Why do Construction companies need Claim Management Companies? Contracts and Claim Management?
Construction and risks often go hand in hand. This complex industry is packed with various challenges that lead to risks &uncertainties and breed a range of construction claims. Such claims, if not managed at the earliest may impact the project, both in terms of time & money. In such an environment, where claims are almost inevitable, Claim Management companies are a contractor’s’ best ally to guide him them through the process of prevention, mitigation, and settlement of claims before they turn in to major construction disputes.
Let us look at some of the most common construction claims, their trigger, and the role of Claim Management Companies in processing them to reap successful awards for the claimants.
Types of Construction Claims in India
Broadly divided into three categories, based on their legal standing, such construction claims need adept handling and amicable resolution. Here is a peek at some of the common construction claims in India:
Contract Claims
Such claims may either be prevented or mitigated by efficient Claim Management firms at the onset of the contract process. Contract Claims are most easily resolved as they are mentioned in specific clauses of the contract. A list of contract claims would include:
- Delay Claims
- Scope Change Claims
- Extra materials & variation Claims
- Differing Site condition Claims
- Price Acceleration Claims
- Loss of Profit Claims
- Unlawful Termination Claims
Extra-contractual Claim
Not a part of the contract, such claims arise due to willful neglect or breach of contract. Examples may include errors by the architects, or poor quality of supplies by the owner that may lead to extra work for the contractor.e:
Ex-Gratia Claim
Such claims have neither a legal nor contractual basis. Often called sympathy claims, these are often paid by the owners on the grounds of natural justice for the contractor. Rising costs due to market conditions, not catered for by the contractor, may be raised as an Ex-Gratia Claim.
Contractor’s Claims
Monetary Claims
Monetary claims in construction are made by the contractor to seek monetary compensation for any or all kinds of claims.
Time Extension Claims
Time extension claims call for extra time to be awarded for completion of a project or for achieving a contractual milestone. Such claims may arise due to any additional work done by the contractor or force majeure clause kicking in due to some natural catastrophe.
Counter claims by Owners
Counterclaims, in the form of penalties and forfeiture of deposits, may be filed by the owner in case of substandard work, or defects arising in the project during a stipulated time as per the contract.
Role of Claim Management Companies in Construction Claims
Construction claims mainly arise due to a change or a variation in contractual clauses, and/or external factors affecting the project. Claim Management Companies help in drafting a well-documentedmonitoring the contract, proper documentation of the events affecting the performance of the contractor, and later aid in researching & analyzing the claim to reap just settlement. It includes expert assessments by qualified consultants, tedious paperwork, and a thorough evaluation by a team of legal & engineering experts. Come take a sneak-peek at the vast contribution of Claims Management Companies in managing construction claims and disputes in India:
Timely identification, notification, and documentation of change
In a construction project, it is critical to identify any change immediately & accurately and notify the other party of it at the earliest. A construction Claim Management Company, with continued project management & qualified experts, recognizes the changes at the onset, and its legal team does the cumbersome paperwork to document and notify all stakeholders.
Quantification of Change through Time and Cost Analysis
Experienced consultants at a Claim Management Company, with their range of statistical tools, can make time & cost analysis of the variation in the contract to evaluate and quantify the change into monetary or time extension claim.
Negotiations
Negotiations between the parties by specialist claim negotiators from a Claim Management Company are more liable to bring amicable settlement and ensure just rewards for the claimants. Successful negotiations are the best way to avoid construction claim disputes in India.
Dispute resolution through arbitration or litigation
This stage is reached when the negotiations fail, and the claimant needs a tough arbitration and litigation team for dispute resolution and reward settlement. Claim management companies battle the claims in thebefore the Arbitrators and courts to ensure lawful settlement.
We, at Contract Square, stand by our clients at every stage of a construction project. From contract management to process planning, risk insuranceidentification, and claim management, we are there for you at every step- investigating, documenting, analyzing, and negotiating in construction disputes to ensure successful compensations for you.
