CONSTRUCTION CLAIMS AND DISPUTE RESOLUTIONS

Construction Claims and Dispute Resolutions

Table of Contents

ABSTRACT3

1)INTRODUCTION4

A)Difficulties with Claims5

I)Claims-Tracking Process Model6

II)Occurrence of Cause for Claim6

III)Does Contractor Intend to Submit Claim?7

B)Contractor uses Established Methods of Analysis in Substantiating His Claim8

I)Delay Estimation: CPM Techniques9

II)Productivity-Loss Estimation Methods10

C)Automating the Process14

2)CONCLUDING REMARKS15

REFERENCES17

Abstract

Claims for additional costs and time extensions result from a variety of events occurring during the course of construction. To enhance the chances of success, contractors submitting claims must closely follow the steps stipulated in the contract conditions, provide a breakdown of alleged additional costs and time, and present sufficient documentation. On the other hand, project owners need to follow an overall comprehensive step-by-step procedure for tracking and managing the claims submitted by contractors. The paper presents a claims-management process that could be used by all parties involved in construction. The process identifies the major information gathering and decision-making milestones as well as the notice and substantiation compliance checkpoints, which are critical to the development of defense arguments as claims are addressed. It further emphasizes the use of tools such as simulation, scheduling, productivity, and economic analysis and other modeling techniques in judging the level of justification and reasonableness of submitted claims.

Introduction

Construction projects are becoming more and more complex due to new standards, advanced technologies, and owner-desired additions and changes. While the successful completion of projects has been thought to depend mainly on cooperation between the contractor, consultant, and owner, problems and disputes have always erupted due to conflicting opinions as to the various aspects of design and construction. With the introduction and widespread application of contemporaneous period analysis (CPM) scheduling, it became easier to point out where the delays are occurring and how delays in one activity affect others, and possibly the project as a whole, thus allowing objective judgments as to whether contractors should be entitled to time extensions. On the other hand, the increased complexity of construction processes, documents, and conditions of contracts has been contributing to higher possibilities of disputes, conflicting interpretations, and adversarial attitudes. The exhausting and expensive process of litigation has not been making things easier, as unsettled claims that have developed into disputes can take a very long time to be resolved. All the above factors have made ''claims'' an inevitable burden in implementing today's construction projects.

Difficulties with Claims

In the construction industry, where contract documents define rights, obligations, and procedures, a claim is a request by the contractor for an extension of time and/or additional cost and can evolve into a disagreement that may not be amicably resolved by the parties concerned (Clough and Sears 1979; Jervis and Levin 1988; Barrie and Paulson 1992). In any construction project, significant additional costs can be experienced by the contractor, the owner, or both, due to the actions of the other party or parties involved. Disputes over the right to a compensation as well as over the amount of time and/or money to be given often necessitate a resort to litigation, arbitration, or other forms of dispute resolution methods for settlement (Muller 1990; Steen 1994; Keith 1997; ...