Lebanon Real Estate Newsletter

Vol. 3, Issue 7 - August, 2007
  Back to Newsletter Home Contact us Vacancies Advertise

An outlook for the role of Claiming

 

   

 


To meet the increasing complex demands of modern developments, the ability to build is now no longer sufficient in itself. Prevailing contract terms and conditions call for a more commercial contractual awareness to embrace a comprehensive range of contractual, quantity surveying and technical services to adequately deal with the many and varied disputes or contractual problems that frequently occur in the construction industry.

In some people's eyes contractual claims have become as much a routine as the signing of the contract itself.

Why claim???

The contract is created by an offer from the contractor and an acceptance by the Employer to do specific work, for a specified sum of money and within defined commencement and completion dates in the framework of the contract terms and conditions.

In an ideal world, there would be no changes in design or specifications, the Employer would give access to the site on the stipulated date and his engineer would provide details drawings and information when required without delay.

Unfortunately, Employers change their minds and engineers change the design.

Delays occur, work is postponed and disruption is caused. The engineer may not supply details on time, he may add extra work, and there may be delays. The contractor finds he is losing money whilst the Employer (engineer) not fully recognizing his responsibilities to compensate, then comes the Claim.

The contractor is the party who enters into agreement with the Client to build a defined project within a time limit against a certain amount of money within a set of agreed drawings, specifications and conditions – and this amount of money is assumed to cover the cost of material, labor, engineering, overhead and profit as any other normal business.

Therefore, the contracting business is neither a gambling nor a charity institution.

The contractor is assumed to deliver what he is paid for – no more no less. But in actual practice the picture is not as simple, and many obstacles, changes and problems arise which require full attention while to construction is going on.

What we are trying to emphasize here is the fact that the contractor while he is fully absorbed and struggling to procure the required material and arrange for labor and engineers & equipment to execute the project as planned – the contractor is usually faced by the Client / or his appointed engineer, partners or designers by multiple of changes or instructions that may cause the stoppage, disruption or delay of the project. Any disruption or delay in the process of the normal execution of the project entitles the contractor to claim for an extension of the agreed completion period of the project and compensation to losses and extra expenses.

Therefore, the contractor, in addition to his skill of conducting his work in a competent and timely manner – He should be equally skilled to protect his contractual rights by maintaining a documented record on day to day basis of all changes and deviations from the original agreement and to claim for any additional operation he may have to undertake with the appropriate time and money compensation.

From experience, it is understood that construction people who will be much absorbed by the day to day exigencies of the construction operations to meet their time schedule are not the proper people to sit and document all such events – but a supporting team of quantity surveyors stationed on the site will be assigned to monitor, record and comment on all deviations which will be taken place on the site.

There should be a close relationship between the Construction Managers, the Engineering Management and the Quantity Surveyors / Claim Writer – and any letter addressed to Client / or other party bearing any contractual implication it is advisable to be discussed and reviewed by all concerned including the Lawyer's opinion.

Irrespective of the relationship between the Client or the subcontractors, and the main contractor it is advisable that the latter start building his claim from the first day he steps into the construction site.

The construction and the claim preparation should start together. The contractor ought to educate his engineers on site to submit a progress daily report with an eye on the variations, delays or any element that can disrupt the work and report it to the Q.S. Department.

The construction people (as soldiers) are conducting the struggled to complete the job (win the war) but at the same time we are in need of reporters to document all the details of the operations at the time while they are taking place and to record all events in a (book) "Claim" to defend the Contractor's position as a claimant or against other claimants.

The same way as our Construction people are conducting the construction on site, a supporting entity should closely monitor, schedule, record and document the progress of works with an eye on the strict contractual and legal implementation of the contract and to point out, expose, and document all changes, variation and any event that deviates from the Scope of the Original Contract.

The role of the Q.S. Department as it stands is limited to the preparation of payment certificates and changes that are taking place on the site – The Q.S. activities should be extended to engulf a global outlook and to have closer relations with the Engineering Department, the Scheduling, planning, Procurement and Legal Departments and explore all possibilities to find grounds for claims.

The preparation of any claim is a tedious and a day to day job. It requires a special skill to accumulate the pieces of evidence from the different players on the arena and present them in a simple and concise language in a legal frame work – based on the Clauses of the General Conditions of the Contract, Technical Specifications and well documented and substantiated.

The claim preparation is meant to strengthen the position of the main contractor vis-à-vis all concerned parties: Client, Subcontractors, Suppliers, Partners and to use it as a tool of defense against whoever tries to claim (then it would be named counter claim) or it will be an offensive tool against whoever commits a breach of Contract or causes losses or damages to the contract.

As mentioned earlier, the Q.S. Team should be increased in numbers including a professional claim writer and should be directly involved with all disciplines and should have a global view of what is going on in the whole project – therefore, all correspondence related to Engineering, Construction, procurement shall be channeled through the Q.S.

The Q.S. shall have direct access to all Construction and Engineering Teams and hold meetings with the concerned parties to understand the background of each case, after checking verifying and taking off quantities when and where needed – to submit a write up and to rediscuss the same before issuing and Change Order or a letter.

The General Policy of the claim and its structure should be discussed at the Highest Level of the Management, the different concerned department, the Q.S. and a Legal Consultant and work accordingly for this goal.

Every letter, every correspondence should be planned to fill in a place in the structure of the claim building- Hence, prior to the issuance of any letter the Head of Q.S. Team along with the appointed Legal Consultant should be consulted.

It's also of vital importance to stress that the claimant ought to notify the other party about any change or any beach of contract within a time limit after its occurrence – Otherwise his silence will be considered as an approval of the new situation and loses a valid reason for claiming in the future. We ought to be quite aware of the procedures and play our role according to the rules of the game.

The handling of the claim requires experienced and professional people to undertake such task in a systematic and studied sequence. The sooner this team is assigned with clear and definite strategy from the Management the better.

In modern construction projects the above mentioned team is becoming inevitable – and it always pays off.

Joseph Safar P. Eng.
Hayek Group
Beirut - Lebanon

  Back to Newsletter