The Claims Management Team should begin by reviewing the circumstances of each claim.
An objective analysis should be performed to ensure the validity of the claim under
the contract, the reasonableness of the cost and schedule considerations requested
by Company, the rationale given to the Client in defense of the claim, and the rationale
put forward by the client for denying the claim. The validity of each claim must
be re-confirmed prior to the development of a strategy for resolution.
Once the validity of each claim has been confirmed, a strategy should be prepared
for achieving a satisfactory resolution with the customer. The preferred approach
to claims resolution will usually be dictated by the perceived reasonableness of
the Client in relation to the negotiations that have taken place and the settlement
options available to Company under the contract or outside the contract.
Development of the claim may take several months or more depending on the complexity
of the claim. Strategies that could have a long term adverse effect on our future
Client relationship should be reviewed with the Company’s senior management and their
approval must be obtained before proceeding with their implementation.
4.2. Claims Resolution Strategy Process
The Claims Resolution Strategy Process provides a methodology to objectively develop
a claim strategy development, to gain management input and approval, and to report
strategy plans and progress. A broad range of strategies should initially be considered.
Strategies should be tested for validity and risks. Strategies that are not viable,
are too risky or are not acceptable to Company’s long term business interests should
Major elements to direct thinking and to capture ideas are as follows:
• Claim Strategy Classifications- "Stay the Course", "Influence", "Defend", and
"Contractual Dispute Resolution" are the major claim strategy category classifications.
• Claim Summary Strategy Table- provides a high level summary of strategies under
each major strategy category.
• Strategy Table- provides a summary of the strategies, actions, events and milestones
that trigger escalation of the Claim.
• Planning Table- is a working tool to help build what the strategies and actions
are, what triggers action, and what preparation activities are required.
• Key Events Table- is a working tool to help identify key milestone and events which
may trigger claim escalation.
Development of these tables from the Key Events Table to the Claim Summary Table
provides a valuable methodology for summarizing strategies and for reviewing issues
with the Company’s senior management.
4.3. Identify Milestones and Triggers
The first step in the process is to identify the major milestones and triggers (dates,
actions or activities) that could cause Company or the Client to escalate action.
4.4. Identify Individual and Group Strategies
The second step in the process is to identify individual strategies and group them
under the following major strategy categories as shown in the Planning Table:
4.4.1. "Stay the Course"- The first category is called "Stay the Course". Under this
Strategy, Company would continue to pursue the claim within the framework of the
contract between Company and the Client and normally actions are with the Client's
Project Team. This would include the preparation of the additional claims documentation/
arguments in an attempt to cause a reversal of the client's previous position, the
use of outside claims specialists, and in the final analysis arbitration or mediation
under the terms of the contract. The selection of one of these options is heavily
influenced by the tone of the client's response to our previous claim resolution
4.4.2. "Influence"- The second category is called "Influence". Strategies placed
in this category are those which are deemed to directly or indirectly cause the Client
to act in a favorable manner to our claim. In this strategy, Company will attempt
to resolve the matter through the normal remedies of the contract or through the
Client's Project Team.
4.4.3. "Defend"- The third category is called "Defend". Strategies placed in this
category are those which are designed to defend against a counter action by the client.
This could include implementation of a plan for gaining the release of bonds or letters
of credit, suspension of follow-up work and warranty obligations, defending against
counterclaims, limiting the size of liquidated damage claims or preparation of a
legal action claiming default or breach of the contract by the client.
4.4.4. "Contractual Dispute Resolution"- The fourth and final category is called
"Contractual Dispute Resolution". Strategies placed in this category are considered
serious enough to warrant the risk of forfeiture of future business opportunities
with this client. Examples of actions in this category include stopping or slowing
down the work, contract termination, litigation, application of liens against the
client's property, the filing of writs, implementing counterclaims or suspension
of work on other projects for this client if legally acceptable.
4.5. Identify Major Event Triggers and Tactics
The is the identification of the tactics or actions which would be initiated for
each individual strategy for the following Major Event Triggers:
• Reasonable Negotiations or Favorable Outcome Likely- Company should believe that
the Client will act reasonably to resolve the claim. The tactics will generally be
characterized as continuing to progress normal dispute resolution strategies or "Stay
the Course" strategies; however, Company will likely begin internal preparation activities
to initiate "Influencing", "Defending" and possibly "Contractual Dispute Resolution"
• Difficult Negotiations or Unfavorable Outcome Possible- The Client continues to
delay or to refute our claim submissions to the point that we believe it is unlikely
that the Client will act reasonably unless we escalate our claim activities. Implementation
of "Influencing" and "Defending" strategy tactics is underway. Preparation activities
are underway to implement "Contractual Dispute Resolution" strategy tactics.
• Failed Negotiations or Unfavorable Outcome Certain- The Client has failed to negotiate
or refuses to act fairly with Company. Therefore Company has no other choice but
to escalate the claim effort which may encompass litigation, counter-claim, and other
In addition an internal Company confidential presentation document should be developed
that communicates a consistent story, talking points and strategies for Company Executives
to use in their communications with internal and external parties.