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IMPROVING CONSTRUCTION CLAIM PROVISIONS: A CASE STUDY OF THAI

PUBLIC CONSTRUCTION CONTRACTS

Conference Paper · January 2008

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การปรับปรุงขอสัญญาเกี่ยวกับการเรียกรองสิทธิในงานกอสราง: กรณีศึกษาสัญญาวาจางกอสรางของ
หนวยราชการไทย
IMPROVING CONSTRUCTION CLAIM PROVISIONS: A CASE STUDY OF THAI
PUBLIC CONSTRUCTION CONTRACTS

กองกูณฑ โตชัยวัฒน (Kongkoon Tochaiwat)1

วิสุทธิ์ ชอวิเชียร (Visuth Chovichien)2

1
Instructor, Department of Innovation in Real Estate Development, Thammasat University, kongkoon@hotmail.com
2
Associate Professor, Department of Civil Engineering, Chulalongkorn University, fcevcc@eng.chula.ac.th

ABSTRACT : This paper aims to present a framework for improving the provisions of the non-international construction contracts.
The procedure begins by analyzing the availability of the important contract provisions by comparing with two well-known
international standard contracts: AIA and FIDIC contracts. Then, the existing provisions are analyzed in order to find their
inadequacies. To illustrate the proposed procedure, the provisions related to claim in Thai public construction contract were
analyzed. The AIA’s A201 (1997) and FIDIC’s Construction Contract (1999) were used as the standards in the analysis process.
The analysis results showed that there are some claim-related inadequacies found in Thai public standard contract which may be
categorized into two types: the absence of important provisions and the inappropriateness of the existing provisions. Some
recommendations to improve the case contract were also discussed. The results of this research enhance the success to projects and
can help saving some national budget.

KEYWORDS : Claim, Construction contract, AIA contract, FIDIC contract, Project management

1. Introduction des Ingenieurs-Conseils (FIDIC), the American Institute of

The use of standard contracts became popular in the
construction industries worldwide due to several advantages
such as being fair to all parties, completeness of the contract
documents, avoiding misunderstanding, clear definition of both
parties’ responsibilities, avoiding improper language in the
specification, using consistent terminology, supporting risk
management, etc. Up to now, many standard contracts have
been issued. They are normally prepared by the well-known
international organizations such as the Federation
 Internationale

(CEM) Page 320
Architects (AIA), the Associated General Contractors of
America (AGC), the Engineers’ Joint Contract Documents
Committee (EJCDC), the Institution of Civil Engineers (ICE),
and the Joint Contracts Tribunal (JCT).
Using non-standard contract form may cause some
problems to the projects. An example of the projects suffering
from the damages caused by the inadequacies of the contract
provisions is the “Bang Na-Bang Pli-Bang Pakong Expressway
Project (BBBE)”, a design-build project that became one of the
most scandalous infrastructure projects in Thailand during the
end of 1990’s. The approximately 580 million dollar project
faced the court decision to pay for additional payment claims
amounting to about 140 million dollar, part of which is
supposed to compensate for damages suffered by the contractor
for not getting access to the construction site. By reviewing the
BBBE contract, it was found that there are some inadequacies
leading to the project problems. They are the provisions related
to excepted risks, and determination of additional payment &
time extension. [8]
In developing countries, there are some efforts to prepare
their own construction contracts for using in the employment in
public sectors. The examples of these contracts are the Thai
public standard construction contract prepared in 2002. There
have been many former researches related to the deficiencies of
these standard contracts. For Thai public construction contract,
they are those of Kompayak [7], Bunsrangserm [3], and
Chovichien and Tochaiwat [9], etc.
As to construction claims, they are found in almost every
construction project. It is the seeking of consideration or
change by one of the parties involved in the construction
process. Nowadays, substantially increasing volume of claims
is the result of the rising complexity of the projects, the price
structure of the construction industry and the legal approach
taken by many employers and contractors.
The objective of this paper is to present a framework for
analyzing the inadequacies found in non-international
construction contracts, especially in those of developing
countries, to find the recommended solution to improve them by
using the provisions related to claims of Thai public standard
construction contract as a case study, and to present some
inadequacies found in Thai public standard construction
contract and some recommendations for improving this form of
contract.
(CEM) Page 321
2. Research Methodology
This research was done by performing the following steps.
Firstly, the related literatures were reviewed. They were those
related to the construction law principle, Thai public standard
construction contract (2002), the widely accepted international
standard construction contracts: the FIDIC Conditions of
Contract for Construction (First Edition) or the “Construction
Contract (1999)”, and General Conditions of the Contract for
Construction (AIA Document A201-1997) or “AIA A201
(1997)”. Secondly, the availabilities of the necessary claim
provisions were examined from Thai public standard
construction contract. Two international contracts, the
Construction Contract (1999) and A201 (1997), were used as
the standards in the analysis process. The necessary provisions
that were stipulated in either international contract but were
absent from Thai public standard construction contract would
be listed. Then, the existing provisions of Thai public standard
contract related to claims were analyzed in order to find their
inadequacies (if any). Finally, the research results were
concluded and some recommended solutions to mitigate the
claim inadequacies found were recommended.
3. Availability of the Necessary Provisions in Thai
Standard Contract
Booen [2] summarized the provisions related to
construction claims in The Construction Contract (First
Edition). The results of this research were used as the checklist
in the analysis process. The other claim provisions found in
A201 (1997) were also added into the checklist. From
analyzing the availability of the necessary provisions related to
construction claims of A201 (1997), The Construction Contract
(1999), and Thai public standard construction contract attached
to the Office of Prime Minister’s Regulations (2002), it was
found that there are a number of necessary provisions absent
from Thai public standard construction contract. Their topics
and brief descriptions are shown in the Table 1 below.
Table 1 Necessary Claim Provisions Being Absent from Thai Public Standard Construction Contract
No. Topic Description of the Absent Provision

1. Consequences of Employer’s The contractor is entitled to claim for extension of time, cost and reasonable profit (in some cases) if works,
Risks goods are damaged by a risk specified to be the employer’s risk.
2. Continuing Contract The contractor shall proceed diligently with the performance of the contract and the employer shall continue
Performance to make payments until the final resolution of a claim.
3. Contractor’s Claim for The contractor is entitled to claim for cost and reasonable profit (in some cases) for any matter he considers
Additional Payment himself to be entitled.
4. Delayed Drawings or The contractor is entitled to claim for extension of time, cost and reasonable profit if the engineer fails to
Instructions instruct or issue the drawings within reasonable time notified by the contractor.
5. Delayed Right of Access to The contractor is entitled to claim for extension of time, cost and reasonable profit if the employer fails to
the Site provide the right to access to the site within the time stated in the contract.
6. Delayed Payment The contractor is entitled to claim for the interest from the amount the employer paid to him beyond the
limit of time specified in the contract.
7. Emergency The contractor is entitled to claim for extension of time, cost and reasonable profit if the employer instructs
him to perform any work need to be performed in order to avoid damage to life or property.
8. Failure to Pass Tests on The employer is entitled to deduct the contract price paid to the contractor if the works fail to pass tests on
Completion completion.
9. Failure to Remedy Defects The employer is entitled to claim for the cost if the contractor fails to remedy the defect that the contractor
is responsible. In addition, he is entitled to remedy such defect by his own forces or by employing other
contractor if the contractor fails to perform this liability.
10. Indemnities Both employer and contractor shall indemnify the other party for all claims and damages attributable to
him.
11. Interference with Tests on The contractor is entitled to claim for extension of time, cost and reasonable profit if the employer delays a
Completion test on completion.
12. Omissions The contractor is entitled to claim for the cost already occurred with the items stipulated in the Bill of
Quantities (BOQ) but are later omitted by variation.
13. Rate of Progress The employer is entitled to claim for the cost if he suffers additional cost from the contractor’s revision of
the program which the contractor is responsible to.
14. Retesting The employer is entitled to claim for the cost if he suffers additional cost from retesting which the
contractor is responsible.

4. Inadequacies of the Existing Claim Provisions of Thai
Public Standard Construction Contract
4.1 Overall Structure of the Claim Provisions
The standard contract attached with the Office of Prime
Minister’s Regulations is silent about many rights to claim,
especially the contractor’s rights to claim against the employer,
as shown in Table 1. The existing provisions are also silent
about the contractor’s rights to claim for the additional payment
from the employer. In addition, the contract provisions do not
stipulate the rights to claim against the other party expressly.
On the other hand, the contract does specify the duties of both
parties and let the claimant claim against the other on the basis
of breach of contract, which is one type of ex-contractual claims
[5]. The drawbacks of this mechanism are that it causes
obscurity and lead to disputes between both parties.

(CEM) Page 322

 From analyzing the claim provisions of the international
standard contract, A201 (1997) and the Construction Contract
(1999) seem to have more well-arranged structures. Both have
many sub-clauses that directly stipulate the rights to claim for
many specific reasons to either employer or contractor
completely. Furthermore, there are mechanisms that make the
scopes of the employer’s and the contractor’s cover all issues
which can result from the construction activities. Sub-clause
4.3.1 of A201 (1997) specifies the definition of claim which
cover both employer’s & contractor’s claim while Sub-clause
2.5 & sub-clause 20.1 of the Construction Contract (1999)
directly stipulate the rights of the employer and the contractor,
respectively, to claim against the other in case of any matter he
thinks he is entitled to claim.
Another salient aspect of the claim provisions of the
Construction Contract (1999) conditions of contract is its
easiness to find and to refer to. Because the provision entitles
the right to claim for additional payment or extension of time is
stipulated in a separate paragraph for each sub-clause and is
worded with the same pattern with the other sub-clauses, it is
easy to find sub-clauses that stipulate the rights to claim.
Moreover, the margin word system, which specifies the whole
idea of each sub-clause, provides the convenience to find the
required claim provisions. To illustrate the said aspects, Sub-
clause 8.9 [Consequences of Suspension] is presented as an
example.
8.9 If the Contractor suffers delay and/or incurs Cost from
complying with the Consequences of Engineer’s
instructions under Sub-Clauses 8.8[Suspension of Work]
and/or Suspension from resuming the work, the Contractor
shall give notice to the Engineer and shall be entitled
subject to Sub-Clause 20.1[Contractor’s Claims] to:
(a) an extension of time for any such delay, if
completion is or will be delayed, under Sub-
Clause 8.4[Extension of Time for Completion]
and
(CEM) Page 323
(b) payment of any such Cost, which shall be
included in the Contract Price…
The margin words such as “Consequences of Suspension”,
“Suspension of Work” and “Contractor’s Claim” give the topics
of the sub-clauses or the referred sub-clauses. The provisions
stipulated in item (a) and (b), which entitle the rights to claim
for an extension of time and an additional payment respectively,
are separated and stipulated in similar wording with other claim
sub-clauses. This makes it is very easy to find what sub-clause
entitles the rights to claim to both parties.
4.2 Error in the Details Provided by the Employer
Thai public standard construction contract refuses to give
the right to claim for cost and reasonable profit (in some cases)
occurring from errors in contract documents to the contractor.
As to Clause 14 of the contract, the contractor agreed that he
has deliberately reviewed all drawings and specifications and
agrees to follow the employer’s instruction in case there is any
mistake or error found in these documents, without any claim
for increased cost. This provision is not fair to the contractor
and causes disputes to the project. Because construction is
complex, unique, and dynamic, it is very difficult to prepare a
set of all contract documents without any mistake or error. In
case the contractor has reviewed the documents with reasonable
care, he deserves the compensation for the mistakes or the
errors which the employer is responsible to.
Thai public standard construction contract should be
modified by allowing the contractor to claim for compensation
if he suffers any damage from the errors in drawings or
specifications which the employer is responsible to. From sub-
clause 2.2.3 of A201 (1997), the contractor is entitled to rely on
the accuracy of information furnished by the employer. This
provision gives right to claim for the errors of the employer in
the documents supplied to the contractor. As to the
Construction Contract (1999), sub-clause 1.9 stipulated the duty
of the engineer, as the employer’s representative, to provide any
necessary drawing or instruction required by the contractor in
order to perform the works continuously. The contractor is
entitled to claim for an extension of time for completion and
payment of any cost plus reasonable profit if the engineer fails
to issue such drawing or instruction.
4.3 Delay Damages
If the contractor can not complete his responsibilities
within time to completion, adjusted by all extension of times the
contractor is entitled, Thai public standard construction contract
specifies the contractor to pay the employer the liquidated
damages stipulated in the contract, in the form of per diem rate.
However, the contract also stipulates the employer’s entitlement
to the consultant remuneration he has paid and the additional
damages (if any) that occur from the delay that is caused by the
contractor which exceeds the liquidated damages collected from
the contractor.
From the construction law principle, liquidated damages
for contractor’s delay completion are predetermined in order to
avoid the difficulty of the employer or a court to accurately
compute the amount the employer has lost owing to the late
completion [6]. This is the reason why the contract should not
stipulate the contractor to pay both liquidated damages and
actual damages at the same time for his delay. By stipulating
both damages, the per diem rate predetermined seems to be only
as a penalty to the contractor. The actual damages still have to
be calculated and the contractor may pay more than the actual
damages caused by his delay if such actual damages are less
than those calculated from the per diem rate.
Thai public standard construction contract should be
improved in this issue in order to increase fairness to the
contractor and acceptance from all relevant people, especially in
the international projects. The contract should stipulate only
one method for calculating the employer’s damages caused by
the contractor’s delay. The liquidated damages approach has
advantage of the easiness to calculate and can help both parties
to avoid disputes. However, the actual damages approach may
be selected for a project.
(CEM) Page 324
Sub-clause 8.7 of the Construction Contract (1999)
specifies the employer’s right to the delay damages stated in the
appendix to tender for the contractor’s failure to complete the
works within the time to completion, adjusted by any extension
of time. These damages shall be paid for every day which
elapses between the relevant time for completion and the date
stated in the taking-over certificate. It should be noted that the
liquidated damages provision is an option in AIA Conditions of
Contract. This is the reason why A201 (1997) does not contain
such provision.
5. Discussion
From analyzing Thai public standard construction contract,
there are fourteen important claim-related provisions absent,
which are summarized in Table 1, including the contractor’s
rights to claim for additional payment. In addition, the existing
provisions were found to have many inadequacies such as the
overall structure of the claim provisions, the error in the details
provided by the employer, and the delay damages. As to the
overall structure of the claim provisions, Thai contract has
problems related to the obscure and dispute-leading mechanism
of stipulating the rights to claim into the contract and the
difficulty to find and to refer to the required provisions.
From the said inadequacies, the recommended solutions
that Thai government should adopt to improve such standard
form of contract comprise:
1) inserting the absent necessary claim provisions, as
shown in Table 1, into Thai public standard construction
contract,
2) stipulating the claimant’s rights to claim in the
provisions expressly,
3) improving easiness to find and to refer to the contract
clause. The standard format of wording, and the margin word
system can help achieving this goal,
4) modifying the provision related to the contractor’s right
to claim for the error in details provided by the employer by
allowing the contractor to claim for compensation if he suffers
 any damage from the errors in drawings or specifications which
the employer is responsible to.
5) modifying the provision related to delay damages by
stipulating only one method for calculating the employer’s
damages caused by the contractor’s delay in the contract. The
liquidated damages approach should be adopted because of its
easiness to calculate, and ability to help both parties to avoid
disputes.
6. Conclusion and Recommendation
This paper proposes a framework for analyzing the
inadequacies of non-international construction contracts,
especially those used in developing countries, finding the
recommend solution to improve them. The framework
proposed in this paper can be a very useful tool for improving
construction contract provisions. It can help the analyzer to
find the inadequacies and recommended solutions to solve the
inadequacies systematically.
Even though Thai public standard construction contract has
been used for procurement in Thai construction industry for a
long time, it still has some inadequacies including those
involving construction claims. They can be classified into two
categories: the absence of the necessary claim provisions, and
the inadequacies of the existing claim provisions. There are
some contract modifications that Thai government should adopt
in order to improve Thai public standard construction contract:
inserting the absent necessary claim provisions, stipulating the
claimant’s rights to claim in the provisions expressly,
improving easiness to find and to refer to the related contract
clauses, modifying the provision related to errors provided by
the employer, and modifying the provision related to delay
damages. By improving the claim provisions of this form of
(CEM) Page 325
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contract, Thailand will get many benefits such as reduction of
project disputes, reduction of project cost, the fairness to both
parties, efficient contract management, and acceptance in the
international level.
7. References
[1] American Institute of Architects [AIA], 1999. Commentary on AIA
Document A201-1997. Washington D.C.: The American Institute of
Architects.
[2] Booen, Peter L., 2001. Claims & Adjustments of the Contract. FIDIC
Global Conditions of Contract. New Delhi,
<http://www.fidic.org/resources/contracts/booen_k.asp> (19 March
2001)
[3] Bunsrangserm, Nujjaree, 2000. A Study of the Deficiencies in the
Contractual Conditions of the Government Construction Contract,
Master’s Degree Thesis, Chulalongkorn University.
[4] Federation Internationale des Ingenieurs-Conseils [FIDIC], 1999.
Conditions of Contract for Construction for Building and Engineering
Works Designed by the Employer, First Edition. Lausanne: FIDIC.
[5] Hughes, G A and Barber, J N., 1992. Building and Civil Engineering
Claims in Perspective. London : Longman Scientific & Technical.
[6] Jervis, B M., 1988. Construction Law – Principles and Practice. New
York: McGraw-Hill.
[7] Kompayak, Palm, 1999. Contract Administration Procedures in the
Thai Construction Industry. Master’s Degree Thesis. Asian Institute
of Technology.
[8] Tochaiwat, Kongkoon and Chovichien, Visuth, 2003. Contract
Provision Inadequacies in Infrastructure Design-Build Contract: A
Case Study. Proceedings of the Fourth Regional Symposium on
Infrastructure Development in Civil Engineering. Bangkok: D2-9 –
D2-18.
[9] Tochaiwat, Kongkoon and Chovichien, Visuth, 2003. The
Applicability of Construction Client/ Consultant Form of Agreement
in Thai Public Construction Projects. Proceedings of The Ninth East
Asia-Pacific Conference on Structural Engineering and Construction.
Bali: CEM-16.