avoiding disputes

I have just returned from a trip to central Asia to visit a client project where I was asked to review a number of claims and responses. The project is a very large one and the claims amount to an extension of time of almost one year and cost claims amounting to over US$100M. Our brief was to provide an impartial overview of the claims and produce a report on our findings. Whilst the brief did not extend to a detailed examination of entitlement issues, three very important issues were revealed and highlighted in our report.

Firstly, despite the fact that the contractor is a well-known international company of good reputation, the claims were prepared to a very poor standard. The object of a claim is to demonstrate to the respondent that the claimant is entitled to an award and the amount of the award and the onus is on the claimant to prove that this is the case. Out of thirteen claims examined, not one of them was able to convince me that either entitlement exists, or the amount claimed is correct.

Secondly, the responses to the claims were prepared by a consultant and were of an equally poor standard. The object of a claim response is to convince both the claimant and the employer that a fair assessment, made in accordance with the contract and taking all matters into consideration is correct. Basically, there are four responses that may be made:

  1. acceptance in full;
  2. acceptance but with a reduced amount;
  3. rejection or, in cases where the claimant has not provided sufficient information to properly assess the matter;
  4. a request for further particulars.

None of the claims had been accepted, either in total or in part. If I were a contractor who, however mistakenly, considered myself entitled to an award I would not accept these findings, because they were insufficiently detailed and failed to set out convincing reasons for rejection.

Thirdly, the claims had been managed by both parties very poorly. Many were submitted many weeks after the events in question occurred and many responses were made far in excess of the time prescribed in the contract. Interim claims were submitted and never finalised, and during the two years since the first claim was submitted no efforts had been made by the consultant to meet with the parties in an effort to reach agreement.

Not surprisingly, this has led to the contractor elevating matters to a dispute, which is likely to be a time-consuming and costly exercise for both parties. The sad thing is that had both parties managed the claims to a professional level with the required amount of expertise, I am fairly sure that the matters could have been resolved amicably by now.

Want to learn more about how to write a successful claim? Check out the CEES tip from our friends at Claims Class.

Hewitt Decipher Partnership’s expert consultants have been preparing and responding to claims for many years. Can we help you? Get in touch via our contact page; we would be happy to discuss any support that you may need.