The recent trend of third-party entities providing funding for contractors to prepare, submit and pursue their claims settlement could result in massive threats to project owners where they can now expect drastic increase in bullet-proof claims submissions by contractors. In addition, this trend will bring opportunities for contractors who can now have access for funds to support the costly claim submissions, which in the past they could not afford to continue pursuing. Further, for claim consultants and lawyers, this trend might come up with new business offerings to expand their claims management services for which now they can secure the funds to pay for.
In principle, every construction claim should have valid merits and need to comply with the awarded contract clauses and conditions to be considered and have chances to be won. Nevertheless, it is also a must requirement that for a claim to be considered and to have better chances to be accepted and awarded, the claim submission must be supported with the complete documentation needed to prove what has really happened. This means that in addition to the requirement for implementing the best practices in construction and contract management, entities involved in the project delivery must also ensure that all project records and documents generated from implementing those best practices are captured and documented in a comprehensive, detailed and correct format so they can be accessed and used to either submit or defend construction claims.
Technology will enable and support capital project entities to implement construction and contract management best practices as well as support those entities in capturing, storing, reporting, accessing, analyzing and viewing all project records and documents generated from implementing those best practices. Capital project owners can be the project entity that benefits most from adopting technology to support construction and contract management best practices. They are exposed most to the threats of construction claims because contractually they will be the entity accountable for most if not all the actions taken by their appointed engineering consultant, supervision consultant, project management consultant and other consultants who will be managing the different construction and contract management processes on behalf of the project owner. This is one of the specific particulars in capital projects deliveries where contract agreements are between the project owner and the different entities, nevertheless, the management of those contracts and associated obligations are delegated to other entities.
Project Management Information Systems (PMIS) like PMWeb help project owners reduce their threat exposure to construction claims through digitizing the different construction and contract management processes and enable capturing all project records and documents generated from implementing those best practices. A PMIS like PMWeb is used to enforce transparency in performing construction and contract management processes by all project entities, enforce accountability in performing those processes, ensure that all project documents and records are properly captured and stored, ensure proactive early warning notifications of project issues, ensure objective real-time reporting of project’s performance and issues and enable searching and locating communications that are relevant to project issues and claims even after the departure of those involved in delivering the project.
Enforce Transparency in Performing Construction and Contract Management Processes by all Project Entities
PMWeb comes ready with most of the construction and contract management input forms ready to use, out of the box. In addition, PMWeb custom form builder allows the creating of all other input forms needed for other project management processes. The value of having an input form goes far beyond of being able to generate the process output form and transactions register in the desired format, having this transparency in capturing trust-worthy traceable data provides the project owner with the insight to better understand the performance of each project management process and how this performance could expose the project owner for changes and maybe claims.
For example, having the insight for the raw data captured in the Request for Information (RFI) process will enable the project owner to better understand the reasons and trends behind those queries including why they were issued, what impact they had on the project, how they benchmark to other projects among many others.
Enforce Accountability in Performing Construction and Contract Management Processes by all Project Entities
Communicating construction and contract management processes via email where the process initiator sends the communication to a pool of individuals is a complete violation of the project communication requirements set in the responsibility assignment matrix (RAM). It is as if the issuer of the process is telling those individuals “go figure it out on how you want to review, approve and share what I have sent”. Each process should have a workflow that details the steps to review, approve and share the process. Some processes might have conditions to incorporate approval authority levels among many other conditions that could impact how the process will be reviewed and approved. In addition, there are rules on how to return or re-submit the process when needed. PMWeb visual workflow allows mapping those steps and conditions for each process to enforce the needed accountability.
Ensure that all Project Documents and Records are Properly Captured and Stored
One of the requirements of any construction project site across the globe is to have what is known as the “Filing Room” where all project communications and documents are stored in their designated cabinets and folders. Unlike generic document management systems, a project document management system like what PMWeb offers complies with this requirement. A project document management system should allow creating the folders and subfolders to match how documents and records are stored in the filing room. Access rights for those folders need to be defined to ensure secured access and authorized individuals can subscribe to those folders to receive notifications when documents are uploaded, downloaded among others. Of course, PMWeb also allows maintaining document versions similar to other document management systems.
Ensure Proactive Early Warning Notifications of Project Issues
The FIDIC 2017 Red Book introduced advance warning provisions (sub-clause 8.4), which require each Party to advise the other “in advance of any known or probable future events which may (a) adversely affect the work of the Contractor’s Personnel; (b) adversely affect the performance of the Works when completed; (c) increase the Contract Price; and/or (d) delay the execution of the Works or a Section (if any).”
Although the FIDIC sub-clause 8.4 has no time limit for giving an advance warning, nor is there any explicit sanction for failing to do so, project owners are highly advised to add sanctions for non-compliance with the early warning process similar to what the NEC contract contains.
PMWeb is used to formalize the process for managing Early Warning Notifications (EWN) by creating the EWN form for which it includes Description of Early Warning, details if the Early Warning likely to (a) adversely affect the work of the Contractor’s Personnel; (b) adversely affect the performance of the Works when completed; (c) increase the Contract Price; and/or (d) delay the execution of the Works or a Section (detail the work will be affected), and advise if an Early Warning Meeting is Required. The form also includes a field for the name of the project entity the EWN is issued to. The information included in the EWN process is used to generate and maintain an active register of all submitted EWNs along with their details and status. The report includes visuals to highlight those EWNs that could have an impact on the project.
Ensure Meaningful and Objective Real-Time Reporting of Project’s Performance and Issues
Project owners should be careful in not falling for the “Watermelon Syndrome” when it comes to reporting their project’s performance and status. Using MS Excel as the data source for the project’s performance dashboard will disconnect the project owner from knowing the facts that led to the reported project performance. What project owners actually receive is what the entity or the individuals who prepared the MS Excel file wants to project owner to know, whether it was true or not. Project owners need to have real-time or near-real-time dashboards that are based on trust-worthy, auditable, traceable and verifiable project information. The project owner must be able to drilldown to the source of the reported information should he/she needs to verify or better understand what is being reported on.
Since a PMIS like PMWeb is used to capture the details of all construction and contract management processes, PMWeb business intelligence reporting allows creating the dashboards and reports that display the captured data in the desired form and format. In addition, it allows designing those dashboards and reports to enable drilling down from the project dashboard level to the specific transaction of each construction and contract management process. PMWeb business intelligence reporting is also used to create the key performance indicators (KPIs), measures and metrics to be reported on as well as generate the needed alerts when unfavorable performance occurs.
Enable Searching and Locating Communications that are Relevant to Project Issues and Claims even after the Departure of those Involved in Delivering the Project
One of the key challenges that faces project owners when it comes to analyzing and responding to submitted construction claims is to understand what has really happened that lead for the claim and whether what is submitted provides the complete facts about the instance. What makes this even more challenging is that many of the individuals who were involved in the project delivery at that time are no more accessible. Therefore, when project owners enforce the adoption of technology in implementing the construction and contract management best practices, access to the records and documents generated from those processes is possible.
PMWeb search command allows searching and locating all project records that are associated with specific key words. Those records can then be linked to an electronic issue file where they can be reviewed and analyzed. Those records provide the project owner with the formal project records that will be crucial in responding to the submitted claims.