Blue Flower

Completion of projects on time may be a complicated task in the construction industry. Due to the dynamic nature of the industry, there are always chances of delays. Claims may be made by claimants pertaining to delayed work, changes in scope, defective work and other numerous reasons.

Due to the complexity of the whole process that is registered, claims management remains an essential part of any project, construction or otherwise. However, management of claims in construction projects is not a one-step procedure as some people might think. 

Management of claim can be done professionally by construction claims consultants Dubai, if you’re in the UAE or other well-known specialists that have numerous years of experience in the sector. Below we discuss the claims management lifecycle and the issues encountered in each stage.

Steps of Claims Management Lifecycle

claims management lifecycle

  • Identification
  • Notification
  • Examination
  • Documentation
  • Presentation
  • Negotiation

The following text discusses Identifies each stage and then highlights the issues associated with each:

Identification

During claims identification, it can be predicted that most of the problems will arise due to the insufficient or total lack of skills and awareness of the staff. The site staff should be well aware of the contract terms and understand them before the start of the new project.

However, most staffs only refer to the terms once problems arise while they should remain vigilant about any changes in the work. Due to a lack of awareness and skills, site personnel may lose the chances of declaring claims

The main problems that arise during identification of claims include:

According To Contractors:

  • Lack of knowledge of the staff at the site, to be able to detect claims
  • Lack of contract knowledge
  • Lack of time due to the workload

According To The Consultant:

  • Absence of skilled parties to detect claims
  • Inefficient communication between people at the site and the head office

Notification

This phase of the claims management lifecycle allows the notified party to review the event or change and fix it by resolving or mitigating its impact. In case the contractor or the Project manager gets to know about a claim event the other entity should be notified immediately.

The claim notification should be a detailed document. When preparing documents for supporting documents to the claim notification, a worthy documentation system and correct site records are important.

Both parties should be aware of the process of notice preparation and understand the complete process. The contractors and the consultant both suggest that the most noticeable problems during the notification phase of claims include:

  • Lack of time to prepare the complete notice
  • Inability to access documents needed for notice
  • Unclear procedures for the preparation of notices
  • Poor instructions regarding the procedure to follow through with the notice

Examination

Availability and of records is an essential aspect for the analysis and estimation of claim expenses. During the third step, it is of primary importance that the contractor’s check thoroughly the required documents to allow claims cost to be calculated by owners.

It is advisable for contractors to monitor recovery of claims and by providing relevant documents, support the process. Main problems associated with this stage include:

  • Absence of records that would help calculate recovery
  • The inability of teams to examine claims thoroughly due to shortage of time
  • Lack of /poor communication to gather information related to the claim
  • Absence of legal contract, the claim is based on
  • The parties should be aware of the laws and contract

Documentation

It refers to the record management of the contractor. Not only are articulate documents effective in calculating the claims accurately but also increase the chances of winning them. According to a survey, respondents agreed that the most of the issues were caused by:

  • Instructions verbally given by the owner
  • Unavailability of specific written instructions
  • Inarticulate records management

An essential feature of the faulty management is the inability to accurately document transactions and procedures. Verbal communication and instructions should be recorded accurately.

In the absence of written instructions from the clients, contractors should initiate written instructions, providing a support in case of construction claims. Ineffective records also create problems during this stage, and it is advised for teams to manage their documents properly. 

When compiling documents, the parties should keep in mind any claims that may be administered in the future, and list all information that will be required in that case. It helps to build effective documents.

Presentation

During the presentation stage of claims management lifecycle, all "completed" claim documents will be submitted to the client for assessment. If the team cannot manage document management and collection, it goes on to affect the following stages.

During this stage, the most prominent issues arise according to both the contractor and the consultant include: 

  • Unavailability of claim supporting documents
  • Lack of skills for the preparation of claim submission and lack of communication during the presentation of the claim
  • Ineffective documents are kept because the staff onsite does not comprehend the reasons behind the storage of documents

Since the parties have to support their claims using formal relevant documents, improper documents make it impossible to do so.

Along with the improper documents another important aspect is the inability of the parties to find a person who can present the claim. Presenting a claim requires the expertise of professional who is knowledgeable in the area of construction claims. They should be aware of the claim process and should have the ability to defend it.

The staff, however, due to the immense workload and other reason fails to hire a specialist and the clients then reject claims.

Negotiations

Negotiations remain an essential approach towards reaching a decision between participants. Before disputes arise. Negotiations continue throughout the claim management process from justification to the settlement.

  • Most of the issues in this stage arise due to
  • The inability of parties to agree on a point in negotiations
  • Inability to provide evidence of the claim, sufficient to convince other parties
  • Lack of negotiation skills

During this phase of the claims management, there is a dire need for strong evidence using which the owner can be persuaded to pay. However, lack of proper document evidence affects the contractors’ position causing them to lose.

Most of the problems in this stage arise due to the lack of negotiating skills. Construction claims consultants in Dubai may be hired to proceed with the process

Conclusion

The problems associated with each stage of the claims management lifecycle point mainly towards the importance of sound documentation management and record keeping. There is a dire need of experienced site staff that can recognise claims during the start of project execution.

Comprehensive project information remains essential for project monitoring and reporting claims so a uniform procedure should be set up in a project which helps with collecting accurate and timely information.

Another important aspect of management of claims is the appointment of an expert for the project. Numerous construction claims consultant in Dubai or elsewhere, depending upon the location of the project may help with the management process of claims.