Positive Effect of Proactive Claim Management on Reducing Conflict and Disputes

Introduction: The North American construction industry is notorious for delays, with a recent surge in disputes as reflected by the increase in their average value to $41 million in 2021 in front of courts and the lengthening of dispute resolution times​​. Reasons for Delays: Construction project delays can be attributed to various factors, including changes…

Positive Effect of Proactive Claim Management on Reducing Conflict and Disputes

Introduction:

The North American construction industry is notorious for delays, with a recent surge in disputes as reflected by the increase in their average value to $41 million in 2021 in front of courts and the lengthening of dispute resolution times​​.

Reasons for Delays:

Construction project delays can be attributed to various factors, including changes in scope, labour shortages, subcontractor challenges, environmental issues, unforeseen events, complex technical solutions, complex delivery methods and communication breakdowns​​. The impact of these issues is compounded when contractual obligations are misunderstood or misinterpreted. Research suggests that many construction projects experience delays due to contract misinterpretation, often leading to disputes that could have been avoided with clearer contractual language and understanding.

claim, proactive, dispute

Definition of Proactive Claim Management (PCM):

PCM is an anticipatory strategy involving early prediction and resolution of potential conflicts. This strategy revolves around three pillars: managing the project schedule, mitigating project risks, and ensuring clear contract interpretation. By adopting PCM, stakeholders aim to identify and resolve issues before they evolve into full-blown disputes.

dispute , claim

Analysis of PCM Impact:

PCM has a multi-faceted impact on reducing delays and conflicts:

  1. Contract Analysis and Interpretation:
    • Using advanced contract management software and legal expertise, PCM enables a deep analysis of contract terms, reducing the probability of misunderstandings that lead to disputes.
  2. Scheduling Oversight:
    • Implementing sophisticated scheduling tools incorporating critical path method (CPM) and predictive analytics can foresee and mitigate potential delays, keeping projects on track.
  3. Risk Management:
    • PCM involves the application of risk assessment methodologies and tools to identify potential issues early on. Quantitative risk analysis (QRA) and other AI-driven models can forecast possible setbacks and allow for preemptive measures.

Conclusion:

PCM offers a proactive approach to mitigating the risks of delays and disputes in construction projects. By focusing on contract interpretation, schedule management, and risk mitigation, PCM can significantly reduce the incidence and impact of conflicts. This approach leads to cost savings and enhances project delivery efficiency.

it is advised to talk with a professional consultant with experience in implementing PCM for a detailed discussion