Welcome to the new issue of Grow Your Knowledge Newsletter where you get free, ready to use, actionable, clear information regarding FIDIC Contracts and Construction Claims.

Today at a Glance;

➤ Term of the Week

➤ One Tweet

➤ Design your Claims Management Systems

TERM of the WEEK

ONE TWEET

Happy Thursday.

“Claim Preparation”: Is it the most important part of your “Claims Management System”?

Not, exactly.

Claim preparation is important for sure.

However, you should consider your entire claim management system.

From the beginning till the end.

Focusing only on the claim preparation is a mistake.

Not properly structuring the phases that are before and after the claim preparation will automatically lead you to;

➤ Low performing claims management system

➤ Unsuccessful claims, and,

➤ Costly disputes

On the other hand, a well-functioning claims management system will maximize the chances of;

➤ Better explanation of your claim and its details

➤ Reaching an early agreement

➤ Solving the problem

You should clearly understand the features of the phases which are before and after the claim preparation.

Here are the features that your claim management system should have.

# The features of the phase which is before the claim preparation #

Feature #1: Act as a claim avoidance mechanism

Especially in the stages of;

➤ Pre-tender

➤ Tender

your claims management system should act as a Claim Avoidance Mechanism.

A well-functioning claims management system can prevent many of the future claims.

Feature #2: Allow you to recognise the claim event

While claim events in project progress and completion are common in the construction industry, the circumstances leading to the claim event can rarely be foreseen at the time of commencement.

Your systems should provide valuable signals to determine these claim events at the beginning.

Feature #3: Correctly interpret the contract terms and conditions

You should clearly determine the meaning of the parties’ words and actions by interpreting the contract.

In that way, you will have a chance to determine their legal effect, as well.

Feature #4: Comply with the Notice Requirements

You should understand and comply with the Notice Requirements, such as;

➤ Timing of the Notice

➤ The information it should contain

➤ To whom it should be sent

➤ The proper way of providing Notice

Understanding the “Notice Requirements” by;

➤ Reviewing the Contract

➤ Determining the related Clause(s)

➤ Learning the prerequisites

is crucial.

Feature #5: Provide accurate records and documentation system

Establishing the grounds of any claim is not possible, without;

➤ Complete

➤ Well organized

➤ Accurate

➤ Available

➤ Accessible

records.

The main sources of records and documents are;

➤ Tender Documents

√ Employer related Tender Documents

√ Contractor related Tender Documents

➤ Contract Documents

➤ Contract Records

➤ Correspondence

➤ Cost Records

√ Direct Costs

√ Indirect Costs

# The features of the phase which is after the claim preparation #

Feature #6: Allow you to make a functional and convincing presentation

Step #1: Executive Summary

Summary should provide a basic understanding of points and questions such as;

➤ Description of the project

➤ What happened

➤ What you want

➤ Why you are entitled to it

Step #2: Table of Contents

In this section, you should provide an index of general topics regarding the claim.

Step #3: Introduction

In this section, you should provide information such as;

➤ What works to be constructed

➤ Parties of the contract

➤ The main reason for the claim preparation

Step #4: Contractual Framework

In this section, you should describe the Contractual Basis of the Claim.

You should identify the clauses of the contract that entitle you to make a claim.

Step #5: Actual Conditions and Impact

In this section, you should describe in detail;

➤ The changes in the original conditions

➤ The impacts of these changes

Step #6: Contractual/Legal Entitlement

In this section, you should identify the rights;

➤ For receiving a time extension

➤ Recovering additional compensation

under the contract or law.

Step #7: Quantification of Claim

In this section, you should value the delay and cost experienced.

Not correctly understanding the fundamentals of substantiation is one of the causes of unsuccessful claims.

You should choose the most appropriate technique in accordance with the;

➤ Circumstances of the claim, and,

➤ The project

All the;

➤ Evaluations

➤ Analysis

➤ Methods

➤ Assumptions

should be transparent and clearly explained.

Step #8: Formal Statement of Claim

In this section, you should present the formal request.

Step #9: Appendix

You should attach all the supporting documents related to your claim, such as;

➤ Evaluation Reports and Schedules with Supporting Figures

➤ Contract Programmes

➤ Cost Information

➤ Monthly Progress Reports, Meeting Minutes

➤ Photographs

➤ Detailed Estimates

Feature #7: Develop an effective negotiation capability for you

Negotiation is a primary tool for avoiding the escalation of the Construction Dispute.

Your claims management system should provide proper;

➤ Data

➤ Information

➤ Strategy

for performing effective negotiation.

Feature #8: Provide Response to the Contract Administrator’s Information Requests

In some instances, there may be a need for clarification of any uncertainties or filling gaps of information that may be found within the components of the submitted claim.

And, the Contract Administrator may request additional information.
Your claims management system should provide sufficient, accurate information and support your claim.

See you next week.

This information is provided for your convenience and does not constitute any “Legal Advice”. This document is prepared for the general information of the interested persons. This should not be acted upon in any specific situation without appropriate legal advice.

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