Are invoices enough?
In recent times I am seeing contractors initial claims assessments being reduced to the checking of invoices received from subcontractors (to prove a cost has been incurred) and the negotiation limited to the cost of the rates claimed.
Although I understand the process and agree that on occasion this is a prudent approach.? However, it is not the only approach and does not consider the following three important points that should be demonstrated in construction claims:
With infrastructure booming in Australia and the Middle East and the “just get it built” mantra no doubt being at the forefront of project owners minds the payment and avoidance of claims is understandable.?
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However, it is not sustainable to accept claims where there is possibly no entitlement or at the very least understand whether there is an entitlement and what the true costs actually is and then make a commercial decision to make a payment for commercial purposes (or not as the case may be).
With a large majority of mega projects being funded by private money more scrutiny will be given to monies paid than what may have previously been the norm.
Qualified resources such as quantity surveyors and commercial managers who possess the skill set required are scarce throughout the world due to the worldwide uptick in mega projects.? However, investing in these specialist resources will set you up for success long term and no doubt cost a lot less than the claims received.? It will also provide you with confidence to make informed decisions.
I am interested to hear other recent experiences and comments on this or similar matters.
Chartered QS, FIDIC Certified Contract Manager, Associate-Institute of Construction Claims Practitioners (AICCP), Certified Construction Contract Administrator, Certified Cost Engineer and Professional Civil Engineer
10 个月This is one side of the coin. On the other side lurk the owners who refuse to pay no matter how entitled a contractor is. They simply refuse to acknowledge any entitlement.
Cost Manager | Employer's (Owner's) Representative | Licensed Civil Engineer | Project Management | Contracts Management
10 个月Thank you for raising these important points. Invoices (Tax Invoice), may be a good starting point to verify the actual costs should there be no applicable or suitable BOQ rate for the claimed work. But entitlement and eligibility of the claim, in principle, should be established first. Is there a valid ground for additional compensation? Or is the claim just based on a "perceived" entitlement due to the lack of understanding of the original scope of work, design intent, specification and all other instructions/facts/basis that's been stipulated on the Contract Documents, Tender Drawings & Specifications? In my experience, it's not very difficult to spot which is which. The way a Contractor's QS put together the claim will give a hint on his/her knowledge on the issue.
Quantum Expert with testifying experience dealing with Building, Infrastructure, Oil & Gas and Mining disputes across Australia & New Zealand - supported with a team of specialised advisors
10 个月A subject very close to my heart. You are correct in stating that a culmination of invoices to support a claim, albeit cost coded and supported by dockets etc, should not necessarily guarantee payment without consideration for evidentiary proof of payment. If the claim is sustainable, why are contractors and alike reluctant in providing remittances demonstrating the actual costs incurred. Whilst I am an advocate to make, effectively 'on account' payments, as being a fair and reasonable approach (subject to review upon proof being provided) it makes for a long winded process that could be short circuited.
???? Perfection? Purification of gyri? You have it! Founder of FIDIC, JCT, VOB, AIA ... Bespoke Contracts Forum 2015 & TEA Group 2018
10 个月Paul, good starting point to open a few discussions. Here, just to underline your conclusion that "Qualified resources such as quantity surveyors and commercial managers who possess the skill set required are scarce throughout the world due to the worldwide uptick in mega projects.?However, investing in these specialist resources will set you up for success long term and no doubt cost a lot less than the claims received.?It will also provide you with confidence to make informed decisions" needs to be extended on the first place with in-house engineers (especially civil engineers, among M&E engineers), and architects, in the commercial roles.
A senior leader with an impressive background in Commercial, Contracts, & Claims Management, overseeing multimillion-dollar projects. With two decades of experience, the majority gained in Dubai, Qatar & Saudi Arabia.
10 个月An invoice typically serves as a request for payment, documenting the services or goods provided, their quantities, and the agreed-upon prices. While reviewing an invoice is an essential part of the payment process, it does not provide a comprehensive understanding of the underlying contractual agreement or the work performed.