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Risk Management and Claims

image of a bridge collapseSeventy percent (70%) of capital projects in sub-Saharan Africa are over budget and 85% behind schedule. And when this happens, many multi-million dollars’ claims are made by either the owners or the contractors so that they can recover for the losses. Regardless of how the claims are managed in the courts, all the parties end up losing. Always.

In construction, the most important factor to a successful resolution of claims is documentation. If you are a contractor, good documentation is needed to present a successful claim. If you are an owner, proper documentation is necessary to defend against inappropriate claims successfully. The value of the dispute is dependent on the quality of the contemporaneous supporting documents.

The trivial method for avoiding claims on projects requires that:

  • the owner provide complete, correct and coordinated construction documents at bid;
  • the owner make NO changes to the project after the contract documents are issued;
  • the contractor and all subcontractors work diligently and make no mistakes.

In the real world, however, there is no time or budget to produce drawings that are complete, correct, and coordinated. Changes in scope are inevitable in any construction project due to unforeseen conditions, human error, budget considerations, or owner choice.

There are only three reasons for any change to the construction contract after award:

  • Owner requested changes.
  • Designer errors (mistakes) and omissions (missing).
  • Changed conditions, resulting from risks that have materialized.

The following services help our clients in preventing any claim from occurring, or in mitigating the impact of the claims when they occur. These services are provided to both the owner or the construction contractor:

  • Risk management planning;
  • Integrated cost-schedule risk analysis;
  • Claims avoidance;
  • Dispute resolution.