Claims Evaluation Techniques

General

Once the claim is a 'fait accompli', the Project Manager (PM) requires answers to the following questions:

As a result of a preliminary review, it is usually possible to assess whether there is a sound basis for a claim. If, after serious consideration, the claim appears unjustified, the PM must advise the contractor promptly and provide a clear logical statement of the reasons the claim is not justified. The objectives in claims evaluation and resolution are threefold:

Detailed Claims Study and Evaluation

Most claims involve delay. The best tool to study delay claims is a planned schedule on which actual completion dates or times are shown. In many cases, however, schedules are incomplete and it may be necessary to prepare a chart showing the actual completion date and what would have been a reasonably planned completion time frame. Responsibility for delay can be determined more easily. Strikes, weather, and acts of God might cause a delay that could be referred to as an excusable delay, the effects of which would normally not be chargeable to either party. PSPC's liability to the contractor may now be calculated as well as the contractor's liability to PSPC. The difference between these two figures is what would constitute a reasonable settlement.

A detailed analysis of a complex claim may require months of study by a party(ies) with a good understanding of construction methods, scheduling and estimating. In studying a claim, the following steps are recommended:

Fact-finding

Determine contractual clauses applicable

Determine quantum

Determine your "Best Alternative To a Negotiated Agreement"

Completing a claims evaluation includes preparation for negotiations. This is essential so that the PM is satisfied that all possible options for settlement have been explored. This is especially important in cases where no agreement can been reached. In order to prepare for negotiations, each disputant must consider all of their alternatives and identify the best one or BATNA. This process will enable the PM to weigh offers and counter-offers that they will receive during negotiations. This should also protect a PM against reaching an agreement that possibly should have been rejected. The BATNA can be developed with the assistance of the Claims Prevention and Management Unit or your regional claims representative and by consulting with RPC and Legal Services to evaluate the litigation risk value as well as the legal exposure risk percentage. During negotiations, the proposed settlement should be more advantageous than your BATNA to be acceptable.

Date modified: