Construction Claims Management Guide

Construction Claims Management
Abraham Befekadu Tessema

B.Sc. In Civil Engineering (AAU)
Msc. In Construction Management (England)
May 2022
Email:abrahambtessema@gmail.com
abbf2003@yahoo.com
Tel Mobile: +251935409255/+251911171104
OUTLINE OF PRESENTATION
1. Introduction;
2. Claims under MDB-FIDIC (2010)
3. Claims under PPA (2011)
4. Delays and EoT;
5. SCL Delay and Disruption Protocol (2017)
6. Claim Management Processes; and,
7. Conclusion.
Construction Solutions PLC

1. Introduction
Construction Contract and Law Conceptual Framework
Deal Design, Documentation & Structuring

Deal Design
DBB: Detail Design DB: Employers Requirements
Deal Documentation
Tender Document Preparation
Deal Exchange
Procurement Management System
Deal Formulation
Finalization and Signing of Contract
Deal Performance
By the Employer By the Contractor
Deal Conformance
Contract Management System By the Consulting Engineer
Deal Non-Performance
By the Employer By the Contractor
Deal Non-Performance Management
Claims Management System Disputes Management System
Developed by: Zewdu Tefera Worke; Engineering Contracts Lawyer

1.0 Contract strategy
Perry, 2006 defined Contract strategy as :-
The set of policies and procedures that are selected to
implement the management decisions the client has to
make at the early life of the project.
The contract strategy determines
 The level of integration of design, construction and ongoing
maintenance for a given project,
 Should support the main objectives of the project in terms of
risk allocation, delivery, incentives and so on
1.0 Contract strategy (Cont’d)
Selection of contract strategy requires decisions about,
 Number of work packages
 Whether there should be one main Contractor or several Contractors;
 Division of tasks between the Client, Consultants and contractors,
 Terms of payment;
 Basis for selecting contractors.

 an essential process for the successful completion of
construction projects;
 a process that encompasses the various phases of
construction stages, i.e., pre-tender stage, contract
formulation, construction as well as post-construction
completion stage; and,
 the cheapest , and the fastest method of dispute
resolution process.
 Construction Project Claim Management Working Manual
(ECPMI ECPMMS: 2019)

 Changes in construction projects cannot be fully controlled
at the design and tendering stages;//THE
ENGINEER/DESIGNEER IS NOT OMNISCIENT!
 Changes in construction projects leads to changes in the
obligations of the parties in the Contract;//mostly affecting
cost and time of completion!
 Depending on the extents of the impact of changes, claims
will definitely arise; and,
 This calls for EXPEDITED RESOLUTION OF CLAIMS!!!. No
place for delay!!!!
 Claims in construction industry are conceived negatively as
nonproductive attempt of a party in the construction
contract who seeks unjustified entitlement without doing
anything significant in return
 It is common to find some contractors who are considered
by many as claim conscious because they are diligently
looking every possible opportunity to drain resources and
hence extra revenue from the Employer;
 Defining claim and hence claim consciousness on the basis
of the unethical behavior of such contractors is a
misconception and wrong.
 Claims should not be regarded as either inevitable or
unpalatable, and complying with claims procedures
should not be regarded as being an aggressive act.
 Major projects give rise to major risks, which have to be
dealt with if they occur. Whilst the Parties might prefer
everything to remain unchanged, they should not
instinctively seek to attribute blame if circumstances
arise or events occur which give rise to an adjustment of
the Contract Price.

 In these events, the claims procedures are specified so as to
provide the degree of formality considered necessary for
the proper administration of a building or engineering
project.
 Complying with these procedures and maintaining a co-
operative approach to the determination of all adjustments
should enhance the likelihood of achieving a successful
project.” (FIDIC Guide, pp.88-89.)// fault lines, thunders,
government changes,wars in a distant land (the fall of
Gadafi and the price of fuel),etc.

 Successful claim management, be it on the side of
contractor or employer or contract administrator
appointed as the Engineer or Architect in
construction projects should be
 well conversant with the contract documents as well as
construction law;
 familiarity with the legal concepts and construction law
in general;
 Have the required technical qualification; and
 practical field experience.

 “A claim is 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.” (American Institute of Architects’
(AIA) Standard Form Construction Contract,
General Conditions (AIA A201), 15.1.1)

 Claim means simply a request, demand, application for
payment or notification of presumed entitlement to
which the contractor, rightly or wrongly at that stage,
considers himself entitled and in respect of which
agreement has not yet been reached.”
Hughes and Barber (1983)
 A claim is an assertion of a right to property, money or a
remedy
ERA’s Claims Manual (SMEC)

 Sub-Contractor Claims;
 Main Contractor Claims;
 Employer Claims; and,
 Funder Claims.

 Under the agreed contract;
 Under the general law of contract;
 Under the general law of tort arising due to
breach of duty;
 Under restitution.

 It is quicker and cheaper;
 It may create a right to an interim payment;
 It may also create a right to an extension of
time; and,
 It normally avoids disputes.

 Claims are basically between the Employer and the Contractor. // claims
between the Engineer and the Employer is contained in the service
contract.
 The parties in the Contract are indemnified from any third party claims
as stated in Sub-Clause 17.1 [Indemnities].
 The Contractor’s claim under Sub-Clause 20.1 is mostly related to

Extension of Time or additional compensation of money or both;
 the Employer’s claim under Sub-Clause 2.5 is related to money and/or

an extension to the Defects Notification Period from the Contractor.

Sub-Clause 1.4 Law and Language
 The Contract shall be governed by the law of the country or other jurisdiction
stated in the Contract Data.// Ask the students to comment whether it is possible
to use other country’s jurisdiction and the possible consequences.
 The ruling language of the Contract shall be that stated in the Contract Data.//
discuss with students about specifications written in different language and
issues related with mistakes in translation. Possibility of price adjustment indices
in Chinese.
 The language for communications shall be that stated in the Contract Data. If no
language is stated there, the language for communications shall be the ruling
language of the Contract.// Discuss with students about the Chinese on site
writing in Chinese on tests results or manuals produced in other languages.

2. Claims Under
Conditions of Contract
for CONSTRUCTION
FOR BUILDING AND ENGINEERING WORKS
DESIGNED BY THE EMPLOYER
Multilateral Development Bank Harmonised
Edition
June 2010
MDB-FIDIC (2010)
2.1 Employer’s Claim under MDB-FIDIC (2010)
If the Employer considers himself to be entitled to any
payment under any Clause of these Conditions or
otherwise in connection with the Contract, and/or to
any extension of the Defects Notification Period, the
Employer or the Engineer shall give notice and
particulars to the Contractor. However, NOTICE IS NOT
REQUIRED for payments due under Sub-Clause 4.19
[Electricity, Water and Gas], under Sub-Clause 4.20
[Employer’s Equipment and Free-Issue Materials], or for
other services requested by the Contractor.
The notice shall be given as soon as practicable
and no longer than 28 days after the Employer
became aware, or should have become aware,
of the event or circumstances giving rise to the
claim. A notice relating to any extension of the
Defects Notification Period shall be given
before the expiry of such period.
The particulars shall specify the Clause or other
basis of the claim, and shall include
substantiation of the amount and/or extension
to which the Employer considers himself to be
entitled in connection with the Contract.

The Engineer shall then proceed in accordance
with Sub-Clause 3.5 [Determinations] to agree or
determine
(i) the amount (if any) which the Employer is
entitled to be paid by the Contractor, and/or
(ii) the extension (if any) of the Defects
Notification Period in accordance with Sub-
Clause 11.3 [ Extension of Defects Notification
Period ].
This amount may be included as a deduction in
the Contract Price and Payment Certificates.
The Employer shall only be entitled to set off
against or make any deduction from an amount
certified in a Payment Certificate, or to
otherwise claim against the Contractor, in
accordance with this Sub-Clause.
 Cf. next slide

 Cf. next slide

 Cf. next slide

i. SUBMISSION OF NOTICE-claim begins with
submission of notice(s).
If the Contractor considers himself to be entitled

to any extension of the Time for Completion and/or
any additional payment, under any Clause of
these Conditions or otherwise in connection with
the Contract, the Contractor shall give notice to
the Engineer, describing the event or circumstance
giving rise to the claim.

ii. STRICT NOTICE REQUIREMENT
The notice shall be given as soon as

practicable, and not later than 28 days after
the Contractor became aware, or should have
become aware, of the event or circumstance.

iii. STRICT NOTICE REQUIREMENT
If the Contractor fails to give notice of a claim

within such period of 28 days, the Time for
Completion, shall not be extended, the
Contractor shall not be entitled to additional
payment, and the Employer shall be discharged
from all liability in connection with the claim.
Otherwise, the following provisions of this Sub-
Clause shall apply.
iv. SUBSTANTIATION OF CLAIM
The Contractor shall also submit any other

notices which are required by the Contract, and
supporting particulars for the claim, all as
relevant to such event or circumstance.

v. CONTEMPORARY RECORDINGS
 The Contractor shall KEEP such contemporary records as may be
necessary to substantiate any claim, either on the Site or at
another location acceptable to the Engineer.
 Without admitting the Employer’s liability, the Engineer may,
after receiving any notice under this Sub-Clause, MONITOR the
record-keeping and/or INSTRUCT the Contractor to keep further
contemporary records.
 The Contractor shall permit the Engineer to INSPECT all these
records, and shall (if instructed) SUBMIT copies to the Engineer.//
common mistake on site is that the contractor will keep on hiding!

vi. TIME BAR CLAUSE FOR SUBMISSION OF
DETAILS OF THE CLAIM.
Within 42 days after the Contractor became aware (or
should have become aware) of the event or
circumstance giving rise to the claim, or within such
other period as may be proposed by the Contractor and
approved by the Engineer, the Contractor shall send to
the Engineer a fully detailed claim which includes full
supporting particulars of the basis of the claim and of
the extension of time and/or additional payment
claimed.

vii. INTERIM CLAIMS.
If the event or circumstance giving rise to the claim has
a continuing effect:
(a) this fully detailed claim shall be considered as
interim;
(b) the Contractor shall send further interim claims at
monthly intervals, giving the accumulated delay
and/or amount claimed, and such further particulars
as the Engineer may reasonably require; and

viii. TIME BAR CLAUSE FOR SUBMISSION OF
END OF INTERIM CLAIMS.
the Contractor shall send a final claim within
28 days after the end of the effects resulting
from the event or circumstance, or within
such other period as may be proposed by the
Contractor and approved by the Engineer.

ix. TIME BAR CLAUSE FOR DETERMINATION BY
THE ENGINEER
Within 42 days after receiving a claim or any further
particulars supporting a previous claim, or within such
other period as may be proposed by the Engineer and
approved by the Contractor, the Engineer shall respond
with approval, or with disapproval and detailed
comments. He may also request any necessary further
particulars, but shall nevertheless give his response on
the principles of the claim within the above defined time
period.

x. DETERMINATION
Within the above defined period of 42 days, the
Engineer shall proceed in accordance with Sub-
Clause 3.5 [ Determinations ] to agree or
determine (i) the extension (if any) of the Time for
Completion (before or after its expiry) in
accordance with Sub-Clause 8.4 [ Extension of
Time for Completion ], and/or (ii) the additional
payment (if any) to which the Contractor is
entitled under the Contract.

x. DETERMINATION (cont’d)
Each Payment Certificate shall include such

additional payment for any claim as have been
reasonably substantiated as due under the
relevant provision of the Contract.

xi. INTERIM DETERMINATION
Unless and until the particulars supplied are

sufficient to substantiate the whole of the
claim, the Contractor shall only be entitled to
payment for such part of the claim as he has
been able to substantiate.

xii. DISPUTE
If the Engineer does not respond within the

timeframe defined in this Clause, either Party
may consider that the claim is rejected by the
Engineer and any of the Parties may refer to
the Dispute Board in accordance with Sub-
Clause 20.4 [ Obtaining Dispute Board’s
Decision ].
 The Contractor must give notice to the Engineer of time or
money claims, as soon as practicable and not later than 28
days after the date on which the Contractor became aware,
or should have become aware, of the relevant event or
circumstance.
 Any claim to time or money will be lost if there is no notice
within the specified time limit.
 Supporting particulars should be served by the Contractor
and the Contractor should also maintain such contemporary
records as may be needed to substantiate claims.

 The Contractor should submit a fully
particularized claim under 42 days .
 The Engineer is to respond , in principle at least

within 42 days.
 The Claim shall be an interim claim. Further

interim updated claims are to be submitted
monthly.

 A final claim is to be submitted , unless agreed
otherwise, within 28days of the end of the claim
event.
 Any extension of time or additional payment will
take account of any failure or other prejudice
caused by the Contractor during the investigation
of the claim.
 Payment certificates should reflect any sums
acknowledged in respect of substantiated claims.
 Cf. Next Slide

 Cf. Next Slide

i. STRICT NOTICE REQUIREMENT (73.2)
The Contractor shall, within 15 days of

becoming aware that delay may occur, notify
the Engineer of his intention to make a
request for extension of the Intended
Completion Date to which he may consider
himself entitled

i. STRICT NOTICE REQUIREMENT (73.4)
If the Contractor has failed to give early

notification of a delay or has failed to
cooperate in dealing with a delay, the delay
by this failure shall not be considered in
assessing the new Intended Completion Date.

ii. TIME BAR CLAUSE FOR SUBMISSION OF
DETAILS OF THE CLAIM (73.2)
and shall, unless otherwise agreed between

the Contractor and the Engineer, within 21
days from the notification deliver to the
Engineer full and detailed particulars of the
request, in order that such request may be
investigated at the time.
iii. TIME BAR CLAUSE FOR DETERMINATION BY
THE ENGINEER (73.3)
Within 21 days from receipt of the Contractor's detailed
particulars of the request, the Engineer shall, by written
notice to the Contractor after due consultation with the
Public Body and, where appropriate, the Contractor,
grant such extension of the Intended Completion Date
as may be justified, either prospectively or
retrospectively, or inform the Contractor that he is not
entitled to an extension.

iv. Causes for EOT (73.1)
The Contractor may request an extension of

the Intended Completion Date if he is or will be
delayed in completing the contract by any of
the following causes:
 Cf. Next Slide

iv. Causes for EOT (73.1)
(a) Exceptional weather conditions in the Federal Democratic Republic of Ethiopia;
(b) Artificial obstructions or physical conditions which could not reasonably have been
foreseen by an experienced Contractor;
(c) Compensation Event occurs or a change order for modification is issued which makes it
impossible for completion to be achieved by the Intended Completion Date;
(d) Administrative orders affecting the date of completion other than those arising from the
Contractor's default;
(e) Failure of the Public Body to fulfill his obligations under the Contract;
(f) Any suspension of the works which is not due to the Contractor's default;
(g) Force majeure;
(h) Any other causes referred to in these GCC which are not due to the Contractor's default.
i. STRICT NOTICE REQUIREMENT (69.1 (a))
If under the Contract there are circumstances which

the Contractor considers entitle him to additional
payment, the Contractor shall:
a) if he intends to make any claim for additional

payment, give to the Engineer notice of his
intention or make such claim within 15 days after
the said circumstances become known to the
Contractor, stating the reason for his claim; and

ii. TIME BAR CLAUSE FOR SUBMISSION OF DETAILS OF THE
CLAIM (69.1 (b))
(b) submit full and detailed particulars of his claim as
soon as it is reasonably practicable, but no later than 60
days after the date of such notice, unless otherwise
agreed by the Engineer. In case the Engineer agrees to
another deadline than the said 60 days, the agreed upon
deadline will in any event, require that such particulars
shall be submitted no later than the date of submission
of the draft final statement of account. The Contractor
shall thereafter promptly submit such further particulars
as the Engineer may reasonably require assessing the
validity of the claim.
iii. STRICT NOTICE REQUIREMENT (69.3)
The Engineer may reject any claim for additional

payment which does not comply with the
requirements of this GCC Clause.

iv. DETERMINATION (69.2)
When the Engineer has received the full and detailed
particulars of the Contractor's claim that he requires, he shall,
without prejudice to GCC Clause 44.4 (Weather), after due
consultation with the Public Body and, where appropriate,
the Contractor, determine whether the Contractor is entitled
to additional payment and notify the parties accordingly

i. Compensation Events for Allowing Time
Extension
The following shall be Compensation Events

allowing for time extension: (74.1)
Cf. Next Slide

(a) The Public Body does not give access to a part of the Site by the Site Possession Date
stated in the Contractor’s approved work program;
(b) The Public Body modifies the Schedule of other Contractors in a way that affects the work
of the Contractor under the Contract;
(c) The Engineer orders a delay or does not issue Drawings, Specifications, or instructions
required for execution of the Works on time;
(d) The Engineer instructs the Contractor to uncover or to carry out additional tests upon work,
which is then found to have no Defects;
(e) The Engineer unreasonably does not approve a subcontract to be let;
(f) The Engineer gives an instruction for dealing with an unforeseen condition, caused by the
Public Body, or additional work required for safety or other reasons.
(g) Other Contractors, public authorities, utilities, or the Public Body do not work within the
dates and other constraints stated in the Contract, and they cause delay;
(h) The advance payment is delayed;
(i) The Engineer unreasonably delays issuing Interim Payment Certificates;
(j) Other Compensation Events described in the SCC or determined by the Public Body and
force majeure.
II. Additional Points (74.2 & 74.3)
a) If a Compensation Event would prevent the work

being completed before the Intended Completion
Date, the Intended Completion Date shall be
extended. The Engineer shall decide whether and
by how much the Intended Completion Date shall
be extended.
b) The Contractor shall not be entitled to
compensation to the extent that the Public Body’s
interests are adversely affected by the Contractor
not having given early warning.
I. Warn the Engineer (77.1)
The Contractor shall warn the Engineer at the earliest
opportunity of specific likely future events or circumstances
that may adversely affect the quality of the work increase
the Contract Price or delay the execution of the Works. The
Engineer may require the Contractor to provide an
estimate of the expected effect of the future event or
circumstance on the Contract Price and Completion Date.
The estimate shall be provided by the Contractor as soon as
reasonably possible.

II. Cooperate with the Engineer (77.2)
The Contractor shall cooperate with the Engineer in

making and considering proposals for how the effect
of such an event or circumstance can be avoided or
reduced by anyone involved in the work and in
carrying out any resulting instruction of the
Engineer.

I. Inspection of the Site Environment (4.3)
If the Contractor has either failed to inspect the Site

Environment or failed to notify the Public Body of any
required remedial actions in accordance with Clause 4.2
then the Contractor shall not be entitled to recover any
additional costs or charges from the Public Body relating
to any unsuitable aspects of the Site Environment nor
shall the Contractor be entitled to seek relief in respect
of any Default arising from such failure.

I. Notice to the Engineer (20.3)
The Contractor shall not be entitled to such additions to the
contract price unless he notifies the Engineer, within 30 days
after receipt of the order to suspend the works, of his
intention to make a claim for them
II. Determination by the Engineer (20.4)
The Engineer, after consultation with the Public Body and the
Contractor, shall determine such extra payment and/or
extension of the period of performance to be made to the
Contractor in respect of such claim as shall, in the opinion of
the Engineer, be fair and reasonable.

 A construction delay is recognized when a
project completes or is forecasted to
complete beyond the contract completion
milestone or a significant interim contract
milestone date specified in the project
schedule.

4.2.1 Critical Path
 The critical path, or “longest path,” of project
activities is the longest chain of interrelated
activities beginning at the start of the project
through to project completion. If the chain of
activities is a valid consecutive set of interrelated
activities, then a delay to an activity along this
chain of activities will result in a delay to the project
completion date.
4.2.2 Float
 If an activity is not on the critical path, or the longest path,
it generally contains float.
 Float is a quantity of time, typically measured in days,
available to an activity within a network that can be
consumed without affecting the latest possible start date of
a successor activity and possibly the project’s completion
date.
 Float values are positive when an activity is either on or
ahead of schedule and, conversely, float values become
negative when activities or the project are behind schedule.

4.3 Types of Delay:
 Non-Execusable ;
 Execusable;
 Compensable;
 Non-Compensable;
 Concurrent.
 Excusable Delay
Excusable delays are events or impacts that delay project
completion dates and result from any issues outside of the
contractor’s control. These events may result from an owner-
generated issue, such as changes to the construction documents,
extensive approval process, differing site condition, and prolonged
adverse weather (above and beyond what is considered average),
or from an extraneous, uncontrollable, unforeseeable event, which
may or may not fall under the contract’s force majeure clause (if it
contains one). This is not an exhaustive list, and other issues may
arise and result in excusable project delays.

Non-excusable Delay
 Non-excusable delays result from any circumstance that is
theoretically within the contractor’s control or could have
reasonably been foreseen. This type of delay does not warrant a
time extension or additional compensation from the owner. In
addition to the extra costs required to fund, staff, and manage
the project, the contract may include a liquidated damages
clause (usually a predetermined value for each day of delay) that
would be deducted from the contractor’s monthly billing or even
owed following completion. In addition, depending on the
magnitude of the delay, subcontractors may also be damaged.

Compensable Delay
 Compensable delays stem from issues outside the
contractor’s control that typically result from actions of
the owner, a representative of the owner, or a third party
within the owner’s control. For the delay to be
compensable, the issues that result in delay are typically
unforeseen, uncontemplated prior to entering into the
construction contract, and could not be controlled by the
contractor. Project delays usually result in additional
costs for the contractor, except when a contractor has not
assumed the risk of delay by expressly excluding
precipitating conditions from the contract.
Non-compensable Delay
 Non-compensable delays affect the completion of
an interim contract milestone or the project
completion date but do not entitle the contractor to
reimbursement of overhead expenses or other
additional costs. These delays are determined to be
the fault of either both parties (concurrent delay) or
neither party. Non-compensable delays are
typically weather-related or force majeure events.

Non-compensable Delay (cont’d)
 Non-compensable delays can also result from

concurrency between two delay events, one of
which is compensable while the other is not. As
with compensable delays, timely time
extensions avoid the potential for unnecessary
acceleration efforts on the contractor’s part and
address the project completion date before other
delay events occur.

Concurrent Delay
 Concurrent delay occurs in three situations.
 First is the situation in which two separate overlapping events,
one caused by an owner and one caused by a contractor, delay one
or more activities on the project’s critical path(s) during the
overlapping period of time.
 As an example, the overlapping delays originate from two
different float paths (both critical) converging to delay an activity
on a common float path. In this example, an excusable,
compensable delay and a non-excusable, non-compensable delay
offset each other.

Concurrent Delay (cont’d)
 A second situation occurs when the owner

and the contractor affect a chain of activities
and the number of days cannot be
apportioned due to the significant overlap of
the role each party played during the delay
event(s).

Concurrent Delay
A third situation occurs when the owner or contractor delays
the project and a weather event or force majeure event also
delays construction progress. In this instance, an excusable,
potentially compensable (owner-caused) or Non-excusable
(contractor-caused) delay is offset by the amount of an
excusable, non-compensable delay.
 Source: Construction Contract Claims, Changes, and Dispute
Resolution,3rd edn. Edited by Paul Levin. American Society of Civil
Engineers, 2016.

 With the intention of consistency and good practice in the
analysis and determination of EoT and associated costs,
the Society of Construction Law in UK has published SCL
Delay and Disruption Protocol.
 The Protocol was first published in 2002 and revised, 2nd

edition was published in 2017.Since its first publication, this
manual has become an important reference globally and
currently it is getting much attention in Ethiopia as well
among construction professionals. The pdf of the Protocol
can be downloaded freely from Internet.
 Claim management processes is inclusive of the different Phases of
Construction Projects.
 Phase -1: Pretender Stage. Activities such as concept design, detailed
design, feasibility and preparation of contract documentations are carried
out.
 Phase -2: Contract Formulation. Activities such as preparation and
submission of tenders, tenders checking and evaluation, pre-contract
negotiations and contract formulation are carried out.
 Phase-3: Construction. This is primarily execution of the construction work
as per the contract to the level of substantial or practical completion.
 Phase -4: Post – Construction Completion. This is resolving outstanding
issues arising during or after completion of the construction project and
finalization of accounts.

 Claim management processes include
 Claim Prevention;
 Claim Mitigation;
 Claim Resolution.
▪ Claim Identification;
▪ Claim Quantification;

Claim Prevention
 The popular cliché, prevention is better than cure, is also the best
approach to claim management. The best way to prevent claim is
to have no claims to prevent! Avoidance or preventing claims from
arising cannot be emphasized enough. Prevention/Minimizing of
claims is an achievable goal if sufficient time is allocated during the
stages of pretender and contract formulation. If enough attention is
given to ensure that scope of the contract is properly defined
through well aligned contract documents to the defined purpose of
the contract and also if risks are well identified and shared among
the stakeholders depending on their position to manage well, claim
prevention/minimization is possible to achieve.

Claim Prevention Inputs
 Scope of Work: The project scope of work has to be defined clearly and
carefully in a clear and unambiguous language, encompassing all
requirements and satisfy the intended purpose of the Work.
 Fair Contract Terms: The terms of the contract have to be fair enough to
create a win-win situation in all stages of the contract. Contract terms
particularly dealing with unknown site conditions, force majeure
events, notice bar clauses and approval/responding times should be fair
for all parties in the contract.
 Required Distribution of Information: The information necessary for the
key project players has to be distributed to enable them to properly
respond to risks.

Claim Prevention Inputs (cont’d)
 Management Scheme of Project: Detailed and clearly
defined management scheme of responsibilities has to be
prepared and allocated to the respective stake holders.
 Risk Allocation: Allocating of the risk between the parties
on the basis of which one has the most control over the risk
involved should be the underlying principle for the risk
management plan.
 Time Frame for Project Completion: It is critical to set a
logical time frame for execution and completion of the
project that is not too short nor unnecessarily long.

Claim Mitigation
 A good claim mitigation mechanism is to settle
issues within shortest time possible after it arises
and at its lowest level before it develops into
complex situation which may take longer, becomes
expensive and affects the parties in the
construction projects adversely.
 Abiding by time bar clauses

 Proper evidences; a claim either fails or succeeds
based on evidences
Claim Mitigation Inputs
 Similar to claim Prevention

Claim Resolution
 Claim resolution process takes two steps-

 claim identification and
 claim quantification

Claim Resolution- claim identification
The following general circumstances are identified as

good aids in early identification of changes (Warning
signs of claim situations)
 Additional work not specified in the contract

documents;
 Work different from that specified;
 Work in a particular manner or method that varies
from that originally anticipated (from implied
conditions or interpretation of specifications);
Claim Resolution- claim identification (Cont’d)
 Work resulting from contract drawings or
specifications that have been changed,
amended, revised, amplified, or clarified;
 Unanticipated work that results from
insufficient details in the plans and
specifications;
 Work required to be performed using one
particular method when specifications allow two
or more methods;
 Work out of sequence;
 Owner furnishing equipment late, in poor

condition, or not suitable for the intended
use;
 Accelerated performance in any way, to
regain schedule, to add workers or materials,
or to work overtime or extra shifts;
 Any new, different, or shorter schedule;
 Relocation of existing work because of lack

of coordination, information, or other
factors;
 “Differing” site condition;
 Differences in contract interpretation;
 Defective specifications;
 Delays from the owner’s acts or failure to
act;
Claim Resolution- claim quantification
 The underlying principle of claim quantification
is to make the contractor whole.
 Quantification of claims is normally made in
terms of additional monetary compensation and
or time extension to the contract completion
date or other milestone date.
▪ Quantity Measurement: cf. 16.8.2.1
▪ Cost Estimation: cf. 16.8.2.2
▪ Contract Law Precedents: cf. 16.8.2.3
▪ Schedule Analysis: cf. 16.8.2.4

 In conclusion, it should be clear that sound
claim management process encompasses all
the phases of construction stages. It
requires careful planning starting from pre-
construction stage until the closing of the
contract.

 Effective claim management enables the
successful completion and delivery
construction projects that fits the intended
purpose by creating a win -win situation to
all parties involved.

END!
Thank You!

Construction Claims Management Guide

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Construction Claims Management

Abraham Befekadu Tessema

Construction Solutions PLC

Deal Design, Documentation & Structuring

DBB: Detail Design DB: Employers Requirements

By the Employer By the Contractor

Contract Management System By the Consulting Engineer

By the Employer By the Contractor

Deal Non-Performance Management

Claims Management System Disputes Management System

Developed by: Zewdu Tefera Worke; Engineering Contracts Lawyer

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 The Contractor’s claim under Sub-Clause 20.1 is mostly related to

 the Employer’s claim under Sub-Clause 2.5 is related to money and/or

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If the Contractor considers himself to be entitled

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The notice shall be given as soon as

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If the Contractor fails to give notice of a claim

The Contractor shall also submit any other

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Each Payment Certificate shall include such

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Unless and until the particulars supplied are

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If the Engineer does not respond within the

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 The Engineer is to respond , in principle at least

 The Claim shall be an interim claim. Further

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The Contractor shall, within 15 days of

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If the Contractor has failed to give early

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and shall, unless otherwise agreed between

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The Contractor may request an extension of

 Cf. Next Slide

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If under the Contract there are circumstances which