Managing Contractual Claims

Managing Contractual Claims


Claims management is a component of the Project Plan concerned with the prevention, mitigation and resolution of consultant and construction contract
claims on real property projects. Well-structured PPP contracts allow for specific consequences for specific failures by one party to meet its obligations to the other party. These failures normally give rise to a compensation event or to a breach of the PPP contract, not to a general claim for damages.

Therefore, it is possible for a party to implement a form of claim on the grounds that the other party has caused it such harm or loss that it would be impossible to obtain relief without instituting a claim for damages. It is beyond the scope of this PPP Guide to examine the legal merits of such an argument, and this section will focus on how to deal with the various forms of claims that may arise.

The first observation is that the likelihood of some form of claim increases with the degree of involvement of the government in the running and financing of the PPP. Such involvement, be it in the approval of designs, provision of ancillary infrastructure to the private partner, the obtaining of necessary consents (such as environmental approvals), the provision of land, or the provision of capital or operating grants, gives rise to risks of the government not meeting the required standards of compliance.

The role of the contract management team is thus critical in ensuring the compliance of the government and correctly documenting all events in meeting such obligations. If land is being provided, then all land-related documents and agreements must be well recorded. Similarly, obligations related to obtaining approvals must be met and documented.

Even with contract management systems working well, it is possible that some claims or notices of relief or compensation events will be received. The contract management team should have the resources and processes to permit good claims management.

Claims management allows claims and potential claims to be identified and evaluated. By assessing their merit early on, claims or potential claims can be avoided or resolved quickly. Alternatively, the decision can be made to pursue other routes to resolution. Table 7.8 is a non-exhaustive list of claims that may be raised by a private partner. This is not to say that all claims listed are legitimate claims in terms of the PPP contract. Claims that are not legitimate should be rejected by the contract management team.

• To identify and manage risk exposures on projects
• Work within a 'team' environment
• Promote established departmental resolution processes.
• Resolve claims promptly in a fair and reasonable manner, respecting the rights and obligations of both the contractor and Real Property Branch (RPB) to claims, counterclaims and assessments

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