How do you assess the validity and value of a contract claim?

A Claim is a request or assertion for an entitlement or relief under the contract or the governing law. Common sources of claims: Delays: unexpected events that extend the project’s completion date (i.e., design issues, coordination issues, site conditions, weather conditions, permits issues, etc.) Defective works: the quality of the work does not meet the specified standards. Payment disputes: disagreement on the due amount - payments delay. Variations: changes to the scope of work from the original contract (i.e., change in quantity, quality, location and sequence of work, addition or omission of works) Termination: one of the parties terminate the contract before the completion of the project.

To assess the validity and value of a contract claim, analyze the contract terms, relevant laws, and evidence supporting the claim. Evaluate the nature of the breach, quantify damages, and consider mitigating factors. Engage legal expertise if necessary to ensure accurate assessment and negotiation of the claim's validity and value.

A contract claim refers to a demand made by the claimant against another party in the context of a contractual agreement, arising when there is a perceived violation of the terms, conditions, or obligations outlined in the contract. Contract claims can encompass a wide range of issues, like breach of contract, delay, defective performance, or dispute over payment. The resolution of contract claims often involves negotiation or legal process. Efficient handling of contract claims is crucial for maintaining the integrity of contractual relationships and ensuring that disputes are resolved in a manner consistent with the terms of the agreement.

1. Review and analyze the contract: - Understand the rights and obligations of each party. - Identify the specific clauses relevant to the claim. - Define claims procedures. 2. Ensure compliance with the essential elements of claim (CEES) - Cause (C): what is the event that has given rise to the claim? - Effect (E): what effect did this cause have on the project (time and/or money)? - Entitlement (E): Does the contract or the law provide entitlement to time and/or money? - Substantiation (S): proof that all statements, arguments and calculations and the like mentioned in the claim are valid, such as: emails, letters, invoices, meeting minutes, drawings, transmittals, daily reports, progress photos, Pos, subcontracts, etc.

Begin by thoroughly reviewing the terms and conditions of the contract in question. Look for particularly the following- 1. Obligations of the Parties 2. Responsibilities and Warranties agreed by each Party, and 3. Any relevant clauses that may pertain to the claimed issue. Also, verify whether both parties have adhered to the terms of the contract. Assess whether the claimed breach or issue is a result of non-compliance with the contractual obligations.

Once a contract claim is ascertained as valid, the next step is to put a dollar amount to the claim. If item rates are in the contract, then we can calculate the amount easily. However, if it is a new item & rates are not available, then we need to make an estimate based on an equivalent item rates. Sometimes, we need to make an estimate for an item for the claim based on the time spent, materials cost etc. The amount we calculate for the claim should be fair and reasonable. If the extra amount claimed is due to the failure of the claimant, then a proportional amount should be deducted. Also, while considering claim amount, follow the principle of “Quantum Meruit” which means “as much as is deserved” as a guiding principle.

Although the concepts of actual cost and time impact might seem straightforward, the methods used to assess them are not. For instance, to demonstrate actual cost, it must be shown that the costs have either been incurred or are to be incurred. Additionally, these costs must be reasonable, attributable, and, in the case of a delay claim, related to time. There is also a misconception regarding the period of impact. Some argue that this period should be the extended period of a project due to the delay. However, it should actually be the specific period of impact, which satisfies well-established principles. In summary, it is crucial to accurately identify actual costs and determine the correct period for consideration in a claim.

If the claim involves financial compensation, carefully assess the damages claimed by the party. Consider both direct and indirect costs associated with the alleged breach. Assess whether the claimed issue falls under force majeure or excusable delays, especially if the contract includes clauses addressing unforeseen circumstances that may impact performance.

In regard to compromise, each party may need to consider, among other things, the Zone of Possible Agreement (ZOPA) and the Best Alternative to a Negotiated Agreement (BATNA). Understanding the zone of compromise not only demonstrates the competence of the negotiator but also makes the process more efficient. In practice, this should not mean inflating claims to receive the intended amounts following the negotiations, as that could challenge the accuracy of the claim, and could harm the trust between parties, and as well that can potentially result in a costly dispute. Therefore, negotiations should be based on actual and reasonable values with the intention of achieving win-win results.

Collaborate with someone with technical knowledge related to the claims. Don't hesitate to ask for any unclear points. When all the supporting data and evidence are well prepared, the claim negotiation with the client goes smoother. The key is not to win or lose the claim, but to focus on finding a solution acceptable to both parties, without sacrificing too much. Communicate and compromise.

The key to successful claim negotiation is to BE PREPARED. But, this is not always easy. * Proper preparation will make your; ? Claim STRONG, and, ? Presentation CONVINCING * To effectively negotiate you should; ? Clearly understand your OPPONENT’s POSITION You should consider the arguments that you are likely to hear from your opponent. ? Carefully predict the FUTURE of your RELATIONSHIP between you and your opponent You should hold out for a larger settlement if you do not plan to work with them in the future. ? Identify the RECOVERY CHANCE If your claim is a complicated claim with insufficient records; your claim can usually be evaluated as having a low potential for recovery.

Facilitate open communication between the parties involved. Encourage them to discuss the claim and provide additional information or clarification as needed. Assess whether any pre-existing conditions or external factors contributed to the claimed issue. This broader perspective can help in understanding the context surrounding the claim.

In fostering effective contract management and mitigating disputes, meticulous drafting is paramount. Utilize precise language, steering clear of ambiguity. Adherence to established dispute resolution procedures is crucial. Early detection and resolution of issues through an early warning system and prompt assessment is vital. Foster open and transparent communication, ensuring responsiveness and collaborative problem-solving in follow-up meetings. Contemporaneous documentation, backed by accurate record-keeping, minimizes reliance on memory, facilitating dispute resolution. In complex matters, seeking expert opinions can provide valuable insights. These proactive measures collectively fortify contracts against disputes.

Preventing or minimizing contract disputes and claims requires proactive management and clear communication throughout the life of the contract. Here are strategies to help achieve this: 1. Clear and Comprehensive Contracts 2. Risk Assessment 3. Detailed Dispute Resolution Mechanisms 4. Regular Communication 5. Legal Review 6. Insurance 7. Regular Reviews and Audits 8. Clear Exit Strategies

in order to achieve the minimum contract disputes is to manage contractual risk register, this is to verify and counter the disputes in early stage of the contract.