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Elective Claims Assignment

The document discusses various types of construction claims, including delay, disruption, acceleration, variation, loss and expense, and payment claims, along with examples and a comparative study between Indian and international projects. It also outlines the causes of these claims and suggests solutions to mitigate them, such as thorough pre-planning and clear contract clauses. Additionally, it addresses the implications of delays and the responsibilities of contractors and owners regarding extensions of time and liquidated damages.

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goelojasvi.05
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2 views

Elective Claims Assignment

The document discusses various types of construction claims, including delay, disruption, acceleration, variation, loss and expense, and payment claims, along with examples and a comparative study between Indian and international projects. It also outlines the causes of these claims and suggests solutions to mitigate them, such as thorough pre-planning and clear contract clauses. Additionally, it addresses the implications of delays and the responsibilities of contractors and owners regarding extensions of time and liquidated damages.

Uploaded by

goelojasvi.05
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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CONSTRUCTION CLAIMS & DISPUTES

Systems and Operations 5 (Construction Project Management)


SUBMITTED BY- OJASVI GOEL, 210BARCH115

1. What are the key types of Construction Claims? Provide examples for each. Provide
comparative study of claims in Indian Construction Projects and International
Projects.

Ans - Construction Claim can be defined as a request by either party to the contract,
usually the Contractor, for compensation for damages caused by failure Of the Other party
to fulfil his part of obligations as specified in the contract. The compensation is usually in the
form of the additional payment or an extension of time (EOT).

1. Delay Claim - When the project is delayed due to reasons beyond the contractor's
control.
Example: A project is delayed because the site was not handed over on time by the
client.

2. Disruption Claim - When the contractor's work is interrupted, causing loss of


productivity without necessarily delaying the completion.
Example: Frequent relocation of work areas due to other ongoing activities disrupts
the contractor’s workflow.

3. Acceleration Claim - When the contractor is asked to complete the work faster than
scheduled, leading to additional costs.
Example: The client asks the contractor to finish two months early, so the contractor
hires more labor and works overtime.

4. Variation Claim (Change Order Claim) - When the scope of work is changed,
affecting cost or schedule.
Example: The client changes the design mid-way, and the contractor needs to redo a
section of the structure.

5. Loss and Expense Claim - When the contractor incurs additional costs due to delays
or extended time on site.
Example: Project delay leads to extra costs for site rent, worker accommodation, and
machinery.

6. Payment Claim - When the contractor does not receive timely payments for
completed work.
Example: The contractor submits bills for completed work, but the client delays the
payment without explanation.

Comparative Study: Indian vs International Construction Claims

2. State the varied causes of different types of construction claims and suggest possible
solutions to rectify them.

Ans - Construction claims typically arise due to issues such as delays, disruptions, non-
compliance, or financial disputes between contractors, owners, or subcontractors.

1. Delays in Project Completion


Causes Solutions
 Unforeseen Site Conditions  Thorough Pre-Planning
 Change Orders  Buffer Time in Scheduling
 Lack of Resources  Clear Contract Clauses on Delays
 Permitting Delays  Efficient Communication
 Labor Strikes or Industrial Disputes

2. Disruption Claims

Causes Solutions
 Inadequate Project  Proper Coordination
Management  Contract Clauses for Disruption
 Changes in Project Scope  Claim Documentation
 Poor Site Conditions

3. Non-Compliance or Breach of Contract

Causes Solutions
 Failure to Meet Specifications  Regular Inspections
 Use of Substandard Materials  Clear Terms in Contracts
 Failure to Meet Safety Standards  Legal Action or Mediation

4. Contractor Performance Claims

Causes Solutions
 Incompetence or Inexperience  Prequalification of Contractors
 Financial Instability  Regular Monitoring
 Inadequate Labor Management  Clear Payment Terms

5. Design Errors or Omissions

Causes Solutions
 Inaccurate Drawings  Preliminary Design Reviews
 Design Changes  Change Order Management
 Third-Party Quality Checks
6. Payment Disputes

Causes Solutions
 Delayed Payments  Clear Payment Schedules
 Disagreements Over Billing  Retention Funds
 Dispute Resolution Mechanisms

7. Force Majeure Claims

Causes Solutions
 Natural Disasters  Force Majeure Clause in
 Political or Economic Events Contract
 Insurance Coverage

8. Quality and Defects Claims

Causes Solutions
 Substandard Workmanship  Quality Control Measures
 Defective Materials  Warranties
 Design Deficiencies  Third-Party Testing

3. In a project, delays take place, and the contractor applies for 'extension of time' by
citing various reasons as attributable to the owner, before the expiry of the
contractual completion date. No action is taken on the above by the owner.
Meanwhile, the owner levies liquidated damages on the contractor and recovers the
same from the contractor's bills. Is the owner correct in his action? Comment.

Ans –

No, the owner’s action doesn’t seem justified in this case.

Since the contractor applied for an extension of time before the contractual completion
date and cited reasons that were attributable to the owner, it was the owner’s
responsibility to review and respond to that request. Ignoring the application and then
going ahead with levying liquidated damages (LD) is not fair practice.

LD is meant to be imposed only when the delay is due to the contractor’s fault. But here,
the delay was supposedly caused by the owner, and the contractor had already flagged it
in time. Until the extension request is assessed and a decision is made, LD shouldn't be
applied. Recovering it from the contractor’s bills while the matter is unresolved could be
seen as arbitrary and may not hold up if the issue goes into dispute resolution.

So, in short, the owner should have addressed the extension request first. Levying
damages without doing that isn't the correct approach.

4. A project was scheduled to commence on a particular date as per the letter of intent
issued by the owner. Owing to certain reasons attributable to the owner, the
handing-over of the site got delayed. Ultimately, it was handed over to the contractor
after a delay of six months. As the contractor, what action would you like to take?

Ans - As the contractor, I would take the following actions:

 Notify the owner in writing about the delay in site handover, clearly stating that the
delay is attributable to the owner. This helps in maintaining proper documentation
from the beginning.

 Claim an extension of time (EOT) -


Since the delay was not due to my fault, I would formally apply for an EOT under the
terms of the contract. This would help protect me from any future imposition of
Liquidated Damages.

 Claim for compensation (if allowed by contract) -


If the contract permits, I would consider raising a claim for compensation for idle
resources, staff, machinery, and other overheads incurred during the six-month wait.
This could include loss of opportunity or additional costs due to time extension.

 Request revised work schedule -


I would coordinate with the project team to revise the project timeline based on the
new start date, ensuring realistic planning moving forward.

 Preserve all communication and records -


I would maintain detailed documentation and correspondence as evidence, in case
the matter escalates or leads to a dispute.

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