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Overcoming Challenges in Construction Claims Management

Construction claims management is a crucial aspect of the construction process, helping to ensure that disputes are resolved quickly and efficiently.

Overcoming Challenges in Construction Claims Management

construction managers discussing cost control strategies

Construction claims management is a vital component of successful project completion, helping minimise financial loss, project delays, and strained relationships between stakeholders. The Contract Administrator who manages the claims plays a crucial role in this process, identifying, addressing, and preventing claims. The main objective would be avoiding disputes or at least ensuring that disputes do not derail the project. However, the path is not always straightforward. Here are some common challenges faced in construction claims management and strategies for overcoming them gracefully.

1. Identifying and Preventing Claims Early

The first step in effective claims management is identifying potential issues before they escalate. Proactive risk identification and mitigation are key to avoiding costly disputes. Thorough planning, contract review, and early communication can help pinpoint areas where claims may arise. By reviewing project timelines, budgets, and specifications early on, and periodically thereafter, potential risks or claims can be flagged and addressed promptly.

In construction, small missteps, if ignored, can snowball into major setbacks. Therefore, managing expectations and staying ahead of potential issues is one of the most effective ways to prevent claims from escalating and disrupting a project down the line.

2. Navigating Complex Contractual Terms

Ambiguities in contracts are a common source of construction claims. Disputes often arise from unclear or misconstrued contract terms. A construction claims/ contracts manager must review contracts carefully to ensure that all terms are well-defined and understood by all parties involved. Clear and unambiguous contract language reduces the likelihood of conflicts later in the project.

It is essential to work with legal professionals during the contract drafting phase to ensure clarity. If disputes arise over contract terms, having a well-defined agreement can help quickly resolve issues and avoid escalating conflicts.

3. Proper Documentation and Record-Keeping

Accurate and thorough documentation is critical to construction claims management. From change orders and daily reports to communications about delays or scope changes, every detail must be carefully recorded. 

Good documentation allows teams to defend claims with concrete evidence. When disputes occur, having clear records helps resolve issues faster and minimises the potential for financial loss. Project management software can help streamline documentation and improve record-keeping across the project.

4. Effective Communication Among Stakeholders

Poor communication often leads to construction claims. Misunderstandings between contractors, clients, and subcontractors can quickly turn into disputes. Regular, clear communication ensures that everyone involved in the project clearly understands its contractual position and is well aligned on goals, timelines, and expectations.

A professional and dedicated contracts manager or contract administrator can duly manage construction claims and help foster transparency and trust by ensuring that concerns are addressed promptly. Effective communication keeps the project moving forward and helps resolve conflicts before they become significant issues.

5. Handling Delays and Time-Related Claims

Delays are common in construction, but can lead to time-related claims if not properly managed. Variations, unforeseen site conditions, resource shortages or any other events out of the contractor’s control can cause delays, so documenting and justifying any missed deadlines is key. 

To mitigate time-related claims, it’s important to plan resources carefully, regularly review the project schedule, and communicate delays as soon as they happen. When lags do occur, having clear documentation of the cause can prevent these issues from turning into costly disputes.

6. Effective Settlement

One of the main goals of construction claims management is to resolve conflicts quickly without resorting to litigation. The contract administrator managing construction plays a critical role in facilitating settlement discussions, offering solutions, and helping parties reach mutually beneficial agreements.

Alternative dispute resolution methods like mediation, adjudication or arbitration can help resolve claims without going to court, keeping costs and delays to a minimum. By working toward a fair and timely settlement, proper construction claims management can protect the project’s financial health and reputation.

Stay on Track with Proactive Construction Claims Management

In conclusion, proactive construction claims management is essential to keeping a project on track and within budget. By identifying potential issues early, navigating complex contracts, maintaining proper documentation, ensuring effective communication, managing delays, and seeking timely settlements, contract managers/ contract administrators, by properly handling construction claims, can mitigate the impact of disputes and support project success. 

At DG Jones and Partners, our world-class construction dispute resolution professionals are ready to assist both contractors and employers. Our approach is rooted in providing impartial and independent advice, tailored to help clients better understand their contractual strengths and weaknesses and, ultimately, achieve their objectives in an effective and well-informed manner. Through the lens of extensive experience, our team offers proactive measures and strategies to maximise dispute avoidance.

Our in-house professionals are also qualified to act as independent adjudicators or to prepare and support clients through the adjudication process, including participation in Dispute Adjudication Boards. They can also serve as quantum and planning expert witnesses, providing impartial professional opinions based on in-depth industry knowledge. 

Want more detailed insights into the DG Jones approach to construction dispute resolution and our range of services? Speak to one of our experts in your region today.