How to assess a contractual claim
BUSINESS AND TRAINING 17
By
Uwe Putlitz
It is unlikely that a conventional construction contract will be executed without any claims from the contractor to the employer , or from a subcontractor to the contractor .
Typically claims are for additional time , or money , or both . The nature of such claims would vary if the cause of such an event applies uniquely to one or two subcontractors and the contractor , compared to the contractor and the employer where the whole works may be delayed .
Claims , in this context , are deemed to be routine contractual notices for regular payments and / or the assessment of additional ( omitted ) work , separate from claims arising from disputes .
The employer may have cause to claim from the contractor – dealt with in most Standard-form Contracts ( SfCs ) as a specified penalty – but these instances are not the subject of this discussion .
Clearly the ( sub ) contractor cannot claim for his / her poor workmanship or performance !
The adjudicator of a claim ( AoC ) must act impartially . All SfCs in common use require the contract administrator ( CA ) to act as a neutral agent , albeit that he / she is appointed by the employer .
The contractor may be less sympathetic to the cause of a subcontractor than the CA assessing the contractor ’ s claim , vis-à-vis the employer . Some contractors employ persons specialising in the formulation of claims , who may be more skilled than the CA as a claims adjudicator !
In practice , not all AoCs / CAs are equally skilled to assess contractual claims .
Adjudication tools Analysis of the programme is generally accepted to be the first step to determine what should have been done within a given time period , in a defined sequence . Such programme may be a freehand illustration on a piece of graph paper or be a sophisticated computer software product . Usually , reference is made to the critical path ( CP ), if this changes the ( sub ) contractor may be entitled to an extension of time ( EoT ).
Be aware that “ the longest path is always the CP , but the CP is not always the longest path through a project network ” [ Mark Watson , Construction Adjudication Association of SA webinar 2021-09-03 ]. The tasks comprising the works programme can be manipulated at will to adapt the CP to suit a claim by a skilled scheduler of construction activities . To find those tasks where durations and / or the relationship to other tasks have been adapted can take many hours . For example , a ‘ fake ’ CP may be created with longer durations or unnecessary interdependencies of activities than the real ‘ CP ’ to hide ‘ contractor inefficiencies ’ to avoid penalty charges .
Irrespective of any manipulation , the planned start and completion dates of major tasks can be extracted from the contractor ’ s programme and be compared to actual dates . The sum of these activities must correspond to contractual performance dates .
SfCs generally require the contractor to provide an anticipated cashflow for the duration of the project , likely to be based on the same contract works programme . Discrepancies may be identified by comparing the intended expenditure and the actual amounts certified for payment .
The objective of these two techniques is obtain a ‘ quick snapshot ’ of possible performance inconsistencies to implement remedial action , if required .
Time and money discrepancies , due to the issue of contract instructions , will account for some deviations – the rest may need explanation by the contractor .
Major reasons for a ( sub ) contractors ’ claims include : 1 . Delay in site handover to the ( sub ) contractor Typically , if the ( sub ) contractor does not have possession of the site , he / she cannot work .
The AoC must determine if the delay is likely to be of a fixed duration , enabling the ( sub ) contractor to carry out preparatory and administrative work provided that such work may save time when possession of the site has been given . The ( sub ) contractor may be entitled to some ( if not the whole ) time claimed until the date of site handover and possibly a portion of preliminaries – depending on the method chosen for payment and / or adjustment at the time of tender .
Uwe Putlitz is a registered professional Architect and Construction Project Manager , a Fellow of the Royal Institute of Chartered Surveyors ( RICS ) and is a visiting lecturer at the School of Construction Economics and Management at the University of the Witwatersrand . Having recently retired as the Chief Executive Officer of the Joint Building Contracts Committee ( JBCC ) he specialises in the avoidance of construction disputes by way of lectures , technical articles dealing with aspects of contract administration for various industry publications arising from the use of Standard-form Contracts including the Federation Internationale des Ingenieurs-Conseils ( FIDIC ), the General Conditions of Contract ( GCC ), the JBCC or the New Engineering Contract ( NEC ) to find an acceptable settlement without resorting to legal processes , where possible . info @ buildstrat . co . za
October 2022 Volume 28 I Number 8 www . plumbingafrica . co . za