Claims on construction contracts: a new management framework

The contractor is required to submit well-argued staternents of entitlements upon the occurrence of defined events recognised by construction contracts. These are generally referred to as claims. It is a matter of record that the high incidence of disputes is the result of such claims. Two main strands of research and expert commentary have been followed to stem this tide. The first focuses on ensuring that the legal implication of terms of contract are understood. The other attempts to ensure that there is equitable risk allocation under construction contracts. Some reported research indicates that poor quality of claims management practice was perhaps one of the most important factors responsible for this phenomenon. Unfortunately, there has been no reported research into the most deficient aspects of the claims management process. The general aim of the research reported in this thesis attempts to fill the gap in the construction industry’s understanding of claims management. The research involved: (i) an extensive review of the literature on claims, information management and technology, (ii) surveys and structured interviews of contractors and consultants and; (iii) case studies. Tile research confirmed the perceived central role of the quantity surveyor (QS) in claims management, in addition to his/her traditional functions. It suggests that as a result of the QS’s workloads, claims are usually left until projects are practically complete. Also, contrary to conventional wisdom, most consultants to not object to the principle of claims but rather reject claims because of lack of factual evidence to support them. This deficiency in claim submissions from contractors is the result of lack of resources, the high cost of accessing the relevant paper records and/or the fact that information they submitted to support claims is usually captured by systems designed to produce internal accounting information which has, at best, only the most tenuous connection with claims. Further, although the technology required to reduce the expense of access to information from paper sources is now well established, few contractors are even beginning to appreciate the values of these systems. In addition, no systems exist that are capable of supporting every aspect of claims management. To improve the situation, the research proposes that : (i) a rnatrix of documents, or their near equivalents, that record resource use, performance and site events with reference to scheduled project activities be implemented; (ii) a requirement to prepare and maintain resource-loaded CPM network schedules to aid the ascertainment of the cost and time impact of site events on specific activities. Standard specifications for these programmes and the minirnurn requirements for keeping site records should also be incorporated with all standard forms of building and civil engineering contracts; (iii) to ensure an adequate standard of claim documentation, it is desirable that the requirements for claim submittals should be specified at project inception; (iv) the problems with documents assembly, retrieval and access to data can be overcorne through the implementation of electronic document management systems; (v) ideological training of personnel to use IT tools and understand the need to change current claims managernent practice should be undertaken and; (vi) the claims management function should be assigned to a member of the project team specifically trained on large and mediurn sized projects.