Dealing with Claims in Construction

M.K .Ramesh, BE (Civil Engineering), MBA, PMP, has over 30 years of experience in managing the construction of sub-stations and transmission lines for organizations operating in India’s energy sector. He has managed projects of various capacities, which also include experience in consultancy project work in the Middle East and Africa. He is a member of PMI Mumbai Chapter.

The scope, time and cost of a project are clearly outlined in the project charter during the initiation process. New claims in projects generally arise due to a change in scope, time and/or cost. All other factors or variables are interrelated with these three factors. One of the reasons for time overrun in a project is the delay in prompt settlement of claims arising during the project lifecycle. If claims are not addressed meticulously (and in a timely manner), the resultant cost and time overrun will impact project outcomes

This is especially true in the construction industry, where many claims arise because of project complexities, long gestation periods, site availability and wayleave issues, etc. Thus, claim management is a real challenge here. Some of the main factors contributing to new claims in projects include:

  1. Scope of work and specifications
  2. Design factors and site conditions
  3. Procurement clauses
  4. Quality
  5. External factors
  6. Social/welfare measures related to project area
  7. Unknown risks associated with project execution
  8. Safety, health and environment

1. Scope of work and specifications: During project charter creation in the initiation process, the scope of work should be well defined. Specifications should be brought out clearly, tailor-made to specific project requirements. In most construction projects, the main reason for claims are a lack…

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