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Claims Settlement


Claims Settlement in construction projects involves a methodical investigation of the claim and its history to assess its validity or otherwise. The first issue to address in claims settlement is the contractual position of the parties to see if the matter that is the subject of the claim is already a responsibility of the claimant or not, and whether the other party would be responsible for recompense anyway.

With the contractual situation clear, the details of the claim itself can be evaluated if necessary. Construction claims normally involve assessment of additional work and/or schedule delays with their associated costs, and these issues often need to be addressed as one of the initial step in claims settlement.

Measuring the quantity of any additional or deleted work is the easy part when the claim is related to changes in scope. Assessing the appropriate values to assign to this work can be more involved, necessitating research into how and when the work was carried out. Was it carried out in sequence with similar work, did it involve remobilizing for the subcontractor involved, did the subcontractor have to work around other contractors, etc.?

Assessing schedule affects involve checking whether the work is on the critical path or not. The fact that a contractor has additional work to do does not automatically mean that a schedule delay is involved - it may simply mean that the contractor can utilize her available staff more effectively.

Avoiding claims in the first place is far better than dealing with them, and this can be achieved by carrying out a constructability analysis of the contract documents to ensure their completeness, and by carrying out a risk analysis of the project to find where problems are most likely to arise and plan for mitigating them.

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