Recent studies indicate that approximately 70-85% of major public infrastructure projects experience claims during their lifecycle, often averaging 10-25% of the original contract value. That’s why Construction Managers must be equipped to manage contractor claims effectively. It can be the difference between a successful public works project and one that spirals into delays and cost overruns.
Agencies who embrace claims management best practices can expect to see tangible benefits beyond effective claims resolution. This translates into more PROactivity and less reactivity within project teams, where they are better able to develop institutional expertise that will undoubtedly carry forward into future projects.
Contractors will also learn to expect fair, timely, and well-documented responses, which often leads to more reasonable claims and more collaborative problem-solving. Perhaps most importantly, this systematic approach helps agencies deliver infrastructure projects more efficiently and cost-effectively, which ultimately serves their communities better through an improved stewardship of public resources.
Continue reading to learn how you can better respond to and manage claims as they arise on your Capital Improvements Projects with confidence, efficiency, and fairness.
Understanding the Landscape
Construction claims arise in various forms throughout a project’s lifecycle—from scope changes and unforeseen site conditions to schedule delays and payment disputes. Each type of claim presents unique challenges within the legal and administrative framework that governs each public works contract.
And, while many seasoned construction managers have developed their own unique approaches to claims management, there are still many other less-experienced public agency professionals who find themselves navigating the same complex situations without the benefit of an extensive claims management background.
But, no matter where you are in the process, success in handling these claims begins with understanding a few foundational elements: an understanding of the technical aspects of each claim as well as how to implement systematic approaches to documentation, communication, and resolution.
To address these challenges effectively, we developed a comprehensive guideline of proven strategies that public agencies can immediately put into practice. The ultimate goal being to better manage claims and protect public interests via the following 6 objectives:
Essential Strategies for Success
Let's look closely at specific strategies that will help you expand on the outlined Claims Management objectives.
1. Know Your Contract Documents
The contract documents are your roadmap for claims management. Before addressing any claim, thoroughly understand the contractual framework governing your project. This knowledge forms the foundation for all subsequent actions and decisions.
Understanding Contract Requirements
Review and understand your contract documents (Specifications, Plans, Standard Specifications, Permits, and the order of precedence, etc.):
Investigating Claim-Specific Provisions
When receiving a claim, immediately identify and review all relevant contract sections.
For example, for discrepancies between plans and specifications, review:
For delay claims and time extensions:
This thorough understanding of contract requirements provides the framework needed for the next step: objective analysis of claims.
2. Ensure Objective Analysis with References
Building on your knowledge of the contract documents, what you “think” a claim is about is NOT as important as the actual contractor documentation. These rarely align perfectly, especially when issues have been discussed extensively beforehand, contractors lack experience in formal claim writing, or key points from field discussions are omitted.
Follow these steps for effective claim evaluation:
Involving legal counsel early is crucial - they provide valuable insights and negotiation strategies that can lead to early resolution. With a clear understanding of both contract requirements and claim specifics, establishing effective communication becomes the next critical step.
3. Establish Clear Communication Channels
From the onset, it is important to be proactive. Make communication channels a key topic in your preconstruction meeting agenda. This foundational step fosters transparency and collaboration while setting clear expectations for dispute notification.
Your project specifications should outline the dispute resolution process. At minimum, reference a standard specification in your project contract. Even without formal procedures, establish that contractors must notify the construction manager promptly in writing when potential disputes arise.
As the project progresses, this proactive approach helps avoid costly surprises and sets the foundation for efficient claim resolution. Clear communication must be supported by comprehensive documentation.
4. Implement Robust Document Control
With clear communication channels established, meticulous documentation and record-keeping become paramount to successfully managing claims. Key documents that should be maintained include:
Most claims relate to previously discussed issues, so ensure your weekly meeting minutes contain sufficient detail. While daily inspection reports are ideal, document every site visit by owners, engineers, or construction managers.
Track quantities either through daily totals of bid items or monthly schedule of values. This helps reconstruct the sequence of events when addressing claims.
While BridgeDoc offers a comprehensive framework for project documentation, even basic procedures and templates can effectively manage risk. The key is organizing documents so they’re easily retrievable when needed. With proper documentation in place, the next crucial step is ensuring timely responses to claims.
5. Maintain Prompt Response Protocols
Timely and professional responses are crucial when addressing contractor claims. While thorough investigation is necessary, always comply with contract-specified timelines, promptly acknowledge receipt of claims, keep contractors informed of evaluation progress, and aim for quick resolution when possible.
Early resolution often leads to better outcomes, as you typically have more leverage earlier in the project. This approach also helps maintain positive working relationships and prevents the accumulation of multiple unresolved issues. While addressing current claims promptly is essential, learning from each experience ensures continuous improvement in claims management.
6. Implement Continuous Learning Practices
Historical context is vital for effective claims management. Focus your assessment on project-specific experiences, broader organizational patterns, contractor relationships, and team performance metrics.
Understanding Contractor Dynamics
Review your history with each contractor to inform your approach. Document patterns in previous claim resolutions, evaluate their good faith in past negotiations, maintain professional relationships while protecting agency interests, and keep responses objective and grounded in contract requirements.
Forward-Looking Analysis
Assess how current claims might affect future work by identifying potential cascading effects on upcoming phases, looking for patterns in site conditions or design issues, adjusting specifications proactively when patterns emerge, and documenting lessons for similar future projects.
Internal Capability Assessment
Regularly evaluate your team’s strengths and weaknesses in technical expertise, documentation practices, response timeliness, and design team support. Use this assessment to identify training needs, improve internal processes, determine when to seek external support, and enhance coordination with design teams.
Systematic Learning Process
Implement regular after-action reviews that identify recurring issues, document successful resolution strategies, capture opportunities for process improvement, and inform updates to contract language, specification requirements, project management procedures, and risk management strategies.
Building Long-Term Success
Success in managing contractor claims isn’t just about resolving individual disputes—it’s about building a robust framework that protects public interests while maintaining productive relationships with contractors. The six strategies outlined above, work together to create a comprehensive approach to claims management. When properly implemented, these practices help agencies reduce claim frequency, expedite resolutions, and maintain better control over project budgets and schedules.