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(INT-3343) Claim Reducing Orientated Model in China

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Level: Basic
TCM Section(s):
7.7. Procurement Planning
10.3. Change Management
Venue: 2020 AACE International Conference & Expo

Abstract: In the project construction business, claims submitted by the contractor often delay the construction schedule and increase the project cost. The traditional Chinese construction contract template had been created on the basis of the completion of engineering work of the relevant project as the start point of the project. Yet, nowadays the fast-track model is general adopted in the trade of project construction, and as the consequence those types of contract templates cannot cover all activities or clearly identify responsibilities and consequences in general, and particularly when the project is difficult. In addition, the situations are made more complicated to the project management / construction parties especially when the client’s on-site project management team steps in the matters in “grey areas" of such contract mentioned above. Significant claims are filed to cover the schedule and cost impacts. Both sides spend much time and energy to test their wills and demonstrate their power in the relationship, but are then forced to settle. From the project point of view, few studies have been conducted concerning how to fundamentally reduce claims. This study examines procurement strategies and regulatory requirements to identify the best stakeholders to participate in a project. Rather than try to shift risks to the other party, further redefining the roles and responsibilities of each party is better. Considering these two points and revisiting the general contract conditions currently used in China, the revision of some special conditions is strongly recommended. The claim reducing orientated model is presented and tested using an international theme park project in China. The results demonstrate that potential claims can be significantly reduced.