Managing construction claims is an indispensable and difficult process in modern-day construction. A lot of parties, and resources (parties as in people involved in the business) are involved. It is a resource-intensive and cash-draining process.
One of the most effective techniques for avoiding construction claims at the beginning of construction projects is stopping the root cause of all problems. Preventing these claims before they take place is one of them.
An example of such is a properly defined technical specification for materials. This helps avoid disagreements relevant to material quality during the project execution phase. Thus, resolving issues between all parties involved in the beginning phases and stages is preferable.
Once the construction project progresses, changes might become expensive and hard to manage. Thus for such reasons, managing construction claims needs effective methods and practices to require implementation for the entire project lifecycle.
Exploring the various phases of a construction projectÂ
Quantum Experts in the industry reveal four basic phases of a construction project:
- The stage before making tenders: This involves the creation of the concept design and contract documentation.
- Contract Formulation: Preparation and submission of tenders plus contract signing.
- The Construction: Project creation and execution.
- Project Completion and aftermath: Project’s completion.
A large number of disputes take place during the third stage. However, the root cause of most of these disputes comes from poorly managed tenders and contract creation phases. Many in the industry ask if it is possible to avoid all claims via the establishment of a proper contract management system. Industry experts agree with it that such a notion and system is possible.
Which phase creates the most disputes in a construction project?
The construction phase creates a lot of disputes. Many of them are unavoidable because things on paper are different from things in reality. Clients, project teams, construction teams, managers, contractors, stakeholders, and other people involved have their own set of instructions, expectations, and ways of doing things.
The role of the contractor and project manager in documenting everything is critical. All differences and disputes in the third phase should be noted. The process of handing over land to the client should be completed after the construction of the building and full payment of all expenses and wages.Â
Yet people believe that construction claims stem from the requirements of contractors. They usually make flimsy claims against clients. The truth is inverse because clients can at times rip off contractors. This is why such claims pop up sharply. Construction companies then end up bankrupt and the industry suffers a lot too.
Various phases of construction claims management
When it comes to managing construction claims, two parties are usually involved. Once makes the claim and the other is preventing it at all costs. IN construction, additional work done is subject to claim because it is not stipulated in the contract. Here are the phases of claim management in construction:
- Prevention.
- Mitigation.
- Pursuing Claims (Claim Identification and Quantification).
- Resolution.
PreventionÂ
This phase starts with the initial documentation of the contract. Ensuring all designs, documents, and plans are on the same route is the most effective method.
MitigationÂ
It is not possible to avoid all claims during the construction phase. Yet reducing their impact is easy to do. Properly defined responsibilities, top-class communication channels, proper risk management, and proper decision-making are ways to help construction project teams take the needed actions.
Claims pursuit
Two key things are present in this phase. Identification of claims and quantifying them. Identification of these factors helps in the proper determination of claims through thorough analysis of contract documents. Extra work descriptions, work scope, contract terms, and the like are properly examined.
Claim quantification helps calculate the cost and time plus impact of them. It analyzes the critical path of the schedule. It also analyzes cost estimation documents.
ResolutionÂ
The resolution phase comes into action after each claim has been identified and quantified properly. Once negotiations between all parties are done on an effective footing, a solution is reached to resolve any claims present.
In case claims are unresolved, the procedure will go to mediation, arbitration, and litigation. The third one involves the courts of law, and the case gets more complicated.
Over to you
Each construction company wants to avoid construction claims. They also want to avoid bankruptcy for the same reason. The construction industry has risks inherent in it and many companies called it quits due to bankruptcy and other measures.
Construction standards have somehow improved. But the demands of clients are strenuous and unrealistic most of the time. Construction companies and contractors have faced the ire. They have faced unjustified cases. When it comes to analyzing construction claims, defending the rightful party is difficult at times. That’s why proper construction claims analysis is compulsory at all costs.
