Managing Project Claims - Focus EPC Projects

A claim is a commercial demand in regard to money, schedules, technical or contractual content raised by one party of a contract against another because of variances or difficulties in connection with the fulfilment of the contract.

Claims can be directed from Contractor against the Employer, Supplier or Commercial Partner – or vice versa.

Claims situations arise between parties of project who are contractually bound, and in this respect it is important to recognise the relationships between the parties involved, and the terms and conditions of the contract.

When submitting a claim, it should be kept in mind that the other party may come up with objections such as notification of claim is not correct etc and Party lodging the claim should be aware of the justification and documentation required in support of the claim lodged by him as per contractual terms and conditions in order to counter such objections

Claim submission will depend upon what information is available at the time. However the content of the claim submission should be brief and relevant.

The claim should cover the following headings.

· Basis of Claim

· History of Events

· Cause

· Effect

· Relief

The requirements for good records cannot be understated.. Exposure to disputes can be minimised by ensuring that necessary records are maintained and managed

Contemporaneous / Factual Documentation include the following

Daily reports, Photographs, meeting minutes, notes of conversations, labour and plant returns and schedule submittals

Analyse the cause and effects, which constitute the claim. In this regard full supporting evidence should be presented. Determine negotiating margin where appropriate.

Amicable settlement is always the desired option in case of disputes over claims. In practice this type of settlement can occur at any stage within the dispute process and are often facilitated by a third party. The ICC, FIDIC and World Bank have developed rules by which dispute resolutions can be applied. In some cases, the type of resolution is governed by the contract requirements and Dispute Review Boards (DRB) / Dispute Adjudication Boards (DAB) are established. Specialist advice should be sought prior to taking these proceedings

Example is given to understand How a claim is generated and how it is lodged with cost and time impact

This document provides guidance; tools and checklists intended to facilitate Claims Management. This document is intended primarily for Project Managers and Site Managers in providing awareness and direction necessary to manage claims situations effectively