Claims Are Decided Long Before They Are Filed
How contracting, contract administration and claims management form one chain in project execution.
A brownfield project on a live site is nearing completion. The contractor submits a substantial claim for extra work and delay. The project team starts searching through e-mails and meeting notes: instructions were given verbally on site, access to the work area came later than planned, but nobody recorded when or why. The discussion that follows is no longer about facts, but about who has the stronger negotiating position.
- Contracting, contract administration and claims management are one chain. A weak link early on becomes a claim later.
- Most disputes start with unclear scope and interfaces, and with changes that were instructed but never formally agreed.
- Disciplined contract administration is the best protection for both parties: the client keeps control, and a contractor with a valid case is paid sooner.
- Early alignment with construction management, engineering and field supervision creates a shared understanding of the contract, so weak points and potential claims are recognised in time.
What follows is my personal view, shaped by more than 30 years on both the contractor and the client side of industrial projects. It is not the only way to approach contracts and claims, and every project and organisation is different. But it is a pattern I have seen often enough to share.
One Chain, Three Links
In many organisations contracting, contract administration and claims management sit with different people, at different moments in the project. Contracting is done by procurement before award, administration happens on site during execution, and claims land on the desk of the project manager or legal counsel at the end. In reality they are one chain, and the outcome of a claim is largely decided by what happened in the earlier links.
It Starts in the Contract
A clear contract does not prevent changes. Projects change, especially brownfield projects in live operations. What a clear contract does is make changes manageable. In my experience the following points deserve the most attention before award:
- Scope and interfaces. Who supplies what, who arranges permits and isolations, and what is expected of the contractor when working next to operating units. Client-supplied materials and work by other contractors are frequent sources of dispute.
- Access and site conditions. Shutdown windows, access restrictions and the condition of existing assets. What happens if access is later than planned, or the existing situation differs from the drawings?
- The change mechanism. Who may instruct a change, how quickly it must be notified, and how it is priced. Rates and unit rates in the contract make pricing changes much simpler.
- Time and delay. How extensions of time are assessed, and what compensation, if any, applies to delay or disruption.
A useful distinction: a change is a variation both parties agree on, a claim is a change on which they do not (yet) agree. The contract should make it easy for most changes to stay changes.
Aligning the Project Team Before Execution
A good contract only works if the people who work with it every day understand it. The contract is often prepared by the contracts manager, while construction management, engineering and the field supervisors, who deal with the contractor daily, only get to know it once work has started. I consider this one of the most underestimated weak spots in project execution.
I therefore prefer to involve them early: in the contract strategy, in the key procedures and, at the latest, in an internal contract briefing before the contractor mobilises. The aim is a shared understanding of three things:
- The contract. What is in scope and what is not, which interfaces remain with the client, and how changes and notices work.
- The cooperation. Who may instruct the contractor, who confirms instructions in writing, and how client and contractor work together on site.
- The procedures. The change register, reporting lines, and how observations from the field reach the contract manager.
The benefit goes beyond fewer mistakes. Field supervisors and engineers are the first to see when the situation on site differs from the drawings, when access is delayed, or when work drifts outside the agreed scope. When they know what the contract says, they recognise these weak points early, and a potential claim becomes a change that can still be discussed and agreed in time. The same briefing, held jointly at the kick-off meeting, helps the contractor's team start from the same understanding.
Contract Administration: The Daily Discipline
Contract administration is often seen as paperwork. It is actually the backbone of contract management during execution. When a discussion arises, the records made at the time carry far more weight than recollections months later.
| Element | What it covers | Why it matters |
|---|---|---|
| Instructions and correspondence | Every instruction confirmed in writing, including those given verbally on site. | Shows who asked for what, and when. |
| Notices | Early warnings and formal notices within the periods set in the contract. | Missed notice periods can remove entitlement, for either party. |
| Change register | Every change from request to estimate, approval, execution and payment. | One overview of open and agreed changes, and their effect on budget and schedule. |
| Progress and planning | Baseline versus actual, with causes of delay recorded as they occur. | The basis for any discussion about time. |
| Site records | Daily reports, manpower, equipment, access and photos. | Facts that both parties can verify. |
On sites with live operations, verbal instructions are almost unavoidable. Work has to be adjusted quickly for safety or operational reasons. That is fine, as long as each instruction is confirmed in writing within an agreed period and finds its way into the change register.
From Change to Claim
Most claims are changes that got stuck somewhere along the way. The route from change to agreement is simple on paper:
| Step | Good practice |
|---|---|
| 1. Early warning | Either party raises a possible change or delay as soon as it becomes visible. |
| 2. Change request | The change is described, with the reason and the relation to the contract scope. |
| 3. Estimate | The contractor prices the effect on cost and time, preferably on contract rates. |
| 4. Agreement | Both parties agree on the content, price and time before or during execution. |
| 5. Change order | The agreed change is formalised and added to the contract value and schedule. |
The route breaks down when steps are skipped: work is carried out before the price is agreed, estimates are postponed until the end of the project, or small changes are left out of the register. Individually they seem minor. Together, at the end of a project, they form a claim that is difficult to assess and even harder to settle.
Handling a Claim
When a claim does arise, a structured approach keeps the discussion factual:
- Entitlement first. On what basis in the contract is the claim made? Without entitlement, there is no need to discuss the amount.
- Cause and effect. Is there a demonstrable link between the event and the extra cost or time? Global claims without itemisation should be sent back for substantiation.
- Quantum. Only then assess cost and time, using contract rates and the records made at the time.
- Settle at the right level. Most claims can be settled at project level, provided both sides have the facts. Escalation works best as a structured step, not as a threat.
Claims management is not adversarial by definition. A contractor with a valid case deserves fair and timely payment, and a client that handles this well builds a relationship that lasts beyond one project.
In brownfield projects on terminal sites, where live operations constrain access and planning, many changes are foreseeable. What I have found works best is handling them weekly: a short change meeting with the contractor, one shared change register and agreement on price and time while the work is still fresh. It keeps budget and schedule under control, keeps the claims list at the end of the project short, and keeps the relationship with the contractor intact.
This is how I approach it, and others may organise it differently. In my experience, though, projects where the whole team understood the contract from the start end with far fewer discussions.