Why some claims are rejected?
In the construction industry, even the best-planned projects can face setbacks. Stoppages, for example, can generate significant losses for contractors. Submitting a well-founded claim is crucial to obtaining fair compensation, but why are some claims rejected?
The importance of well-structured claims
Many claims are rejected due to poor documentation. Contractors and clients often view claims negatively, which can lead to a lack of preparation or avoidance altogether. However, a well-managed claim can prevent costly arbitration and ensure adequate compensation.
The four essential elements of a successful claim
A solid claim is based on four fundamental pillars:
- Cause: The specific event that originated the claim, such as the late delivery of plans.
- Effect: How the event impacted the claimant, in terms of time and/or additional costs.
- Entitlement: The contractual or legal basis that supports the right to compensation.
- Substantiation: Documentary evidence that supports the cause, effect, and entitlement to the claim.
Clear writing and objective management
A claim must be clear and concise, avoiding legal jargon and facilitating its understanding. The presentation and defense of the claim often benefits from the participation of an external consultant, who brings objectivity and experience in dispute management.
Conclusion
Claims are an essential tool to protect the interests of contractors in the construction industry. A well-prepared claim, based on the four essential elements and presented clearly, significantly increases the chances of success and avoids costly arbitration.
About Fractal - Ingenieros & Abogados
Fractal—Ingenieros & Abogados is a boutique firm that specializes in Project Management and Construction Law. It is focused exclusively on the Construction Industry.
Our comprehensive services include independent consultancy and advice on claims, contracts, risks, integrity, and project control. We cater to various clients, including law firms, claims consultants, commercial and multilateral banks, fiduciary and insurance companies, arbitration and adjudication courts, dispute boards, project owners, equipment and materials suppliers, national and foreign investors, and engineering and construction companies.