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Avoiding Claims

During the Pre-contract Phase

If construction delay claims or conflicts can be avoided or mitigated, there will be substantial financial savings on projects.

At the time of entering into contracts, owners and their project management team need to pay attention to precontract negotiation and agreement with their contractor(s) to clarify and agree on the rules for quantifying and assessing the impact of anticipated delay and disruption.

Ekton works with its clients to shore off the following aspects that require precontract negotiation, agreement, and clarification:

  1. the rules of evidence for claims;
  2. the record requirements for claims, and the procedure for keeping the records;
  3. the project scheduling tool (software) for the preparation of the program and the procedure updating the program;
  4. the methodology for analyzing delay claims;
  5. the formula for quantifying unabsorbed head office overhead component of prolongation cost;
  6. the method for quantifying disruption cost;
  7. the handling of concurrent delays;
  8. profit—whether claimable and the rate of profit to be paid;
  9. acceleration—circumstances under which it will be compensated and the basis of compensation;
  10. and the question of who owns the float.

These are, typically, not covered by most standard forms of contracts.

It is worth noting that higher levels of precontract negotiation are associated with a higher quality of decision making, while higher levels of the quality of decision-making process are associated with lower levels of intensity of conflicts.

During the Engineering and Construction Phase

The biggest mistake in construction claims is not realizing that mistakes are being made.

Many owners and construction professionals have trouble recognizing the subtle indications that construction claims are developing. Small delays and cost overruns are waived off as temporary anomalies. Yet, the construction schedule continues to slip, and the cost overruns increase.

Re-sequencing or reducing durations on tasks that have not started yet should only be considered after the cause of the delay is investigated. Likewise, increasing the number of hours worked will not resolve poor productivity on a construction project. It will probably have the opposite effect and the bottlenecks and conflicts will still be there. This is why so many construction projects that have been “accelerated” wind up finishing behind schedule.

In very simple terms a contractor needs to achieve a day of progress against the critical path every day that he is working. When this does not happen, something is wrong.

As part of our claims avoidance service, we will help you catch those little mistakes that are being made, allowing you to avoid as many claims as possible, that could roll up into dispute.