Portfolio, Program & Project Management Construction Software

Managing Claims

Managing Claims

Web-Based Project Management Solutions Revolutionize Enterprise Project Management: Managing Claims

No one can deny that construction claims are on the rise—particularly in the GCC but also globally.

With new project awards declining, projects seeing lower profit margins, increased liquidated damage claims for late completion, and other recent developments, owners and contractors are becoming more contentious and adversarial, which is leading to a growing volume of claims and disputes.

Everyone knows that construction claims are never won on merit alone. Claims require extensive analysis of numerous factors: what events occurred, who is accountable for these events, how the contract clauses address the events, the impacts the events had on project cost and schedule, the documents and records available to substantiate or defend the claims, etc.

Those involved in analyzing, preparing, submitting, presenting, negotiating, and defending these claims are well aware of the huge volume of data that must be extracted, analyzed, and responded to in a relatively short time period. They also know that performing these tasks inefficiently drastically increases their chances of losing the claims, which can result in major financial losses for their company.

The High Likelihood of Claims in Engineering and Construction Projects

There are many reasons why engineering and construction claims are so likely. Actually, the reasons can be thought of as risks, and neither party in the contract is able to predict with 100% certainty whether these risks will occur or not and what the impact will be if they do occur. Therefore, the vast majority of organizations tend to assume that the risks will occur and estimate the amount of funds needed to cover their impact. However, due to the fierce level of competition in the industry, projects are being provided with less contingency, and each party in the contract wants to make sure that any additional funds needed to cover the impact of these risks is paid for by the other party. Indeed, it’s no longer about seeking a win-win scenario, but a win-lose, so claims are becoming more and more inevitable.

Some of the most common reasons for construction claims include:

  1. Acts of God
  2. Acts of Government
  3. Actual Acceleration
  4. Adverse Weather
  5. Bankruptcy
  6. Cardinal Change
  7. Commercial Impracticability/ Performance
  8. Commercial Impracticability/ Supply
  9. Constructive Acceleration
  10. Constructive Change
  11. Defective Specifications
  12. Delay of Approvals
  13. Delayed Issuance of Change Orders
  14. Delayed Notice to Proceed
  15. Destruction of Work
  16. Destruction of Materials
  17. Differing Site Conditions
  18. Early Completion Prevented
  19. Impossibility of Performance
  20. Improper Inspection
  21. Inadequate Supervision
  22. Inadequate Utilities
  23. Interference
  24. Labor Shortage
  25. Lack of Access
  26. Lack of Information or Decision
  27. Lack of Permits
  28. Lack of Right of Way
  29. Late Drawings
  30. Late, Defective Material, Etc.
  31. Payments Not Made
  32. Scheduling Difficulties
  33. Stacking of Trades
  34. Strikes
  35. Subcontractor Delay
  36. Superior Knowledge/ Misrepresentation
  37. Supplier Delay
  38. Suspension of Work/Delay
  39. War and Other Hostilities

 

How Can Web-Based Project Management Solutions Improve Claim Management?

This article discusses how web-based project management solutions like PMWeb can help enterprise project management offices (EPMO) improve their claim management practices. It will explain how such solutions can enhance a project team’s ability to analyze, prepare, submit, present, negotiate, and defend claims as efficiently as possible.

PMWeb provides an out-of-the-box solution that helps construction claims teams improve their ability to complete many different tasks:

  1. Capture Contract Clauses and Specifications and Link Them to Relevant Project Records
  2. Manage Claim Issues
  3. Create Templates for All Correspondence that Could Impact Your Construction Claims
  4. Import All MS Outlook Emails That Relate to the Project so They Can Be Linked to Other PMWeb Records and Documents
  5. Store All Project Documents Using PMWeb’s Document Management Repository
  6. Maintain a Log of All Project Documents, including Drawings, Specifications, Agreements, BOQ, etc.
  7. Capture the Details of All Material, Drawings, Equipment, and other Submittals
  8. Capture the Details of Important Project Communications
  9. Document All Claims-Related and Other Meeting Minutes, including Claim Settlement Negotiation Meetings
  10. Enforce a Reliable and Proactive Action Management Process
  11. Quantify the Claim: Cost
  12. Quantify the Claim: Schedule
  13. Compile and Present the Claim’s Cost and Time Submission
  14. Create a Variety of Tabular and Graphic Reports to Support Claim Management
  15. Use BI Applications to Visualize and Analyze Captured Data To Identify Claims Trends and Issues.
  16. Capture Contract Clauses and Specifications and Link Them to Relevant Project Records

Every engineering and construction project has contract clauses and specifications to abide by and fulfill. In many cases, project team members wrongfully assume that those clauses are the same across all projects, so they tend to pay less attention when reviewing them. Having those clauses and specifications mapped into a single repository using PMWeb will not only ensure that the project team reviews those clauses and specifications before they’re added, but also allows the team to link the project communication or submittal being made to the relevant clause. The clauses and specifications repository also helps the team add details about the party responsible for a clause, make comments and notes, along with other useful actions.

This allows the party who issued the communication or submittal to review the contract requirements and ensure that what is being communicated is correct. And there is no limit to the number of clauses or specifications that can be linked to a single record. Such links are vital, as they enable the organization to search for and report on all project communications and records related to a clause or specification.

  1. Manage Claim Issues

When there is a claim—or even the possibility of a claim—the team needs to search for and collect all project communications and documents that might be relevant to the claim, which can be a tedious, time-consuming process. If all project communications and documents are already uploaded into PMWeb, however, the team can simply use the program to automatically locate these documents using a keyword search. Along with entering the keyword(s), the user can indicate if the search is limited to a single project or a group of projects, if they’re searching for a specific type of project communication or all project communications, and if they’re searching for documents with approved status or another type of status.

Once located, the relevant project communication(s) can be saved into a unique claim issue file or be appended to an existing one. The claim issue creator can then open this file and drill down through each of the records and their attachments.

Sometimes, a team needs to review only the documents that were uploaded to the document management repository. For this type of search to work, it can’t be limited to file names or assigned attributes. Instead, the search should cover the actual text content of those documents. To perform this type of search, the user selects the PMWeb Document Management Repository, lists their keyword(s), and selects “Search for Content.”

  1. Create Templates for All Correspondence that Could Impact Your Construction Claims

Regardless of the project’s size or type, there are always several different types of communication involved. There are standard document templates, such as the Request for Information (RFI), Transmittals, and Submittals, but there are also many additional letters and correspondence that get sent to the other parties in the contract. However, some project managers are not very adept at drafting such contractual correspondence, and this can lead to problems, since the content of these letters is often critical evidence in claims for financial recovery and time extensions. To address this issue, PMWeb allows users to create an unlimited number of these letters, and it further facilitates the process by allowing users to add the appropriate attributes, attach supportive documents, and perform other needed tasks.

Nevertheless, the biggest benefit of such web-based solutions is their ability to create a centralized collection of all possible project communications aligned with the different contract clauses. This enables project managers to select the necessary template, fill the needed gaps, and issue the communication. Again, having the needed correspondence located in one place that’s easily searchable greatly increases your chances of winning a claim.

  1. Import All MS Outlook Emails That Relate to the Project so They Can Be Linked to Other PMWeb Records and Documents

In today’s modern world, email is frequently used for both informal and formal communications. However, many project teams aren’t aware that their emails need to be properly managed in order to support a future claim. One of the best practices for managing email is for each team member working on a project to have a unique email address specifically for that project, such as First.Last@projectXYZ.com. All email communications relevant to the project must use this address. Another best practice requires that all emails, especially formal project communications, be carbon copied (CC) to a single email address, such as file@projectXYZ.com. This allows all of the emails related to a project to be quickly imported into PMWeb’s email repository.

This also enables the project team to link this email address to the relevant project communications using the attachment tab. So when the search is complete and a record is located, all the email communications related to it will be available for the organization to review.

  1. Store All Project Documents Using PMWeb’s Document Management Repository

At this point and for the foreseeable future, the engineering and construction industry will continue to generate hardcopy project documents. That said, web-based project management solutions can also be used to improve the maintenance of hardcopy documents. Using PMWeb’s document management repository, folders and subfolders can be created to precisely map the project’s filing system. Documents of many different types and sizes can be uploaded into the repository, and different versions, attributes, and other information can be added to each uploaded document.

 

Moreover, comments, notes, and links to other records can also be added to the document using PMWeb’s redline option. During this process, the user’s name, the date, and the time the comments, notes, and links were made are also captured. Users are then able to generate a report that includes all of these comments, notes, and links.

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