Construction Claims vs. The Perfect Claim E-Courses: What's the Difference?
Students often get in touch and ask:
What's the difference between The Perfect Claim and Construction Claims e-courses?
Both courses deal with the fundamentals of claims management, so what sets them apart?
The Perfect Claim
The Perfect Claim focuses on a specific case study. We take students through a claim for an extension of time and the payment of costs on a project where there were unforeseeable ground conditions.
Using the case study, we work to build the claim from A-Z.
During the course, we cover:
- the case study, potential claims and notices
- preparing the claim and delay analysis
- cost calculations
- compilation of and preliminaries to the claim
- cause and effect
- additional payment
- entitlement
- finalising the claim
Basically, everything you need to know to prepare a claim to a professional standard and ensure its success.
Construction Claims
The Construction Claims courses are more generic. They are suitable for both contractors and consultants because they deal with things from ‘both sides of the fence’.
The courses cover:
- contract administration for claims
- how to identify potential claims
- claim strategy and management
- cause and effect
- an overview of delay analysis
- entitlement
- responses and determinations
- writing compilation of claims and determinations
Graduates will be able to manage, prepare and respond to claims at a professional standard.
Which Course To Take?
Both courses will give you a full understanding of claims and how to manage them.
For engineers responsible for assessing claims and issuing responses, I tend to recommend the construction claims courses as the later modules deal with these aspects of claim management.
If you're not an engineer, I would choose the course that appeals to you the most. Check the module descriptions for each course. See which course you like the sound of and go with it. If you’re excited by the content, you’re much more likely to stick with your studies and graduate.
Sign up during Ramadan and be part of our Ramadan campaign: save 20% on all intermediate and premium e-courses and we'll donate 5% of every purchase to the UN Refugee Agency to support those affected by the recent earthquake in Syria and Turkey. Check out our Construction Claims and The Perfect Claim E-Courses today.
Notices: Should a Contractor submit if they are not sure whether they intend to make a claim?
A Claims Class blog follower recently asked for advice on the correct interpretation of FIDIC Sub-Clause 20.1 (Contractor’s Claims). What happens in situations where the Contractor is not sure if they will submit a claim or not—should they submit a notice of claim?
Often, the Contractor becomes aware of an event that may cause delay, additional cost, or entitlement for additional payment. At that time, they may not be aware of the final effect of the event.
Should I submit a notice?
Perhaps a delay will end before it affects the Time for Completion. Perhaps an instruction received will not constitute a variation that changes a lump sum contract. Or, the Contractor may decide that the value of the claim will not justify the time and cost involved in preparing it.
The wording of the first part of this clause is as follows:
‘If the Contractor considers themselves 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. 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.’
Consequently, the Contractor is obliged to submit a notice within 28 days after they became aware of the event or circumstance. This may sound like a long time, but it is surprising how many contractors fail to abide by this time frame. They may not have become aware of the event when they should have. Or, they may not have had enough time or resources to investigate the matter sufficiently. This means it is difficult to make a decision on whether a claim would be justified.
What if you fail to give notice?
Paragraph 2 of Sub-Clause 20.1 goes on to explain the consequences of failing to give notice as follows:
‘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.’
So, if the Contractor does not submit a notice within 28 days, they lose all entitlement to make a claim. This may sound very harsh, but the notice provisions ensure that the Employer and Engineer are aware of the Contractor’s intentions. That way, mitigating action or cost and time provisions may be made as soon as possible.
Failure to submit a notice of claim could be very costly for the Contractor. Some people say that time bars may not be applied in Civil Law jurisdictions, and in some cases, I agree with them. This is not, however, a clear-cut matter. It takes a lot of time and effort to put forward a case to justify that the Contract conditions are contrary to the law. It’s much less risky and certainly more cost-effective to simply comply with the Contract.
So, what's my advice?
Contractors should submit a notice of claim within 28 days, even if they are not sure at this time whether they will follow it up with a claim. It’s very easy to subsequently write to the Engineer to advise that, having investigated the matter further, they will not be submitting a claim. That way, the Contractor will not have made life difficult for themselves if they later pursue the matter.
Interested in learning more about claims? Check out our e-courses and start learning with us today.
5 Tips for Success When Claiming for Variations
A question I am often asked during CPD talks and claims training courses is, “Is it necessary to submit claims for a variation?” Unfortunately, I have to give a lawyer’s answer to this and say, “It depends.” However, there are essential elements to a successful claim.
If the party responsible for administering the contract follows the procedure set out in most forms of contracts for instructing variations, then the answer is “no,” because the variation has been acknowledged. It will either be measured and evaluated as part of the remeasurement on a remeasurable contract or as a separate evaluation leading to a change in the contract price of a lump sum contract.
When Consultants Don’t Do What They’re Obliged to Do
We all know that, in many cases, consultants do not formally issue instructions for variations to the contract and often give instructions that are not acknowledged as being variations. Examples can often take the following forms:
- Issue of revised drawings;
- Comments on shop drawings that require changes to the contract drawings;
- Comments on materials submittals that change the specification;
- Instructions given during site meetings;
- Verbal instructions given on-site as the work is being carried out.
Very often, the above are a result of design errors or omissions. If, as is often the case, the consultant responsible for contract administration is also the designer, they understandably may not wish to draw the employer’s attention to their failings. They especially do not want to have to advise the employer that, because of these failings, the project is going to cost more and/or be delayed.
Bearing in mind that most forms of contract oblige the contractor to comply with instructions, the contractor has no choice but to proceed with the varied works. But what should the contractor do if they consider that the instruction comprises a variation, although no formal acknowledgement has been made?
5 Tips for Success
- First, they should consider whether the variation is going to result in significant additional cost and/or delay. If not, it is probably something that may not be worth pursuing for the sake of good relations.
- Is the contract remeasurable or a lump sum? If remeasurable, payment will be picked up in the remeasure, and unless the variation will delay the time for completion, there is no need for a claim. If, however, the contract is a lump sum, there must be a mechanism for increasing the contract price, so a variation needs to be established.
- If they decide to pursue the variation, it is vital to send a notice to the contract administrator stating that the instruction constitutes a variation under the contract and that the contractor intends to claim additional payment, an extension of time, or both. The contractual time frames for the submission of notices should be respected to avoid any time bars. This notice is vital to allow the contract administrator or employer to revoke any instruction they may have previously considered had no time or cost implication, or at least to make provisions against it. Hopefully, at this point, the contractor will receive an acknowledgement of the variation. However, in my experience, contractors should not hold their breath while waiting for this.
- If no acknowledgement is forthcoming, the contractor should submit a claim for the variation. The claim should follow good practice for claims and should set out the following as a minimum:
- Establish that an instruction has been given.
- Establish why the instruction comprises a variation. This can usually be achieved by comparing the works included in the contract to the work that has been varied by the instruction.
- Establish the contractual provisions for variations and demonstrate that the instruction comprises a variation leading to additional payment or time.
- Quantify and evaluate the variation—whether additional payment, an extension of time, or both—and explain how all calculations have been carried out.
- Substantiate everything.
Claims Class followers will know that the above comprises the essential elements of a successful claim, which are:
- Cause,
- Effect,
- Entitlement, and
- Substantiation.
Interested in learning more about claims? Our newest e-course The Perfect Claim gives you the knowledge and skills to prepare a successful claim, every time.
Time at Large - An Explanation
A blog reader asked for an explanation of “time at large”. This is not something that I have personally come across in practical terms. For the advice that I am about to give, I am indebted to my ex-boss, Roger Knowles. Roger provides an explanation in his book, 150 Contractual Problems and their Solutions. Roger explains it arises:
"when a contract is entered into with no period of time fixed for completion. Where this occurs, the contractor’s obligation is to compete within a reasonable time."
I have never experienced such a situation and I expect that when it does occur, it will be on Read more
How To Ensure Engineer’s Responses And Instructions Do Not Result In Expensive Claims
A request came from one of our blog followers. It was to examine the Engineer’s duty to provide instructions and responses within a reasonable time. In my experience, failure of the Engineer to comply with such obligations often gives rise to claims. Delayed issue of drawings or instructions are a regular feature of projects around the world.
I shall use the 1999 FIDIC Red Book as an example, although other forms of contract also contain similar provisions.
Contractors! Are Your Claims Responded to Correctly?
EC Harris’ (now Arcadis) Global Construction Dispute Report has, for many years, cited inadequately expressed claims as being one of the top five causes of disputes in the construction industry.
Although the reports do not specifically mention it, I suspect that inadequately and unfair determinations should also be somewhere near the top of this list. This is because, over and over again, attendees at our courses complain that their claims have not been responded to either fairly or in a meaningful way.
So, what is the problem?
If we look at the FIDIC forms of contract as being fairly typical of the widely-used forms of contract, we can see that the Engineer has the following obligations when responding to claims:
- Respond to the claim within 42 days - Sub-Clause 20.1 (Contractor’s Claims);
- In a case of rejection, respond with detailed comments - Sub-Clause 20.1 (Contractor’s Claims);
- Include sums that the Engineer considers to have been reasonably substantiated as being due in interim payment certificates - Sub-Clause 20.1 (Contractor’s Claims);
- Consult with each party to attempt to reach agreement - Sub-Clause 3.5 (Determinations);
- Make a fair determination in accordance with the Contract - Sub-Clause 3.5 (Determinations);
- Give notice to parties with detailed particulars - Sub-Clause 3.5 (Determinations).
It should be noted that the above are obligations, which means that if the Engineer does not fulfil them, they will place the Employer in breach of contract. In other words, this is a serious matter, so why do those responsible for administering the contract frequently not comply with them?
If you are a consultant responsible for responding to the contractor’s claims, what should you do to comply with your obligations? If you are a contractor, what are your rights when your claims are dealt with incorrectly?
Firstly, the Engineer should review the claim and come to an assessment that is in compliance with the contract. They should then meet with the parties to explain their findings and to allow the parties to provide additional information or particulars and to express their own points of view. If necessary, the Engineer should revise their findings to take into account any additional information received. Finally, they should issue detailed particulars of their assessment of the matter so that both parties may fully understand how they have reached their conclusion.
It may be necessary to repeat some of the above steps after the assessment is revised, but by doing so, this will bring the parties closer together, and hopefully, agreement will be reached. In such cases, the Engineer has done a good job.
Lastly, it is my firm belief that the Engineer’s assessment should be prepared for the benefit of both parties and should be adequately explained and reasoned to such an extent that both parties will be convinced that if they raise a dispute, it will likely fail.
If this article has been useful, you'll find our Perfect Claim workshop essential. Learn to ensure each claim document you prepare is perfect. Avoid costly pitfalls.
Trying Your Luck - Where do you draw the line with your claim submissions?
I was recently asked a question by one of our distance learning students which, at some time or another, you may have asked yourself. The question was:Read more
A Simple and Effective Way to Improve Claims: Visuals in Narratives
One of our distance learning students recently raised a point that graphics and other visuals can be effectively used in narratives to enhance a claim document. I agree with him, provided that you follow some basic rules. In this blog we look at visuals in narratives and how they could improve your claim.Read more
Top 10 Secrets of Successful Subcontract Commercial & Claims Management
It is no secret that subcontracting is one of the highest risk sectors within our industry. Subcontractors suffer more than most from the mistakes and misdemeanors of others. If the project is poorly funded, the Main Contractor’s first course of action is often to reduce outgoings. The easiest way to do this is to delay or limit payments to Subcontractors.
If the Main Contractor faces liquidated damages or the rejection of interim payment applications, the first to feel the impact will again be the Subcontractors (and often for reasons completely unrelated to the Subcontractors' own performance!). This is not due to malice, but rather an unpleasant commercial inevitability in jurisdictions without statutory protection for Subcontractors. The reality is that the further away you are from the source of the project funding, the less likely it is that the cash will find its way to you.
However, there is much that a weary or wary Subcontractor can do to minimize their risk and maximize their recoveries. Here are our top 10 recommendations:
1. “Back to Back” or “Pay when Paid” – Is It Really?
The authors of this piece doubt that these terms are often as straightforward as they seem. What people declare as being “back to back” is rarely so. A Main Contractor may not have been paid for a variety of reasons. Unless those reasons expressly relate to your performance, you may legitimately ask why this has anything to do with you. Ask yourself, “If the Employer never pays the Main Contractor, does that mean I will never be paid?” Is that what you actually signed? We rarely find this to be the case, and this often causes confusion between Contractors and Subcontractors who blur the difference between the commercial reality of their financial position and the conditions of the Subcontract they have entered into.
2. Have You Actually Seen It?
You’ve heard about it, and it’s referred to in your Subcontract, but more often than we would care to count, we find that the Subcontractor does not have access to a full copy of the Main Contract. Ask for it and ensure that your Tender team has actually seen it. Make certain that a copy is retained, as many Subcontract claims or claim defenses are founded upon what the Main Contract does or does not actually say.
3. Think Carefully Before Signing Your Rights Away in a Claim Cooperation Deal
Cooperation agreements that state something along the lines of “…we will incorporate your Subcontract claim into the Main Contract claim if you drop any direct claims against the Main Contractor” have become commonplace. Let’s be clear: these agreements are not about ensuring that your claims receive a fair and just hearing by the Employer—they are simply about limiting the Main Contractor’s liability to you (and the Employer) for their own actions. The Main Contractor does not wish to pay for anything that they cannot pass on to the Employer. Analyzing both Employer delay events and Main Contractor delay events is essential to preserving your full entitlement. How best to use this information is a key commercial decision faced by the Subcontract management team.
4. Prepare Your Own Programme
It sounds obvious, but a tactic we often see is a request for the Subcontractor not to prepare their own programme and instead simply adopt the Main Contractor’s programme. This can prove to be a very costly decision and often results in the Subcontractor signing up to a programme that does not reflect their own anticipated work sequence or a programme that is not actually approved by the Engineer and subject to further change. Prepare your own programme and ensure that this is what your performance is measured against.
5. Prepare Your Own Progress Reports
It may have seemed like a sensible, cost-saving idea at the time to allow the Main Contractor to measure and report your progress, but these records remain the Main Contractor’s records. Where are yours? This question will be difficult to answer and could prove costly if you end up in a dispute with the Main Contractor. The progress reported will also be the Main Contractor’s perception of progress—not yours.
6. Follow the Subcontract
It costs surprisingly little to properly administer and comply with the terms of the Subcontract with respect to payment applications, variations, progress reports, notices, and particulars. The cost of not following these basic Subcontract requirements can be alarmingly high. You need to comply in order for the Main Contractor to also comply and maintain a clear route for recovery of payment from the Employer.
7. Don’t Be One of the Crowd
On a project that may include 30 or more Subcontractors, it is easier to follow what others are doing rather than doing what you should be doing. Many of the Subcontract terms may differ. Wider relationships may protect other Subcontractors, and they may be holding back accordingly. Don’t be steered by others—follow your Subcontract and comply with the terms.
8. Be First in the Queue (Or Not Far Behind!)
It’s always a difficult decision about when to time your move (in terms of claims for additional time or cost), and it is sometimes the case that the first Subcontractor to ‘ask for more’ is used as an example to others of what they can expect. That said, many Subcontractors leave it far too late to act. This also leaves the Main Contractor exposed as they have most likely proceeded with claim submissions in the absence of your detailed particulars.
9. Are You Getting the Attendance You Deserve?
You priced your tender based on the timely provision (by others) of scaffolding, temporary power, timely inspections, 14-day turnaround of shop drawings, agreement of a coordinated construction plan, etc. Make sure you receive this attendance and support, and if not, make sure you notify the Main Contractor accordingly. Claims arising in this regard will not be passed on to the Employer, as it is most likely due to breaches of attendance obligations by the Main Contractor and therefore likely to be strongly contested.
10. Successful Subcontracting Is All About Relationships
Successful subcontracting is about maintaining a fair balance of risk and reward between the Main Contractor and the Subcontractor. Get this right, and most problems can be resolved. A focused and jointly coordinated commercial strategy is likely to yield far greater financial returns from any Employer. Maintain dialogue with your Main Contractor at all times, but don’t forget to protect your interests at the same time, because if matters are not amicably resolved, you will find yourself in arbitration against the Main Contractor, not the Employer.
This guest blog article was written by DBS Consult, an international claims and dispute management consultancy based in the UAE.
Inadequately Expressed Claims: the second most frequent reason for disputes
ARCADIS have recently published their Global Construction Dispute Report 2018 and unsurprisingly “Poorly drafted or incomplete/unsubstantiated claims” is reported as the second most frequent reason for disputes. This annual report has consistently ranked the same reason highly for several years, so it seems that the industry is not learning the fact that the onus is on the claimant to properly prove his case and that failure to do so will be costly and time-consuming.Read more