Construction claims in capital projects are on the rise and they need to be managed like the many other project management process. Contractors are required to formally notify the project owner or Engineer whenever they believe that they are entitled for a claim. Arguments could occur when the contractor’s claim notice is not complete and does clearly state why the contractor believes that he is entitled time and/or cost reimbursement for the claim event.
To reduce those arguments, it is highly recommended to formalize the claim notice submission. This requires having a form to capture the cause-and-effect details of the event or events that caused the requirement to claim as well as why the contractor believes that he is entitled for the claimed extension of time and/or cost. The claim notice needs to provide the claimed EOT and Cost if those can be quantified.
Nevertheless, reducing the chances for arguments requires agreeing on the contract clauses that could entitle the contractor for a contract adjustment. For each clause, the list will include the type of adjustment, extension of time, cost and/or profit that the contractor could be entitled for. This entitlement list will be part of the project management plan for which the project owner, Engineer and Contractor would agree to. The comprehensive entitlement list developed by Eng. Fatma Hussein (https://www.linkedin.com/in/fatma-hussein00/) provides a good example.
Project Management Information Systems (PMIS) like PMWeb will be used to create the modified Claim Notice Form. PMWeb custom form builder will be used to create the claim submission form which will have the fields to capture the claim cause and effect, details of the contractor’s entitlement for additional time and/or money, check box if the claim is considered to be for works that are out of the project scope of work, and the claimed cost and extension of time entitlement, and the project schedule activity that will be the first to be impacted by the submitted claim.
The form will also have a detailed checklist of the contract clauses that entitle the contractor for a cost, schedule and/or profit adjustment for which the entitled category will be colored in Green while those that the contractor will not be entitled will be colored in Red. When submitting the claim notice, the contractor needs to checkout all clauses that the claim notice is based on.
The form attachment tab will be used to attach the project documents and records that are related to each claim notice topic. Those documents will be uploaded and stored on PMWeb document management repository. In addition, links to relevant PMWeb records and imported MS Outlook emails will be also included in the attachment tab.
To ensure that each claim notice submission get reviewed by the designated project owner’s claim management team that could be located at different locations who have different responsibilities in assessing, analyzing and responding to claim notices, PMWeb workflow module will be used to map those review, approve or reject tasks. The workflow could include branches to align the workflow with the set authority approval levels. The workflow will also identify who have the authority for approving the final counterclaim response.
The information captured in the Construction Claim Notice Form will become available for the claim management team to present in any desired form and format. The report could identify the reasons for those claims, which claims where due to additional scope of work, which claims have time and cost impact, claim cause and effect statement, claim entitlement, which activity does the claim impact, the amount claimed by the contractor and the amount assessed by the counter claim among many others.
About the Author
Bassam Samman, PMP, PSP, EVP, GPM is a Senior Project Management Consultant with 40-year service record providing project management, project controls services and project management information system to over than 400 projects with a total value in excess of US$ 400 Billion. Those projects included Commercial, Residential, Education and Healthcare Buildings and Infrastructure, Entertainment, Hospitality and Shopping Malls, Oil and Gas Plants and Refineries, Telecommunication and Information Technology projects. He is thoroughly experienced in complete project management including project management control systems, computerized project control software, claims analysis/prevention, risk analysis/management (contingency planning), design, supervision, training and business development.
Bassam is a frequent speaker in topics relating to Project Management, Strategic Project Management and Project Management Personal Skills. Over the past 40 years he has lectured at more than 400 events and courses at different locations in the Middle East, North Africa, Europe and South America. He has written more than 400 articles on project management and project management information systems that were featured in international and regional magazines and newspapers. He was a co-founder of the Project Management Institute- Arabian Gulf Chapter (PMI-AGC) and has served on its board of directors for more than 6 years. He is a certified Project Management Professional (PMP) from the Project Management Institute (PMI), a certified Planning and Scheduling Professional (PSP) and Earned Value Professional (EVP) from the American Association of Cost Engineers (AACE) and Green Project Management (GPM).
Bassam holds a Masters in Engineering Administration (Construction Management) with Faculty Commendation, George Washington University, Washington, D.C., USA, Bachelor in Civil Engineering – Kuwait University, Kuwait and has attended many executive management programs at Harvard Business School, Boston, USA and London Business School, London, UK.