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Yet another great post. Thanks for sharing Ramesh. Keep it up.
By Claims do you mean Change Requests? Please advise.
Very Important subject. Can you elaborate more on how "Effective management of claims can reduce the time and cost impact on the project".
This is an informative and useful comment but I found a missing idea that major issues for claim might result from the different understandings of implications of scope of work, contract clauses, etc from between the both client and contractor's perspective in construction domain. Claim management might be, in general, helpful to reduce risks being claimed by an opposite party but once claim issues occur, there might be limitations to reduce time and cost until disputes have been resolved. Claims arising between contractual parties are similar to conflicts arising between stakeholders, which means they are natural and inevitable but when they can be managed effectively or efficiently, adverse impact might be tremendously reduced to both parties. However based on my experience, it is never easy.
Hi Rajan Hariramabardran
Yes it is a change request. Change request in projects is of two types . One in the form of changes occurred in quantities / quantum of work for which price schedule is in place. Another form of change is due to additional work/ or activities which are not captured in the contract but arising out of project requirement which is covered under claim for pricing .
Hi Rami Kaibni
The activities which are arising out of project requirement not captured in the contract but these activities are required for execution of work to complete the project on time. If these activities are become a dependant activity within critical path in WBS , then the claims are to be settled in a stipulated time line with cost effectiveness within the ambit of laid down procedures . In this case, if the claim management is not effectively carried out by project team then the derailment of activity will result into time and cost over run.
Very good point to settle the issue in a timely manner !.
You're right regarding various impacts on time and cost from the Variation Order or Change Order. A Change Oder is considered as a approved form of Change Request which was originally initiated by the Contractor or Client and subject to Engineer's(Consultants') review and approval when the Engineer represents the Client. Or as you commented, Change Order might be issued by the Client when Client's discretions to make changes are stipulated in the Contract.
Increasing time in the critical path doesn't necessarily give the Contractor its eligibility to obtain the Extension of time and Cost compensation if the changes result from Contractor's failures of its responsibilities, if changes are made within boundaries of the scope to be completed by the Contractor even though the specific works from changes are not clearly stipulated in the Contract Documents and/ or if changes might be from the foreseeable events as the experienced Contractor in general.
Effective claim management might be very helpful from beginning of the project to avoid many unclear understandings on SOW, Contract Clauses and/or any contents in relevant Documents between the both Parties. Claims or disputes arising from changes during the execution of the project, if once occur, are not easy to be resolved in a timely manner due to different understandings and interpretations on the inherent characteristics of changes even though claim management has been in place from the very beginning of the project.
Very nicely summarized scenarios. This topic has so many provisos that to include all would be to write a good sized book. I especially agree with the disputes part owing to different interpretations and conflicts of interest and their impact in spite of claim management.
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