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(CDR-1436) Generating Claims through Contract Provisions and Management Practices

Primary Author: Mr Mark F Nagata PSP
Co-author(s): Mr Frank DiCianni

Audience Focus: Basic
Application Type: Application
2013 AACE International Annual Meeting, Washington, DC, USA

Abstract: Nobody is pro claims. We are all claims avoiders. We all partner, whether in name or just deed. Yet claims continue to be filed and we continue to be mired in litigation or tamer, but still costly, mediation and arbitration. The purpose of this paper is to explore why our stated objective of claims avoidance does not always fit with reality. Perhaps some claims are inevitable, but the focus of this paper will be on contract language and construction management practices that function as “claims generation machines.” Their operation is not obvious, but too often effective.

Specifically, these machines are:
1. Managers who do not “believe their indicators” and don’t act to resolve delay-related issues timely.
2. Management practices that push off the resolution of time extension request to the end of the project.
3. The willingness or need for individuals at different levels in an organization who are willing to pay for items that the contract itself forbids.
4. Contract provisions that resolve disagreement over the pricing of additional work differently.
5. Contract provisions that fail to consider all of the potential costs of a change.