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* CLAIMS * SHORT-FORM CONTRACTING

Construction Contract Administration. * CLAIMS * SHORT-FORM CONTRACTING. CEM 520. Presented by : Usamah A. Al-Dakhil. I- CLAIMS. A request , demand for cost, time or performance compensation above that

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* CLAIMS * SHORT-FORM CONTRACTING

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  1. Construction Contract Administration * CLAIMS * SHORT-FORM CONTRACTING CEM 520 Presented by : Usamah A. Al-Dakhil

  2. I- CLAIMS

  3. A request , demand for cost, time or performance compensation above that granted or contemplated from one contract party to another. Definition: * Owner Contract Parties Who can Present Claims ( Reduction Of contract price/ Performance) * Contractor ( Additional Time / Additional Compensation from owner * A/E * Subcontractor * Others RARE

  4. Claim Formates Ranges From Informal or Verbal Requests To Voluminous, Highly Structured and Heavily Documented Claims Package ( Mostly Litigious )

  5. CAUSES : I- Owner Claiming Against a Contractor : A. Unsatisfactory Contractor’s Products B. Delays Caused By Contractor due to: Cost of Repair, Replacement, or Removal of Defective Work to meet specifications. Loss of use of the facility Ripple effects on other contractor Increased Cost of Other Delayed Works. C. As a Claim Defense : - Retaliate Claims Represented by Contractors by Presenting a Counter claim. - To discredit, the Elements of Original Contractor Claim. - When Termination or Brach of Contract Due to Contractor Failure to Complete the Work.

  6. I- Owner Claiming Against a Contractor : II- Contractor Claiming Against Owner : 1. Late or Defective Owner-Furnished Information, Drawings or Specs. 2. Late or Defective Owner-Furnished Material or Equipment. 3. Changes in Regulatory Requirements, Drawings, or Specs. 4. Changed or Unknown Site Conditions. 5. The ripple Effect of collateral Work. 6. Restrictions in Work Method. 7. Ambiguous Contracts or Contract Interpretation.

  7. Elements of a Construction Claim : 1. Increased Cost of Performing the Changed Work : (Easy to Determine) Increased Labor Costs Additional Material or Equipment Required Additional Supervision, Administration and overhead Increased Time Required for Performance Decreased Productivity or Efficiency Weather Effects Schedule Disruption and delays Demobilization, Remobilization Redundant Material Handling Shift-Time and Overtime Misallocation of Equipment Loss of Material Economics Congestion in work Place Inefficient Crew Size or Mixes

  8. Elements of a Construction Claim : 1. Increased Cost of Performing the Changed Work : (Easy to Determine) 2. “Impact Costs” on Unchanged Work . ( Difficult to Determine) Q. What were the increased costs of performing of B and C after A Has Been Changed ? A. Owner and Contractor Must Determine the Cost to perform B and C When A Had not Been Changed.

  9. EXAMPLE : If the Owner Delays the Contractor and Causes him to Postpone Work it Planned During Summer into Winter Season. The Work itself remains the same, but the Contractor Will Claim “Impact Costs” Associated with Winter Work :

  10. EXAMPLE : Impact Costs 1. Cost of Protecting the Work from the Winter weather 2. Inefficiency in Production caused by Workers performing in cold 3. Costs of Heaters and Fuel for Personnel and Work Protection. 4. Damage to Materials and Equipment Caused by Weather 5. Increased Maintenance Costs for Equipment 6. Inability to Secure a Work Force. 7. Lost Time Due to Extreme Temperature or Climate Conditions 8. Increased Housing and Transportation Costs. 9. Delay Due to Chrismas Holidays. 10. Extension of Insurance Premuims or Bond Payments 11. Inflation.

  11. Structure of Contract Claims : 1. A description of the Contractual Terms and Conditions. 2. A factual Description of Events Happened in Chronological order. 3. The Results of the Claim -Provoking Circumstances. 4. A cost Analysis.

  12. Claim Analysis : Owner Must Analyze the Claim in three Stages ; 1. Factual Analysis (what happened) 2. A legal or Contractual Analysis. ( Easy when good control) 3. Cost Analysis ( How Much Money / Time ) Two Methods : 1. Total Cost Method 2. Incremental Cost Method (Recommended)

  13. Delay Claims : Most Common Claims. Three Types: 1. Excusable Delays 2. Compensable Delays 3. Concurrent Delays Claim Cost Items : 8. Engineering Support 9. Contact Administration 10. Quality Program Administration 11. Security 12. Supervision 13. Extension or Loss of Warranties 14. Demurrage 15. Material Storage and Protection. 1. Interest 2. Insurance 3. Home Office Overhead 4. Utilities 5. Rentals 6. Equipment Maintenance 7. Supplies

  14. Overhead Costs in Claims : 1. Home Office Overhead 2. Staff Expenses 3. Rents, Taxes, Advertising Expenses.

  15. Arbitration to Resolve the Claim : - Most Contract Contain an Alternative : Arbitration. - What Arbitration Organizations and Rules Will Apply. Advantages : * Low Cost * Speedier Resolution * Involves Construction and Engineering Experts * Can be Done on a more Informal, Friendly Basis. EX: ENGINEERING COMMITTEE

  16. Evolution of a Claim Know in Advance Notification Change Order Issued Yes Yes No No Informal Change Change Request Yes Resolved? Claim No Arbitration Litigation Agreement Change

  17. Suggested Procedure For Handling Claims - Contract Administrator should Ensure that Claim is Given Proper Management Visibility, Carefully Analyzed, Documented and Resolved ASAP. - All Conversations, Correspondence, Documentations,…etc. Pertaining to the Claim Should be Obtained and Compiled. - Separate File Should be Maintained for Each Claim.

  18. Process Contract Manager Owner Contractor Insufficient More Details Record Details sufficient Interviews Review Contract Documents Compile of Required Documentation Negotiate w. Contractor Analyze Claim Change Order Documentation

  19. SHORT-FORM CONTRACTING

  20. Contracts Short Long Long Form Contracts: - Used for Medium to Large Scopes of Work, Risk and Cost. - For Medium to Large Scopes, Risk and Cost. - Massive Documents for qualifying bidders, RFP’s, Bid Preparation and Reception and Evaluation.

  21. Short Form Contracts : - Used for Low-Cost Work that Cannot be Planned and Priced well in Advance. - Contracts Agreement Must be formed in Few Days. -They are Abbreviated Documents and Conditions. - Insignificant Formation Cost Compared to Long-Form Contracts.

  22. Applications : - For Emergency Works (Fire, Storm Damage). - House Keeping (Site Cleanup, Maintenance). - As a Relief for Large Contractors ( Unable to Perform Additional Limited Work). - As a Competition for Change Orders to Existing Contractors - When Existing Contractor Has Been Performing Unsatisfactory. - To Perform Backcharge Work.

  23. Procedure forming Short-Form Contracts : Short-Form Documents Should Parallel the Content and Format of Long-Form Contract. Competitive Bidding Should be Encouraged if Possible. Existing Contracts Should be Reviewed Before the Need for the Short-Form Contracting is Established.

  24. Procedure forming Short-Form Contracts : The Alternative of Adding Work to an Existing Contract Should be not Overlooked. Close Coordination between Long-Form and Short-Form Contracts Should be Maintained to Avoid Duplication, Redundant, and Loss of Scope. Administration of Short-Form Contracts Should be Identical to Other Contracts.

  25. Protection Versus Brevity Some or all of the Following Conditions May be Eliminated: 1. Progress Payments. 2. Changed Work. 3. Contractor Submittals. 4. Equipment Warrantees 5. Close out Ducumentation. 6. Technical Specification and Drawings. 7. Required Contractor Controls. 8. Retention.

  26. Short-Form Change Orders * Field Originated Changes. * Emergency Works. * Minor Alternation to the Contractor’s Scope. * Result from Unplanned Conditions ( Bad Weather) Long-Form Change Orders : * Well Planned in advane, Originated in the Home Office. * For Changes Requiring Significant Time/Cost. ** Caution : Short-Form Change Orders Should be Identified, Evaluated and Approved Like Home-Office Change Orders. Avoid Duplication or Conflict with Home-Office Change Orders.

  27. Short-Form Contracting Cautions Short-Form Contracting Cautions * Pay Attention to Insurance Coverage and Bonding Capacity. * Avoid Duplication of Effort between Short and Long Form Applications. * Ensure That Critical Contractual Protection is not Lost by Abbreviation. * Avoid to Price Short-Form Contracts/Change Orders in a Cost-Reimbursable Manner When Other Fixed Price Methods Are Used. * Monitor Adherence to Time, Cost or Scopr Limitations. Short-Form Contracting Cautions Short-Form Contracting Cautions Short-Form Contracting Cautions

  28. THANK YOU THANK YOU THANK YOU THANK YOU THANK YOU THANK YOU THANK YOU THANK YOU THANK YOU USAMAH AL-DAKHIL

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