Construction projects often have to face a variety of uncertainties that can be the cause of unnecessary expenses and delays and can lead to construction claims. During this process, usually, people are unaware of the policies until they suffer loss or damage. Thus, understanding different construction claim allows owners to identify potential claim situations. This recognition can protect the owners from incurring losses and can help in recovering compensation as well.
A construction claim can be filed by one or more different parties/stakeholders involved in the construction of any project. The filing of the claim can be done by the contractor that may wish to claim additional compensation owing to certain changes in the contract. It may also come from the client’s end that may be seeking compensation for extra work that has been done by the contractor.
Thus, if any party fails in fulfilling the terms of a contract, the other party/parties can claim compensation.
To manage such claims, the Construction Claims Management process is referred to. So, Construction Claim Management is a process of settling the claims made by either of the parties. This management process requires appropriate supervision during the entire life cycle of construction. If this happens, it is up to the loss adjuster or claim manager that helps in resolving the case as quickly and efficiently as possible.
How Construction Claim Leads To Dispute?
Contract Administration
When the parties do not mutually agree and the claim made is rejected by the opposite party, the process enters into the ‘Dispute’ stage. In other words, the incongruence among various parties with respect to profits, demands, and ideas, leads them to vie for the achievement of their own goals, snowballs into a construction dispute. Thus, an overall conflict occurs when parties refuse to fulfill their responsibilities under the contract provisions.
Possible Reasons Behind Claims
- Lateral changes in the scope of the project leading to fluctuations in contract work
- Delay in site handover
- Imperfect drawing plans & engineering designs
- Unforeseen site conditions, including soil composition, etc
- Delay due to Price Escalation
- Poor construction productivity
- Neglect or willful breach of contract by one party or the other
- Damages due to natural disasters and force-majeure conditions
- Unwarranted termination of the contract
- Delay in Statutory Clearances
Process of Construction Claim Management
- Claim Prevention: This process begins at the pre-tender and contract formulation phase of a project. The contract documentation plan and scope of work are prepared to cover all the requirements related to the project, which helps in avoiding the possibilities of claims/disputes in the future.
- Claim Mitigation: Construction activities are generally performed in susceptible and outdoor environments. Under this step, the manager analyses every stage of the project and minimizes the possibilities of disputes, all through the progression of the contract. S/he defines the responsibilities, reach, and risks of the construction. Also, risk management plans play essential roles in this phase of claim mitigation.
- Pursuing Claims (Claim Identification and Qualification): Even after proper project administration, the firm may face claims. To identify claims made by another party, the manager needs to analyze both the scope of work and the provisions of the contract. After the proper analysis, if any activity is identified as a claim, the manager inquiries about the possible solution of the matter.
Suppose the claim can be avoided by giving extra time or additional payment. In that case, the manager schedules a settlement meeting between the parties to calculate the reason behind the dispute and mutually finds the solution.
We professionally manage the entire risk evaluation & insurance process to ensure all potential risks are adequately covered and support in a timely & accurate filing of claims. Contact us for more information on the best Claims Management services in India.
- Claim Resolution: Claim resolution is a step to settle the claims made. If the parties mutually agree and fix the issues, the changing order is passed. Otherwise, if the parties don’t reach a mutual agreement, then depending on the resolution terms of the contract, the manager advises negotiation, mediation, arbitration, and litigation before it is entirely resolved through the final compensation.
Many project participants measure construction claims to be one of the most worrying and unpleasant events. The soaring competition has forced contractors to submit projects with minimum profits. Under these conditions, it is not surprising that the number of claims within the construction industry continues to rise.
At Contract Square, we stand behind the owners to ensure expert Claim Management and provide the best solutions for documentation, correspondence, review, analysis, and evaluation. Our expert claim management team helps you discover the claims, understand the contract, prepare entire documentation, and ensure amicable & considerable settlement awards. We help you save money, time, and unnecessary hassles, allowing you to focus completely on project execution & timely delivery. Connect with us for the best contract and claims management services in the construction sector.
