Project managment

Claims from the contractor

The term ‘claims’ is loosely used and has several meanings, which can cause confusion unless the context within which the word is used makes the meaning clear. In ordinary parlance the word is used to mean ‘claims for more money by a contractor which may or may not be payable’, that is, for matters other than those for which payment is specified in the contract. However, most contracts formally recognize and define some types of ‘claim’ a contractor can submit.
Clause 53 of the ICE conditions sets out the procedure to be followed by the contractor if he wants to claim (a) a higher rate or price than the engineer has set under a variation order or in relation to some altered quantity under a bill item; or (b) additional payment he considers he is entitled to under any other provision of the contract. Under (a) the contractor must give notice of his intention to make a claim within 28 days of being notified of the engineer’s fixing of a price. Under (b) the contractor must give notice ‘as soon as may be reasonable and in any event within 28 days after the happening of the events giving rise to the claim’. The provisions with respect to (b) primarily relate to claims for encountering ‘unforeseen conditions’ or claims for delay. Both these are complex matters, which are dealt with separately in Sections 17.8–17.10.
Claims that arise concerning a rate or price set by the engineer for some varied work or excess quantity measured are often uncomplicated. Sometimes the facts need unravelling, such as – what activities is the rate to include; why do records of time or quantity spent on the operation differ between contractor and resident engineer? These matters have to be gone into in detail. The contractor may contend that the rate should allow for standing time, ‘disruption’ and ‘uneconomic working’. There is truth in a contractor’s claim that any rate set should allow for these matters. ‘Uneconomic working’ depends on the nature and quantity of extra work ordered. To order something additional to a contractor’s current work can put him to considerable re-organization. For instance to order tie-backs to sheet steel piles after they have been driven involves obtaining extra steel, making extra excavation, and probably hiring welders.
To get this organized may take some days, during which the contractor may not be able to start the next major operation scheduled on his programme. Fairly frequent claims consist of the contractor claiming he should be paid for something for which there is no obvious measurement in the contract. This type of claim depends on whether the terms of the contract allow payment or not.
This is when the specification, bills of quantities and method of measurement come under close scrutiny, because any inconsistency between them is liable to give the contractor at least some kind of case for payment. When specifications and bills of quantities are very large, the odd error will invariably occur. The resident engineer should take care not to agree an extra prematurely, he should check the contract first, to ensure that it does not include the extra in some bill rate.
Some contractors use confirmation of verbal instructions (CVIs) as ‘claims’ (see Section 13.3). The resident engineer or one of his staff tells the contractor  that the blinding concrete looks too thin in places and must, as specified, be a minimum of 100 mm thick, and within an hour or so the resident engineer receives a signed CVI stating ‘We are to thicken up blinding concrete at soand- so’. At the bottom of the CVI form is printed ‘and any extra work arising from the above instruction will be charged’. This sort of spurious claim has, of course, to be rejected immediately in writing by the resident engineer.

Otherwise, if not contradicted and left on file, it may later be re-submitted by the contractor as a justifiable ‘claim’ long after the nature of the incident has been forgotten. If the resident engineer has, however, given a verbal instruction that justifies a claim for extra payment, he should confirm it in writing with precise details, and require the contractor to submit a detailed account of his costs promptly. He should also keep his own records of the work done by the contractor in response to the instruction.

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