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4.       Claim Strategy Development


4.1. Verifying Claim Validity


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 be discarded.


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 attempts.


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" strategy tactics.


• 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 tactics.


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.



Link to section 1. Introduction

Link to section 2. Expectations

Link to section 3. Claim Development Process

Link to section 4. Claim Strategy Development

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