Claim In Construction Industry

CHAPTER – 1: INTRODUCTION

1.0 Background:

India is a developing country. The construction sector of India is growing rapidly. There are many ongoing Infrastructure projects in India of Billions of Dollars where the delay or stoppage of work due to any reason cannot be acceptable. In this rapidly growing construction industry many times claims arise between client and contractors.

Construction Claim can be defined as a request by either party to the contract, usually the Contractor, for compensation for damages caused by failure of the other party to fulfill his part of obligations as specified in the contract. The compensation is usually in the form of the additional payment or an extension of time (EOT).

Construction claims are measured

On the other hand, client’s understandable disappointment at being enforced to release large additional payments beyond the sums initially budgeted and assumed to be sufficient, damages the relation with the contractor. A survey study by Sample at al. (1994) concludes that the most common causes are increases in scopes, weather conditions, restricted access, and acceleration, in addition to the above causes Adrian (1993) indicated relatively low profitability of the construction industry, changing of product delivery, and other factors like; inadequate bid information, faulty or late owner-supplied equipment or material, inferior quality of drawings or specifications, and stop-and-go operations. Based on 91 projects, concluded that the most crucial sources of claims are unclear or inadequate documentation, late instructions, variations initiated by the employer/engineer, measurement related issues, inclement weather, and time extension assessment. The difference between how firms manage these claims, however, can impact their profitability both in the short term and the long term. Consequently, a good background with efficient knowledge is essential during both interpretation and application of Claim methodology in order to reach satisfying results, that is, knowledge is defined as

Some authors interchange the two terms, others point to conceptual differences, even if they are blurred. However, 'Conflict' and 'dispute' are two distinct notions. Conflict, it is proposed, exists wherever there is incompatibility of interest, and therefore is pandemic. Conflict can be managed, possibly to the extent of preventing a dispute resulting from the conflict. Dispute is associated with distinct justifiable issues. Generally the process of dispute resolution lends itself to third party intervention. It is concluded that effective management of conflicts and disputes would be furthered by separating the two fields, and particularly by applying a more stringent structuring (Peter, Michael and Edward, 1998).

John Burton (1990) has suggested that Disputes are short-term disagreements that are relatively easy to resolve. Burton has referred the conflicts as Long-term, deep-rooted problems that involve seemingly non-negotiable issues and are resistant to resolution of the problem.

Douglas Yarn (1999) has observed that conflict is a state rather than a process. People who have opposing interests, values, or needs are in the state of conflict, which may be manifest, in which case it is brought forward in the form of a dispute which cannot exist without a conflict.

As per Costantino and Merchant (1996), Conflict is the process of expressing dissatisfaction, disagreement, or unmet expressions. Conflict is ongoing, intangible