Changes and Claims Avoidance
Most of us have heard of the saying, “The only thing in this universe that does not change is the word change itself”.In the realm of projects, change shall mean anything that deviates from the originally agreed scope, terms and condition of the contract. It is inherent, hard to avoid and sometimes unpredictable, therefore it is best that in all stages of the job it is well managed. To this regard, management shall mean setting up adequate processes and infrastructure, so that all stakeholders can properly identify what qualifies as a change (at this stage it becomes a change order). Then agree on the entitlement to how much compensation in terms of money and schedule is required to be reimbursed to the affected party. So, what happens to the perceived changes that falls through the cracks in the change management process? As well as those items that concerned parties couldn’t agree on entitlement? This is where Claims come into the picture! Aside from disputed items in the change order, claims also happens if an event outside the control and influence of a certain party caused delay or disruption to a task(s) resulting in longer or shift in activities. But why Claims Avoidance vs just managing it? The simple answer is because in most cases when claim is initiated it begins to sever the good contractor – client relationship. Also, an improperly prepared claim package tends to waste a lot of valuable time on both sides of the fence in reviews and further disputes. Hence, it is beneficial to all parties to focus instead on empowering the Change Management process. So how do you accomplish this? Through a well-defined design package, high level of accuracy on quantities, adequate specification and creation of realistic schedule where all risks and constraints are accounted for. These are good steps but too broad and general and most times hard to implement and validate on when the desired criteria have been reached. So, everyone must do due diligence from the early stages of the project that the right talent to create a robust change management plan is in place and all stakeholders are adept to it. But remember, no matter how solid the contract language, scope, terms and conditions, there will be items that would be disputed because of difference in interpretations. Well, at least this greatly reduced several unnecessary claim documents to be reviewed!!! As a final thought, the project execution phase shall be the judge on how strong is the change management process. Change is imminent and disputes towards its interpretation will always happen. It will probably come down to how strong the partnership and how good of a relationship between parties exist. As well as how it will endure the test of back and forth change orders and disputes. But perhaps the project cannot attain a state of good relationship unless all processes are set up adequately where it is transparent, with no hidden agendas, and is geared towards being fair and reasonable.Please comment below. thanks www.thinkhighlevel.com |
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