construction claim a unmesh kulkarni, vice president ... claim –a marathon race unmesh kulkarni,...
TRANSCRIPT
ConstructionClaim – A
Marathon Race
Unmesh Kulkarni, Vice President
Head Contracts,
Reliance Infrastructure Ltd
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Outline of the Discussion
Prerequisite of Claims
Timelines of Claims (Submission and Resolution)
Drivers for decisions of Claims
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What is a Claim ?As per the various scenarios in the Industry, various definition / understanding of claim are:
Claim - A demand or assertion made by a Party for compensation (time and / or cost)
for a loss under a contract occurred due to other Party.
Claim - means a written demand or written assertion by one of the contracting parties
seeking, as a matter of right, the payment of money in a sum certain, the adjustment
of time, the adjustment or interpretation of contract terms, or other relief arising under
or relating to the contract
Claim is defined as unresolved issue raised either by Contractor and /or Owner
arises during the performance of the Contract but do not get mitigated either in
part or in full through provision of the Contract.
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Prerequisite of Claims
Visualization
Trending and identification of potentials
Preparation / Positioning / Getting ready
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VisualizationThe Process of imagining and conceiving
Brainstorming
• At peer level, department level, company level
• Formal as well as informal levels
Hand holding
• Involving the concerns (Keeping
confidentiality in mind)
• Walk the talk
Capturing and sharing lessons learnt
Training
• Through internal sources and information.
• External Experts
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Trending and identification of potentials
Identifying / recording the potential Claim at pre-tender stage
Read thoroughly the Contract Document
Identify the soft spots / Potential reasons
Carefully examine letters, reports, MoMs
Examine the Industry trend of Construction Claim
Input for Claim
Reports (Daily,
weekly, Monthly)
MoM’s Letters
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Source: Root-cause Analysis of Construction-Cost Overruns / Journal of Construction Engineering and management Vol 140, Issue No 1, Jan, 2014
Industry trend of causes for
Construction Claim
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Preparation / Positioning / Getting ready
Claims shall get triggered on occurrence of the following events –
Variations arising out of different situations which are not approved by the Client.
Additional Work / Instructions of Client beyond the requirements of the Contract.
Deviations / Differences in Site Conditions which are beyond the Contract.
Disagreement / difference in interpretation from the Contracts conditions /
Spécifications
Delay in approvals of Engineering documents, Sub Vendor approvals.
Delays in execution and completion of the Contract for various reasons beyond
control of Contractor.Cond..
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Preparation / Positioning / Getting ready
Biased Contracts Conditions
Conditions not anticipated under the Contract.
Non-performance of crucial / time bound obligations
by Client resulting in cost and time overruns.
Incomplete mitigation on account of
Change in Law.
Work Suspension.
Force Majeure conditions
Local unrests
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Preparation
Strategy / selection of potential event
Types of Claim event
Drivers of strategy / selection
Cost / time gain
Positioning (Keeping upper hand in
the relationship)
Counter balance
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Position / Getting ready
Get aligned at all levels for selected / major event
Creating / Identifying potential event
Creating documents
Instruments of Communications
Author of Communications
Effective Communication
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Timelines of Claims (Submission / Resolution)
Claim is a Continuous process, sufficient time is required for generating quality document,
However Legitimately starts with either issuing or receipt of notice.
Notice of Event
Duration is varying & also depends on case to case
Tendency to defer timely notification on account of maintaining a good boy
image to be overcome
Substantiation of Claim document
Sufficiency & adequacy of supporting document
Clarity & non ambiguous preparation
Avoid unnecessary fatting
Effective coordination within various stakeholders
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Essentials of Resolution
Basic understanding prior to submission
Convincing working level teams of client for better
resolution
Clarity on give and take
Effective presentation in front of decision member committee
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Typical Resolution Timeline For Claim Life Cycle
Most of the Contracts have lack of clarity on timelines.
Event
• Fixed
Claim
• Not Fixed
Dispute
• Fixed
ADR
• Not Fixed
Solution
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Dependencies for Resolution of the Claim
Client’s Intent to resolve
Contractor’s requirement
Stage / essentiality of Project
Who is having upper hand in
relationship at that Instance
Quality of Claim document
Quantum of Claim/s
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Drivers for making decision of Claim
Negotiation for mutual benefit
Intent to Close
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Drivers for making decision of Claim
Power Play
Arm twisting
Patience Testing
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Drivers for making decision of Claim
Agree to disagree
Alternate Dispute Resolution Mechanism
Conciliation Arbitration Legal recourse
Long drawn decision making process with lot of
Cost & time impact
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Source: Global Construction Disputes report 2017 By ARCADIS
Trend of Disputes Resolution in World
Global Average for
Year 2011 to 201639.3 13
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Source: Global Construction Disputes report 2017 By ARCADISwww.thebig5constructindia.com
Top 5 reason Construction Claims / Disputes in World
Source: Global Construction Disputes report 2017 By ARCADISwww.thebig5constructindia.com
Questions & Queries !!!
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Letters- Information, notifications, conveying agreements/ disagreements
Minutes of Meetings- recording proceedings of the Meetings
Reports- Daily, weekly, Monthly
Transmittals- details of data transferred
Site Instruction Book- instruction, suggestions, observations related to actual Works
Request for Information (RFI)- Technical Clarifications/ observations on data provided
Instruments of Communications
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Cardinal Change claim
Constructive Change Claim
Impact ClaimPrice
Escalation Claim
Damage Claim (General damage /
Consequential)
Loss of profit Claim
Delay claimPerformance Quality Claim
Bad Faith Claim
Types of Claim
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Who should be Author of Communications:
Reports
Daily - Site Supervisors/ Const. Manager / Project Planner
Weekly- Site Supervisors/ Const. Manager /Project Planner
Monthly- Project Manager/ Project Planner
Letters- Contracts Manager/Project Manager
Minutes of Meetings- Project Planner/ Construction Manager / Contracts Manager
Transmittals- Project Document Controller
Field Instruction thru’ Site Book- Project Manager/ Construction Manager
Request for Information (RFI)- Technical Manager/ Engineering Manager
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Effective Communication can be developed by
Standardization -certain advantages for standardization
Ease in understanding and conveying
Lesser variety documents and Records are easy to handle
Training is simpler and more uniform
Communication planning and especially -control is simpler
Better utilization of documents and the compiling thereof
Saves time
Easy to use in one project or another, although these are totally different projects.
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Effective Contract communication can be developed by
Communication plan-
The communication plan should outline to address -
Who (lines of communication sender- and receiver-responsibility and authority)
What (scope of communication and format)
How (e-mail, facsimile, letter, Memo document, telephone, meeting, presentation)
When (schedule/ frequency)
Feedback (confirm message received and understood – document control)
Filing (retrieval, storing, disaster recovery)
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