Construction Claims &

Dispute Resolutions
Introduction
Claim is legally defined as an assertion to right.

Claim is therefore a substantive demand, for example,

by the Contractor against the Employer.

All of such willful act of the claimant should be based

on her/his right, entitlement and privilege that can
legally be supported.

All of such willful act by the claimant need to be

proved and the claim should be properly presented
and shall also be justified.
Types of claims

Generally, Claims can be classified as follows

based on Legal and General backgrounds.
a. Contractual claims

b. Ex-contractual claims

c. Ex-gratia claims
Contractual claims
These are claims made under the expressed
provisions of a contract (claims under contract )
 A claim for which both the event and the

remedy are specified in the contract

But this does not mean that the claim should be

necessarily on the provisions of the contract, it
may also be claims for breach of contract.
 For which the remedy is specified in the

contract
 Ex-contractual Claims
Legitimate claims that occur but that do not have
their basis in the conditions of contract,
They are needed to be dealt with by
 mediation

 arbitration or

 litigation in the normal way

Claims in Tort :
 the law of tort is concerned with civil duties and
relationships
 It regulates wide variety of unlawful behavior, those
related to construction includes nuisance, trespass,
negligence etc..
Ex-contractual claims
Quasi-contractual claims: this type of claim is for
the value of work completed or services performed
and may arise:
 under a contract where no price is fixed or

where the agreement is to pay reasonable

sum
 Where there is no valid and enforceable

contract between the parties,

But the law inputs an obligation to pay a reasonable
sum for work done or service rendered.
Ex-gratia claims

The ex-gratia claims are claims made

 With no ground in the contract or at law but,
only on the sense of fairness

 e.g. an ex-gratia claims might be made to recover

cost incurred by the contractor the expenditure of
which give benefit to the employer, but for there are
no grounds for recovery under the contract
Construction Claims
Construction projects may not go smoothly as planed due to
uncertainties about events in the future.

For example: Delay which are the major causes of claims may
occur due to:
 unforeseen site conditions

 Increase in scope of work and others

As a result, disagreement can arise regarding contractual

matters.

Claim is mostly concerned with

 entitlements and
 liabilities arising under, or as a result of, a legally valid
contract.
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Construction Claims
A construction claim is therefore can be demanded
for
 payment of additional compensation,
 extension of Time or compensating delay
damages,
 adjustment of the parties' respective contractual
obligations,
 any other change with regard to the contractual
conditions or terms.
Claim Administration Process
1. Claim Preparation and Submittal

 The first notice starts the claims procedure

 Any other notice and supporting details may also be

required by specific clauses
 Contemporary records to be kept

 Record may be inspected by Engineer

Claim Administration Process
2. Claim Processing
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.
Assessment of claims by using Alternative
Dispute resolution systems.
3. Claim Enforcement
 is a stage where the approved claim is enforced
and finally becomes a closure.
Valid Claims
All parties involved in the contract should be aware of the
causes of valid claims.
valid claims are those claims that the contracting
parties entitled to.
Valid Claims can be rejected by one of the following reasons:
 Timely notice was not given
 Late claims

 Contract procedures were not followed

 Proper record were not kept

 Inadequate information is provided to verify claims

 The claim does not establish any valid entitlements

under the contract
Typical Claims

The employer may claim for

Liquidated damage
Extension of defects liabilities period
The contractor may claim for
Time extension,
Additional cost or
 both time extension and additional
payment.

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 Common Sources of Contractor’s Claims
The causes of claims on construction projects
are many. Some of the major ones are:
 Extra works,
 design change,

 differing soil/site conditions ,

 untimely payment,

 limited access to the site,

 defects in plans and specifications ,

 failure on the part of the owner to approve

drawing
They are also causes of valid claims.
Typical Contractual provisions
Liquidated Damage under clause 49 (PPA 2006)
and its Reduction scheme
 Clause 32 and 44.4
 Contractor shall give notice as soon as
practicable
 Describing the event or circumstances in
detail with in 28 days
 Notice shall comply with clause 6 i.e in
writing and properly delivered
 Etc…
Dispute Resolution Systems
Unresolved claims are the basis for the existence
of construction disputes.

 The remedy for the claims or disputes may be the

contract and/or the applicable law.

The contractual parties will pass through different

dispute resolution system depending on their
acceptance over the proposed compensation.
 Types of DRS
Preventive Dispute Resolution System
 Use of dispute resolution advisors and Facilitators for early
neutral evaluation and advise to prevent the happening of
claims or their consequential disputes.

 The following aspects may contribute to the prevention of

construction disputes
 To have a well planned project;
 To have a well studied project;

 To have a well designed project;

 To have a clear, accurate & complete tender
document; & contract document
 To have a good project governance;
Types of DRS
Amicable Dispute Resolution System
 use of Mini-Trials to administer the claim in a less
formal, simple procedure, more flexible, less adversarial
and strictly confidential mode so as to avoid the time
and cost implication of claim processing.

 Negotiation (B/n the contracting parties, win-

win),
 Mediation (mediator is facilitative, gives a
brainwash, no suggestion),
 Conciliation (evaluative type, third party give
recommendation suggestion)
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Types of DRS
Judgmental Dispute Resolution System
 applicable to bring the closure of claim
processing.

 includes Adjudication or Dispute review board,

Arbitration and Litigation where the formal
adjudicatory or common law system is adopted.