The Difference Between A Claim to the Engineer & A Claim in Arbitration?
A student recently asked, “is there any difference between a claim submitted to the Engineer and one submitted for arbitration?” My response was along the lines of “Yes, there frequently is, but there shouldn’t be”.
The Scenario:
Let me explain why by describing a very frequent scenario related to claims.
- The Contractor considers that he has a justifiable claim for a significant amount of money or an extension of time. This claims in turn, will negate delay damages.
- Our Contractor reviews the resources available to them. They allocate responsibility for preparing the claim. However, they do not ascertain whether the person preparing the claim has adequate qualifications or experience to prepare it to a suitable standard.
- The person given the responsibility does their best. However, lacking the necessary experience and skills, the preparation of the claim is not to a good standard.
- The Engineer rejects the claim because it cannot be understood. It does not contain adequate information, it lacks substantiation or it does not prove that the claim is justifiable. Even an impartial engineer would be acting correctly in doing so. A defensive engineer would love that fact that he has an excuse to reject the claim.
- The contractor, still considers that a justifiable claim exists and also thinks that the engineer has acted unfairly. After several months of indecision, the Contractor elevates the matter to a dispute and calls in the lawyers.
- The lawyers examine the claim and response and advise the Contractor that they agree the Contractor has entitlement. But, the claim needs expressing properly if the matter is to succeed at adjudication or arbitration.
- The contractor still does not have anyone on the team with qualifications or experience to prepare an adequate claim. So the lawyers offer to either prepare it themselves. Or they recommend that the contractor bring in someone with appropriate skills.
- The properly prepared claim appears before the adjudicators and arbitrators. They in turn make an award in favour of the contractor. The whole process by this time will have taken years rather than weeks and involved the contractor in considerable time and cost.
The Reality
Maybe now you can understand why, frequently there is a difference between a claim to the Engineer and one submitted for arbitration. More importantly, you may see why there shouldn’t be such a difference. Had the Contractor just prepared his claim to a suitable standard in the first place, rather than trying to save money on the claim preparation, the matter would have been resolved quickly and for a reasonable cost.
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The claim has to go to next tier if contractor do not feel convinced with first tier at the engineer level and i look at this in this way
Follow the contract, use its terms of reference. Claim for me always reflects an indication for confrontation. If it’s a change, or a variation identify it as so. If it’s your entitlement say that. Records, records, records, and fact, fact, fact. Stay away from polemics and confrontation. Avoid the red herrings, outline the circumstances, maintain same throughout and don’t get personal.
I agree with Brian, but in most cases it’s the Engineer (Client Representative) that starts getting personal. When I was a young Project Engineer for a contractor on revamping a bridge in Southampton, when we submitted our 1st claim, the Engineer’s clark of works started screaming and shouting at our workforce and this continued in our meetings even with the HA present. I was appalled to say the least about this Consultant Firm’s engineers behaviour
Very informative
Although I agree that contractors do not often commit proper resources to claim preparation, I was always taught that a contractor’s claim document should be prepared to such a standard that it could be used without much or any amendment in arbitration.
And I would go so far as to say that as soon as the agreement is signed, the contractor should get his quantity surveyor or contracts administrator to document every possible event daily. Perhaps you can face a situation regarding site possession whereby the employer failed to provide the contractor with access to the site. A simple letter to the contractor would suffice. If it continues, you may need to submit a notice. As Andy always says – records, records, records. Failure on the employer’s part to hand over the site on time is a reasonable cause for the contractor to submit a notice (within 28 days) followed by his claim. If proper records were being kept and the necessary notices were issued, or if notices were not issues, you should have had your intentions minuted at the regular progress meetings, and site photographs ought to have been taken to assist you in preparing your case. I am just trying to see how and why the contractor should always keep proper records, revisit your baseline schedule (submitting your updates on a regular basis), ensure that site photographs are taken at regular intervals (As-Built), keep file notes of major decisions/instruction/status with RFI, reviewing your contract periodically etc. If all of this is being done regularly and in accordance with the contract (assuming it’s a FIDIC Red Book), then I don’t see why there should be any difference between what the contractor submitted to the Engineer versus what was being submitted to the Arbitrator.