Construction Claim A Unmesh Kulkarni, Vice President ... Claim –A Marathon Race Unmesh Kulkarni, Vice President Head Contracts, Reliance Infrastructure Ltd

ConstructionClaim – A

Marathon Race

Unmesh Kulkarni, Vice President

Head Contracts,

Reliance Infrastructure Ltd

www.thebig5constructindia.com

Outline of the Discussion

Prerequisite of Claims

Timelines of Claims (Submission and Resolution)

Drivers for decisions of Claims


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.



Prerequisite of Claims

Visualization

Trending and identification of potentials

Preparation / Positioning / Getting ready


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


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


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



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..



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


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


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


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


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


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


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


Drivers for making decision of Claim

Negotiation for mutual benefit

Intent to Close



Power Play

Arm twisting

Patience Testing



Agree to disagree

Alternate Dispute Resolution Mechanism

Conciliation Arbitration Legal recourse

Long drawn decision making process with lot of

Cost & time impact


Source: Global Construction Disputes report 2017 By ARCADIS

Trend of Disputes Resolution in World

Global Average for

Year 2011 to 201639.3 13


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 !!!


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


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


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


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.


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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Documents

Construction Claim A Unmesh Kulkarni, Vice President ... Claim –A Marathon Race Unmesh Kulkarni, Vice President Head Contracts, Reliance Infrastructure Ltd