You are tasked with reviewing a claim, responding to it and hopefully, reaching agreement with the contractor. So, how do you go about it?

Some forms of contract set out clear provisions that oblige the engineer to act fairly in producing a response. It is, however, true to say that not all responses to claims will be treated in this way. A strategy to deal with the claim should be considered carefully by the engineer and the employer. In this article, we set out ten considerations you should make before responding to a claim.

1. What is your responsibility?

Is your responsibility as the responding party to defend the respondent’s interests, minimising the claim as much as possible? Or is it to produce a fair and reasonable determination?

2. Value of the Claim Vs. Cost of Defence

If the defence of the respondent’s interests is of primary concern, you should assess the value of the claim. Does it justify the expenditure of significant resources to offer up a rigorous defence? If a claim is likely to result in a significant award, it would probably be worth providing the necessary resources to ensure that a high-quality effort is made.

3. Chance of Success

What are the strengths and merits of the claim and its chances of success? Are the odds of success favourable enough to justify the effort and expense in providing a rigorous defence?

4. Quality of the Claim

What is the quality of the claim submission? Does it provide enough information to enable proper conclusions to be made? Does it satisfy the basic principles necessary to establish entitlement and quantum? Can it be properly understood? If the claim does not fulfil the necessary criteria, should it be rejected on the basis that the case has not been proven? In this situation you might request further particulars. Alternatively you could proceed with a response and attempt to close the matter equitably.

5. How to Respond

The strategy should also consider how the response is to be pitched. Is it felt that the best result would be obtained by minimising any awards and leaving plenty of room for negotiation? Perhaps it would be better to ensure that the value of the award is reasonable. In this case you should assess whether arguments are absolutely sound, and the case for the respondent is bulletproof. The latter usually results in an initially higher award to the claimant but is often harder to refute. A response strategy aimed at minimising the quantum might have a chance of success if received by inexperienced parties, but, if the matter subsequently proceeds to a dispute, such a response is unlikely to succeed when experts get involved.

6. Dispute Procedures

If a strategy of rigorous defence is adopted, what is the dispute procedure and what is likely to be the outcome if the matter does progress to a dispute?

7. Time Scales and Obligations

Would the respondent’s interests be best served by protracting the matter or by dealing with it in a timely manner? If the former strategy is adopted, would protraction cause the respondent to be in breach of any contractual obligations and, if so, to what effect?

8. Resource Management

Some claims are complicated in their very nature. If this is the case, they require a certain amount of specialist knowledge and experience to prepare an adequate response. Do the resources available include the required experience and knowledge, or should additional resources be brought in?

9. Relationship Management

Past and future relationships between the parties should be considered, possibly at executive level. Consider the impact before embarking on a course of action that could end in contention.

10. Who Will Receive the Response?

The actual personnel who are likely to receive the response or determination should also be considered. Will they be difficult to persuade? Has animosity crept into the relationship? Is the person responsible likely to have sufficient knowledge to understand the matters in question and the contractual principles relied upon? Is the claimant likely to engage the services of an expert to assist him/her or to deal with the matter on his/her behalf if a negative response is issued?

I hope that this gives you some guidance if you are responsible for responding to claims.

The above is an amended version of a chapter from the Third Edition of Andy Hewitt’s book, Construction Claims and Responses. It is available from Wiley Blackwell.

Responses to claims are covered in detail during the 6th module of our Construction Claims Premium E-Course. To view the full course syllabus or to enrol click here.