Chapter 5- Contract Management
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This document discusses claims in construction projects. It defines a claim as a request for additional compensation or time extension due to occurrences beyond the contractor's control, such as differing site conditions or owner-caused delays. It notes that owners are liable for inaccurate data or design changes after contract signing. The document outlines common causes of claims and types of claims against owners and contractors. It provides tips for claims prevention including comprehensive documents and communication. Finally, it discusses variation orders and the sources and types of variations in construction projects.
Chapter 5- Contract Management
- 1. Claims Mada Walabu University Procurement Management and Contract Administration CoTM 4242 Chapter 5 College of Engineering Construction Technology and Management Department Lecture by: Andualem Endris (M.Sc) Email: andualem@anenypublishing.org www.andualem.site123.me
- 2. 31 July 2021 COTM 4242 2 What is Claim?
- 3. Claim Claim is a request by a contractor for additional compensation or time extension for occurrences beyond the contractor’s control including: • differing or unexpected site conditions • change in scope • delays caused by the owner Owner has duty to provide adequate and accurate data to the bidders 31 July 2021 COTM 4242 3
- 4. Claim • Owner is liable to contractor when: – inaccurate data are given – extras develop because of improper design – design is significantly changed after the contract is signed (constructive change) • Contractor must prove entitlement and the associated damages • Contractor must provide timely notice of claim upon discovering impact 31 July 2021 COTM 4242 4
- 5. Causes of Claims • Contractors attempt to submit an artificially low price and hoping to make up the difference through claims later on; • The constraints of time, finances and other factors force a contractor to cut corners; • Where the form of contract transfers the risks to the employer (esp. DBB system); • Poor or unclear tender and/or contract documents; • Poor or inadequate administration of responsibilities by stake holders; and • Unforeseen or situations during project execution. 31 July 2021 COTM 4242 5
- 6. Types of Claims Typical claims against owner are: • Poor project planning • Scope changes • Constructive change orders • Errors and omissions • Contract accelerations and stoppages • Site access or availability • Other construction interference and delays • Strikes and acts of God. 31 July 2021 COTM 4242 6
- 7. 31 July 2021 COTM 4242 7 Types of Claims …cont’d Typical claims against contractor are: • Late completion - liquidated damages • Out of specification materials • Defective work • Property damage
- 8. Claims Prevention • Producing comprehensive and accurate contract documents • Constructability review • Clear understanding of contract requirements prior to bidding • Having good administrative procedures in place • Open and honest communication • Timely troubleshooting Claim prevention begins in the pre-construction phase 31 July 2021 COTM 4242 8
- 9. Design Professionals should: • Specify locally available material • Allow substitution of the same quality material • Avoid one-of–a-kind or non-standard items where possibly • Design structures with as many surplus elements as possible • Design should allow construction using the prevailing methods and equipment 31 July 2021 COTM 4242 9
- 10. Design Professionals should: • Design to minimize required labor • Specify a quality of workmanship consistent with the quality of the project • Do not require the contractor to assume responsibility for information that should be furnished by the design engineer/architect • Produce simple, straight-forward specs - clearly state what is expected 31 July 2021 COTM 4242 10
- 11. Variation/Change Orders 31 July 2021 COTM 4242 11
- 12. Variations • Variation is the addition, omission or substitution of works. • Variation management is an organized effort to eliminate unnecessary cost and time impact as a result of processing project work outside the scope of the contract. • Variation is not a Claim 31 July 2021 COTM 4242 12
- 13. Variation Order – A written order issued by the owner to the contractor for a change to the contract within the scope of work – Variation orders are written for: • extra work • increasing or decreasing the contract quantities • alterations – Variation orders state the basis and amount of payment and time extensions 31 July 2021 COTM 4242 13
- 14. Types of Variations • Formal – Via contract variation clause (Ex. See Clause 15 of PPA, 2011) • Constructive – Action of owner that has the effect of directing a change, although not initially documented as such. • Cardinal – Variations totally out of scope of original contract. – Should re-negotiate entire contract. 31 July 2021 COTM 4242 14
- 15. Sources of Variations • Unanticipated site conditions • Owner requested design modifications, additions or deletions • Clarification of contract documents 31 July 2021 COTM 4242 15
- 16. THANK YOU!
- 17. ASSIGNMENT 2 • Please review construction claim analysis and management process model. And discuss step wise please. Group Assignment (5 students/Group) Submission date: May 16, 2019 31 July 2021 COTM 4242 17