Construction Claims, Contract Admin

Will Your Contract Admin Stand Up to Future Claims?

Good contract admin (or administration) is key to any successful project.  If a claim is to succeed, it must contain certain essential elements: Cause, effect, entitlement and substantiation.

In other words:

  1. What happened that gave rise to the claim.
  2. The dates that various events occurred.
  3. The effect of delays on the time for completion
  4. In the case of incurred costs: Are they appropriate? Are they calculated correctly?
  5. Does the contract contain entitlement to compensation?
  6. Is every statement or fact in the claim substantiated?

We should also remember that the onus is on the claimant to prove that the claim is just. It is not the respondent’s job to do this when reviewing the claim.

To achieve this, the contractor’s contract administration systems must be able to support future claims. If they are not, it will be difficult or impossible to prepare a claim that fulfils these criteria.

Contract Administration: Things to Consider

Some things to consider in this respect are as follows:

  1. Is your record keeping adequate and can the records be easily retrieved?
  2. Are important and formal records drafted so that they may be understood by a person not familiar with the project?
  3. Are notices that are required by the contract given within the prescribed time frames? Do they contain the correct information?
  4. Has a baseline programme been established? Is it prepared in line with good practice?
  5. Are revised programmes prepared when circumstances dictate?
  6. Are progress updates accurate? It is difficult to subsequently claim a delay if progress has been reported showing no delay.
  7. Do monthly reports adequately record the events, and may they be understood by a person not familiar with the project?
  8. Are daily records of resources deployed to the project being maintained and submitted to the engineer on a regular basis?
  9. Do you have adequate and properly qualified and experienced resources to create and maintain efficient contract administration?
  10. Do you have adequate and properly qualified and experienced resources to prepare your claims?

If you can answer yes, to all these questions, there is a good chance of success for your claims. If not, then you may need to reconsider your approach.

For more help with these subjects, why not consider joining one of our e-courses?


Increases in Material & Other Costs

The consultancy side of our business has recently received enquiries along the lines of the following. “We have come to the end of our project and are facing a huge loss due to increases in the cost of materials and shipping and because of measures that we have had to adopt to control COVID-19. What can we do?”

Read more


Claims class student online training

Claims Class Helps Student Secure US$1 Million

This month I am going to allow myself to pat myself on the back, because of a success story from a recent Claims Class student.

A gentleman from an African country contacted me to discuss enrolling on one of our claims courses. He had found out about Claims Class after purchasing a copy of my Book FIDIC 1999 Notices. This is what he told me.

Read more


Lump Sum Cash Contract

What is Included in 'Lump Sum'?

A simple matter that often causes confusion is exactly what a lump-sum price includes.

Take a typical contract designed by the employer. The contractor is required under the contract to provide the works defined on the drawings and in the specification. In other words, the drawings show the extent and the configuration of the design. The specification describes the composition and quality of the work. Thus, it is clear that the lump-sum requires the contractor to provide whatever is included in the drawings and specification.

Read more


Variations and Preliminaries

Claims for Additional Preliminaries as a Result of Variations

Variations - something that comes up a lot in our courses. One question crops up time and time again. Does the contractor have entitlement to payment for additional preliminaries arising from variations?

The short answer to the question (as usual) is that it depends.

What Are Preliminaries?

Read more


Claims class student online training

Why do Final Accounts lead to Disputes?

I recently provided advice on a dispute of US$250M. This sum includes variations, prolongation costs, acceleration costs, disruption costs and delay penalties. The dispute crystalised when the contractor submitted his final account. This is a familiar occurrence. In fact, a large proportion of disputes occur when the project is either nearing or after completion.

Read more


Payment for Work Not in Accordance with the Contract

A former Claims Class student asked my advice on a matter which I thought would be an interesting case study to share. The Contract conditions are FIDIC and the question around non-payment of work which was not in accordance with the contract.

Background

Each month the Engineer makes deductions in the payment certificate for Non-Conformance Reports under Sub-Clause 14.6 (Issue of Interim Payment Certificates), sub-paragraphs (a) & (b).

The Contractor does not contest the Non-Conformance Reports. They state that the defects will be rectified. A problem being that this is likely to take some time to achieve.

Read more


Late Payment: What Can We Do When We Don't Get Paid?

What can we do if we don't get paid or suffer from late payment? We get this question a lot at claims class, along with similar questions about late certification.

In some regions, this is less of a problem because legislation is quite strict on payment terms. However, elsewhere, it is common for the paying party to hang onto money for as long as possible.Read more