Contract Management Coursework

27/02/2023

1

Claims, Disputes and Project Management

Week 24

Unit Folder Content

• Just Google claims and dispute in project management

– 2 Videos

• How useful are they? Episode 104! Nancy,

• 1 legal case

• I website

Content

• Claims and Disputes: the same thing? What about conflict?

• ENGM66062 Contract Management

• Claims under the contract

• Disputes

• Relevance to PM

• Relevance to IPM

• Conflict and/or Dispute

Poorly Defined

• Claims, Conflict and or Dispute

• See Linkedin

– https://www.linkedin.com/pulse/conflict-claim- dispute-mark-colman/

Conflict, Claim or Dispute?

Mark Colman Chartered QS / RICS Registered Expert Witness / Commercial, Contractual and Dispute Resolution Consultant 2 articles

September 13, 2020

The Halki Principle

• The definition of dispute, for example, as proposed in Halki Shipping Corporation v Sopex Oils Ltd, [1] (the Halki Principle) established that a ‘dispute’ does not exist until a ‘claim’ has been submitted and subsequently rejected.

Why do Claims arise?

• Impossible to say why but a list might include • Poor project planning

• Scope changes

• Variations or change orders;

• Contract acceleration and delay

• Work suspension and stoppages

• Site access or availability

• Other suppliers/contractors interferences and delays;

• Strikes and acts of God

• LOW BIDS

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Claims

• Suppliers/Contractors can claim against Owners

• BUT

• Owners also can claim against Suppliers/Contractors

• AND

• Professionals can claim against Owners

What to do if you are the IPM?

• Late completion • Dismiss? Work together; LAD’s

• Non specified materials • Replace ? What if it delays? Accept?

• Defective work • Rectify

• Other damage [to property etc] • Rectify

• Breach of H&S • Educate? Dismiss?

• The lesson is ...

Claims Analysis and Evaluation

• Claim analysis procedure is established to ensure a comprehensive, consistent and systematic approach to claim analysis and evaluation during the evaluation and negotiation period

• Records, Records, Records

Claims Analysis and Evaluation

• Contract study

• Claim submission

• Change orders and Change Management Procedure

• Schedule, Plan, Programme, CPM

• Progress Reports and Meetings

• Records, Records and Records

Developing OR defending a claim

• Who develops? PM [contractor/supplier]

• Who defends? PM [client or contractor/supplier 1 up supply chain]

• Who decides? IPM ?

Developing a claim

• Contract

• Schedule, Plan, Programme, CPM

• Progress Reports and Meetings

• Records, Records and Records

• Negotiation

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Defending a claim

• Contract

• Schedule, Plan, Programme, CPM

• Progress Reports and Meetings

• Records, Records and Records

• Negotiation

Deciding on a claim

• Contract

• Schedule, Plan, Programme, CPM

• Progress Reports and Meetings

• Records, Records and Records

• Negotiation

What if an IPM’s decision is not accepted?

• Dispute

– Negotiation

– Mediation, Adjudication, Arbitration, Litigation

– Other

How to avoid claims and therefore disputes?

• Collaborative working

• DAB DAP DRB etc

• Project Management

Claims, Conflict and Disputes

• Claims, Conflict and Disputes

• For our purposes Conflict = Disputes

• Sometimes the contract calls things claims sometimes not

• NEC – Compensation events

• Why is this important? IPM often given the role of assessing claims PM prepares claim

Claims and contracts

• FIDIC – Clause 20 : Claims and Disputes

– Clause 20.1 • Records

• Disputes Adjudication Board (DAB)

• NEC ECC – Records

– Compensation Events

– Notice

– DAP

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ENGM66062 Contract Management

• The unit address legal issues, standard forms of contract, contract management techniques and the application and strategic and organisational issues

• Remember the model: IPM Independent Project Manager or Consultant

• Client Supplier

IPM

Contract

Power, Organisation and Agency but NO contract

Claims under the contract

• The contract might say:

– Claims

– Extras

– Compensation Events

• NEC Clause 64

– The Project Manager assesses a Compensation Event

– THE PROJECT MANAGER

Relevance to PM; Relevance to IPM

• Reports of the time spent by Project Manager [PM and IPM] in dealing with conflict and dispute range between 10 and 70 to 80!% of their total time!!!

The classic conflict modes

• Confronting, Compromising, Smoothing, Forcing, and Avoiding • PMIBOK Guide sixth edition lists five conflict resolutions techniques: • Withdraw/Avoid; Smooth/Accommodate; Compromise/Reconcile;

Force/Direct; Collaborate/Problem Solve • PF says is it conflict or dispute • Conflict might be managed • Disputes might be resolved • Contract might encourage management or collaboration it might do

nothing • Contract might lay down disputes procedure [management then

resolution via e.g. DRA/DRB; Mediation; Adjudication; Arbitration] it might do nothing

• English law has laid down tests for when a dispute occurs [e.g. in construction adjudication a claim has been submitted and rejected] these milestones are important because the IPM might be the one who rejects the claim]

Claim and BoK 5, 6 and 7

• A claim is an assertion under the contract of a right or entitlement that may lead to a demand or request, usually for extra payment and/or time. There should be clear processes described in the contract for the management of claims. BoK 5

• BoK 6 no definition BUT:Uncontrolled change in a contractual environment often leads to claims

• BoK 7 Important who reviews and evaluates claims

How to avoid claims and therefore disputes?

• Collaborative working

• DAB DAP DRB etc

• Project Management

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What to do if you are the IPM?

• Late completion • Dismiss? Work together; LAD’s

• Non specified materials • Replace ? What if it delays? Accept?

• Defective work • Rectify

• Other damage [to property etc] • Rectify

• Breach of H&S • Educate? Dismiss?

• The lesson is ...

Claims and contracts

• FIDIC – Clause 20 : Claims and Disputes

– Clause 20.1 • Records

• Disputes Adjudication Board (DAB)

• NEC ECC – Records

– Compensation Events

– Notice

– DAP

Remember

• Owners can claim against contractor/supplier AND PMs can claim against Owners.

• Value of property depends on 3 things – Location – Location – Location

• Claims depend on 3 things: – Records – Records – Records