name:-------------------------Woldya- Adigrat - Zalambessa road upgrading
project Contract no 2. Betemariam – wukro
Project length: ------------------------- 117.156 Km
Contractor: ----------------------------- China Wanbao Engineering Corporation
Construction commencement date: -April 4, 1999
Scheduled completion date: --------- April 3, 2002
Project duration: --------------------- 36 months
Original contract amount: ---------- Birr 203,410,054.65
Current status:------------------------
Project 2
Project name: ------------------------- Awash – Hirna – Dengego &
Dire Dawa – Dengego- Harrar
Project length: -------------------------91 Km
Contractor: -----------------------------Keangnam Enterprise Ltd. Of Korea
Construction commencement date: -June 4, 1999
Scheduled completion date:---------December 4, 2001
Original contract amount: ---------- Birr 188.08 Million
Current status:------------------------ Completed
Project 3
Project name: -------------------------Awash – Hirna – Dengego &Dire Dawa-
Dengego- Harrar Contract No.1
Awash- Hirna
Contractor: -----------------------------CRBC
Scheduled completion date: --------- June 7, 2002

Current status: ------------------------
Project 4
Project name:------------------------- Modjo - Awash – Mile
Contract No. 1 Modjo -Awash
Project length:-------------------------160.3Km
Contractor:-----------------------------Keangnam Enterprise Ltd. Of Korea
Construction commencement date:-April 1, 1999
Scheduled completion date:---------April 1, 2002
Original contract amount: ---------- Birr
Project 5
Project name------------------------Addis Ababa Ring Road
Project length:-------------------------
Contractor: -----------------------------CRBC
Construction commencement date: -May, 1999
Scheduled completion date: ---------
Project duration: ---------------------
Original contract amount: ----------
Current status:------------------------
Project 6
Project name: ------------------------- Mile- Assab Road
Contractor: -----------------------------SOGEA – French company
Construction commencement date: -March 1995
Scheduled completion date: ---------December 4, 2001
Original contract amount: ---------- Birr 285. 9 Million

Current status: ------------------------ Not Completed
Project 7
Project name: ------------------------- Chida – Sodo Feeder, Contract 1
Project length: -------------------------166.5 Km
Contractor: -----------------------------Salini
Construction commencement date: -December 1994
Scheduled completion date: ---------October 1998
Original contract amount: ---------- Birr 203.925Million
Current status: ------------------------ Completed
Causes of Claims on Road Projects on Ethiopia
Appendix A
Study title; Causes of claims on road projects in Ethiopia

The questions below are related to your agency profile and experience
in construction claims.
Please indicate by filling the blank or by putting mark in the
appropriate box.
The answers you provide are used for academic purpose only.
NB. Consultants respond to the questions in asterisk
SECTION ONE: - General Information
*1. Your agency profile (optional)

Name __________________________________________
Grade / Class __________________________________________
*2. Type of agency
Owner Consultant Contractor
3. How many contracts have you awarded / won within the last ten
years?
1-5 5-10 10-20 20-40
>40
4. How many of the above awarded / won contracts have claims?
0-5 5-10 10-20 20-40
>40
5. If your firm did not make claims, what was the reason?
Successful completion
Lack of construction industry policy
Lack of claim administration process
Lack of claim experts within your firm
Others, please
specify____________________________________________________
6. Which standard condition of contract does your firm use?

MOWUD FIDIC
Other, please
specify_______________________________________________
Addis Ababa University, Department of Construction Technology and Management

SECTION TWO: - Causes of Claims
*1. What were the major causes of claims?

1. Very often 2. Often 3.sometimes 4.not occurred
Owner Caused
Changes in designs and specifications
Untimely payment
Failure to provide possession of site
Extra work
Termination
Inadequate bid information
Suspension
Late removal of obstruction
Contractor Caused
Unbalanced bidding
Inadequate investigation before bidding
Non-compliance with contract document
Schedule updates not done
Not following engineer’s instructions
Change in construction methods
Termination of contract
Lack of expertise
Delay in completion time
Subcontractor’s delay
Consultant Caused
Late instruction additional work
Delayed approval of schedules, work order, samples, lab. tests
Late instructions
Impractical or impossible
Higher standards

Lack of expertise
other please specify________________
Third party Caused

Change in legislation
License for importation of explosives, equipment ,etc
Obstructions by local people
Labour strike
Shortage & problem on delivery of materials
Contract Document
Ambiguity and discrepancies among documents forming contract
Conflicts in designs and specifications
Non availability of survey benchmarks
Errors and omissions
Differing conditions
Landslides
Sever weather condition
Shortage of suitable quarry
Other please specify_______________
Force Majeur
Flood
Site security problems
War & hostilities
*2. Which type of contractual claims usually occurs?

Time related claims Cost related claims Both

Section Three: - Claim Impacts and Mitigation
*1. Identify the potential impacts of claims

Financial impacts
Others, please specify
__________________________________________
*2. Does your agency maintain history /records of project claims?
Yes No No information
*3. What steps does your firm take to minimize claims?
Before work begins

Partnering / team building partnering
Value engineering
Design review
Appropriate method of delivery system
After work begins
Open communication& Partnering
Record keeping
Review schedules
Careful inspection
Design quality assurance/ quality control
Orders that prevent constructive changes
Response to submittals

*4. Please indicate the value of the use of the following techniques in
reducing the number of severity of claims or resolving claims
1. Very valuable 2. Valuable 3. Not valuable
Roles and responsibilities of parties
Pre design / pre construction investigation
Internal professional managers
Construction / program management consultants
Design quality assurance / quality control
Construction meetings
Construction scheduling
Clear contract document
Keeping records
Choosing appropriate delivery system
Partnering / team building
Value engineering
Design review
Careful inspection
Other please specify-
____________________________________________________
----------------------- // -----------------------
Thank you

Appendix B
Description / profile of the selected projects.
Project 1
Project name:-------------------------Woldya- Adigrat - Zalambessa road
upgrading project Contract no 2.
Betemariam – wukro
Contractor: ----------------------------- China Wanbao Engineering Corporation
Construction commencement date: -April 4, 1999
Scheduled completion date: --------- April 3, 2002
Current status:------------------------
Project 2
Project name: ------------------------- Awash – Hirna – Dengego &
Dire Dawa – Dengego- Harrar
Contractor: -----------------------------Keangnam Enterprise Ltd. Of Korea
Scheduled completion date:---------December 4, 2001
Original contract amount: ---------- Birr 188.08 Million

Project 3
Project name: -------------------------Awash – Hirna – Dengego &Dire Dawa-
Dengego- Harrar Contract No.1
Awash- Hirna
Contractor: -----------------------------CRBC
Scheduled completion date: --------- June 7, 2002
Current status: ------------------------
Project 4
Project name:------------------------- Modjo - Awash – Mile
Contract No. 1 Modjo -Awash
Project length:-------------------------160.3Km
Contractor:-----------------------------Keangnam Enterprise Ltd. Of Korea
Construction commencement date:-April 1, 1999
Scheduled completion date:---------April 1, 2002
Original contract amount: ---------- Birr
Project 5
Project name------------------------Addis Ababa Ring Road
Project length:-------------------------
Contractor: -----------------------------CRBC
Construction commencement date: -May, 1999
Scheduled completion date: ---------
Project duration: ---------------------
Original contract amount: ----------
Current status:------------------------
Project 6
Project name: ------------------------- Mile- Assab Road

Contractor: -----------------------------SOGEA – French company

Construction commencement date: -March 1995
Scheduled completion date: ---------December 4, 2001
Original contract amount: ---------- Birr 285. 9 Million
Current status: ------------------------ Not Completed
Project 7
Project name: ------------------------- Chida – Sodo Feeder, Contract 1
Project length: -------------------------166.5 Km
Contractor: -----------------------------Salini
Construction commencement date: -December 1994
Scheduled completion date: ---------October 1998
Original contract amount: ---------- Birr 203.925Million
Current status: ------------------------ Completed

Causes of Claims On Road Projects - A Case Study in Ethiopia

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Causes of Claims On Road Projects - A Case Study in Ethiopia

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A case study in Ethiopia

BY: ABEBE NIGUSSIE

CAUSES OF CLAIMS ON ROAD PROJECTS

BY: ABEBE NIGUSSIE

Current practice of the construction industry shows that it is a rare

This thesis addresses the causes of claims on road projects in Ethiopia

This study concludes that the causes of claims in Ethiopian road

Key words Claim, causes of claims, claim administration, changed

Finally, our deepest gratitude goes to our friends Dereje Hassen,

4.2.2. Work to be done after work begins ....................................... 39

Table 1 source of claims.................................................................... 23

AACRA Addis Ababa City Road Authority

INTRODUCTION AND METHODOLOGY

addition to technical skills, the ability to coordinate the diverse efforts of

This paper attempts to assess causes of claims in road projects by

1.2 Aim and Objective

1.3. The study Scope and Limitations

The scope of a research can be built using four different parameters.

Practice shows that it is a rare event construction projects are

Usually limitations are encountered during conducting, processing and

1.4 Problem Identification

This study attempts to identify causes of claims in road projects in

Figure 1 Simplified Problem Tree (Identification of Study Problem)

The methodology followed in this paper is inductive in nature. It

• Analysis of the experience of stakeholders was carried out

• Conclusion is produced from the analysis made in the research

The study strategy is summarized and shown in the following

2.3. Orientation of the survey questionnaires

The questionnaires are specific and adapted for an assessment on the

Data collection Case

Figure 2 Study structure

The document study and questionnaires were used to gather

Before dealing with literatures definition it is perhaps best to begin with

1.2 Valid claims

1.3 Contents of a claim

A narrative: - describing in chronological order those elements which

1.4 Classification of claims

Having arrived at the definition, it is necessary to look at the various

1.4.1 Classification by type

Contractual claims: - These claims, sometimes referred to as claims in

Extra- contractual / Quantum Merit claims: - In the absence of

1.4.2 Classification based on entitlement

This classification mainly deals with the parties’ entitlement in claim

Non-Time Related Claims – Claims that seek additional cost (and

1.5 Impacts of claims

Claims have considerable damage to the construction industry; at best

¾ Reduces trust on public- private partnership for development;

There are many reasons for claims to arise on a construction project.

2.1 Principal causes of claims

Different writers classify causes of claims differently depending on the

2.1.1 Constructive changes

Changes resulting from acts attributable to the owner, which cause

Accordingly most forms of contract provide powers to resolve

entitled to compensation and time extension, if and only if delays are

2.1.3 Changed conditions and Unusually Sever Weather Conditions

2. Unusually Sever Weather Conditions

2.1.4 Schedule change

This refers changes in the time or sequence of the schedule to complete