Project Claim Management
Last updated: 2022-03-19
contracts describe project claim management procedures because we need them in
implementation and closure phase in order to resolve problem situations that
are not covered by the contracts’ change management clauses. Usually, that
means that the change is already executed but any payment for additional effort
or penalties for delays are not yet agreed upon.
In sub-section Project Contract
Management we illustrate the fundamentals of successful project claim
Fundamentals of a Successful Claim
a good claim preparation consists of three steps.
Step 1: Analysis of Contracts
all rights and obligations of the involved parties, the relevant clauses and
their possible interpretations and the project claim management procedures we
have to comply with. The following diagram shows a general project claim
Claim Management Process
We note that there must be at least notifications of
the event itself and of the impact that event would have. Certainly, we should
find these notifications in our collection of project records.
Step 2: Analysis of Project Records
There will be records available that refer to the
problem situation which is under dispute. Each one of these records or
documents should hold the date when it was created. This gives us a time line of the chain of events and
the correspondence about them. Possible project records
between Customer and Supplier
between Supplier and Sub-suppliers
– Confirmation of Instructions
to Involved or Affected Parties
Reports - Weekly Reports - Project Status Reports
of phone calls
important result of this step is a clearly structured list, the so called time line of all records and documents
relevant to the claim case. This list, in turn, forms an essential
building block of the evidence of the claim and of project claim management
in general. Here, we give an example
illustrating a structured procedure that helps us to put this list together.
Claim Case Description
Claim Case Analysis
note that the time line of a claim case contains only relevant project records that
hold as evidence, no assumptions and no conclusions. We continue discussing this case in sub-section Project Claim Analysis.
Step 3: Analysis and Decision of a Claim Strategy
we enter the escalation of the claim settlement procedure as it is laid down in
the contract we always try to negotiate with the involved parties in order to
find the most feasible solution. This negotiation needs a strategy which we
only can prepare after obtaining a clear understanding of the underlying
contracts with their possible interpretations and the available records. The
claim strategy depends on our answers to the following questions:
order to define the claim strategy the following questions can be helpful:
- what relationship to
our contractual partner do we want to keep?
- what are the policies
of our other involved or affected business units?
- how does the claim
correspond to the project goals?
- how does the claim
correspond to our general business goals?
- who needs to be
- how solid is the
Claim Documentation, Letter, and Presentation
project claim management requires good project documentation. As soon as we
collect all the relevant material of a claim case we need to file that material
together with all the other project relevant documents. Even in case we decide
not to pursue an “aggressive” claim strategy we need to inform the other
involved parties of our view of any potential claim case, usually as required
by the ruling contracts, i.e. in writing and within agreed deadlines. Best practice content of such a
letter or folder is
summary: short and clear.
- All project records
of relevant facts that constitute the evidence: the time line serves as
list of content, which consists of the copies of these records.
clear reference to the records.
the actual claim negotiation and further escalation we prepare a presentation
of the whole case that helps all involved parties to get a clear overview.
Learning Path Navigation