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
➤ Why is your Variation Claim rejected?
TERM of the WEEK
ONE TWEET
Happy Thursday.
Let’s guess why your variation claim is rejected.
Probably there is something missing in the substantiation of the claim.
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It’s a fact that proper substantiation is not easy.
Various factors, such as;
➤ Poorly determination of the SCOPE of variation
➤ Insufficient identification of the EFFECTS of variation
➤ Inaccurately PRICING of variation
are really challenging.
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Then, how will you properly substantiate your claim?
All you need is to;
➤ Ask the correct questions, and,
➤ Find the right answers
Here are the critical questions you should clearly answer while substantiating your variation claim;
➤ How to PROVE the variation?
➤ What kind of EVIDENCE should I use?
➤ Which method is the most appropriate for QUANTIFICATION?
How to PROVE the VARIATION?
A clear understanding of the “Scope of Works” is crucial for understanding the “Scope of Variation”.
“Scope of Works” defines the context within which a variation event can be identified and analyzed.
You can clearly determine the amount of work you should complete to fulfill contractual obligations with the help of;
➤ Drawings
➤ Specifications
➤ Bills of Quantities (BoQ)
What kind of EVIDENCE should I USE?
There are various types of evidence.
However, the critical thing is that the evidence should be;
➤ Relevant
➤ Valid
➤ Credible
➤ Clear
➤ Transparent
to support your position.
You can gather such evidence by referencing;
➤ Contract provisions
➤ Tender Calculations
➤ Cost records
➤ Accounting Information
➤ External Information
## The Contract Provisions ##
The starting point must be the terms and conditions of your contract in connection with;
➤ Express provisions of the agreement
➤ Any terms imposed by applicable law
## Tender Calculations ##
You should examine the tender calculations.
While doing that you should consider all the information regarding the calculations underlying the contract pricing.
## Cost Records ##
The main source of cost information on a construction project is the Contractor’s cost documents and accounting records for that project.
You should consider;
➤ Identification of Invoices
➤ Discounts
➤ Bulk Discounts
➤ Timing of Costs
➤ Final Accounts
## Accounting Information ##
The accounting records usually provide two types of information available: these are;
➤ Financial Accounts
➤ Management Accounts
## External Informatıon ##
Some of the examples for external information are;
➤ Pricing books
➤ Records from the Contractor’s other projects
➤ Data from the wider market
Which METHOD is the MOST APPROPRIATE for QUANTIFICATION?
Quantifying the claims can be incredibly challenging and complex.
You should;
➤ Know what happened.
➤ Show what it cost
You should determine the acceptable methods for the pricing of variation by reviewing the contract.
Specific methods can be used to quantify these costs;
➤ Actual Costs
➤ Total Cost Method
➤ Modified Total Cost Method
➤ Jury Verdict Method
➤ Quantum Meruit
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You are as powerful as your systems.
Build your own claim preparation system.Prepare the effective claim and present it in a professional way.
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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