Claim Avoidance
More formally, a contractor's claim may be defined as:
A legitimate request for additional compensation (cost and/or time) on account
of a change in the terms of the contract
It follows from this definition that a claim may arise under any form of construction
contract, except perhaps those very rare kind, in which all costs are fully reimbursable
without any reservations at all. Of course, a claim is most likely to arise
under a fixed price form of contract, and in fact today there are few such contracts
in which there are no claims, negotiations and settlements before the contract
is finally closed out.
It also follows that it is essential to know exactly what is expected of the
contractor under the terms of the contract, both before signing (indeed at the
time of bidding), as well as during its execution.
This knowledge must not just be limited to senior management at the home office.
Site supervisors who deal with the day-to-day work must be equally well informed.
Strictly speaking, every article and requirement of the contract must be clearly
understood, if the contents of the contract are to be faithfully carried out.
It is a matter for great regret, therefore, that some contracts are written
by lawyers in such a way that only other lawyers can understand them. ÊAnd even
then they do not always agree! So what chances have the owner and contractor
in understanding their respective obligations in such contractual relationships?
But that is another story!
Fortunately, the increasing use of standard documents and specifications has
gone a long way to facilitate the expression of requirements, and thereby avoid
disputes through simply misinterpretation. So three simple rules can be promulgated
to avoid making claims:
- Know exactly what the contract requires
- Do what the contract requires, but without interference
- Don't do anything else, without proper documentation
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Introduction
