OUR KNOWLEDGE. OUR KEY ISSUES.
You can find here briefings on selected topics of commercial, contract and claims management. If you should wish to know more about other specific company informations, that are not related or declared within this site, please do not hesitate to contact us.
26.10.2020. Claim Management, sales and other imponderabilities
“We’d like to embed claim management as a way of securing commercial project results in our company,” or words to that effect are what the managers of a plant manufacturing company say when once again customer projects have only achieved breakeven by the “skin of their teeth”.
“Yes, but we have to make sure that we don’t annoy our customers with claims,” says the company's sales manager. “Because they’ll never buy from us again!” This statement reflects the view that “claims” are apparently unfair.
2020-08-03. Claims management goals? Are they clear?
When asked what are the claim management goals during project implementation, most project experts are quick to respond: “to increase profits”, “to improve the project by taking an aggressive approach” and “to put disastrous projects back on track”. At first glance, all these answers appear plausible. But do these responses really represent the goals of claim management?
2020-04-20. COVID-19 pandemic: successfully dealing with project claims
- Force majeure
- Additional costs
The COVID-19 pandemic is a global phenomenon. Global both in terms of its development and the correlation between its consequences for people’s social and economic coexistence.
It’s a long time since there has been such a global phenomenon. So as a project manager, it’s easy to assign a force majeure character to the COVID pandemic and refer to the sections of the project agreement that deal with the consequences of force majeure events.
After reading these force majeure clauses, you quickly come to the conclusion that it’s safe to follow these to the letter and inform your contractual partner in the project that this is affected by force majeure and you’re therefore submitting compensation claims for any disruption suffered, as a precaution. But is this really safe?
2020-03-27. Corona crisis: Current duties regarding information and action for clients/contractors of projects
- Force Majeure
- Securing claims
- Duty to cooperate
Recent days have required all of us to develop a high level of improvisation skills and adaptability to an unprecedented situation which will change our social and economic existence for a long time to come. We see that everyone is working very hard to keep the consequences of the Corona pandemic as low as possible for their own social and professional environment. Understandably, this is almost impossible to achieve. To be able to successfully complete projects, albeit later than planned, under the current conditions, there is a need for close cooperation between the operators/clients of industrial plants and their contractors. The same applies to cooperation between subcontractors and the direct contractors of these projects.
2020-03-18. Corona-Crisis: Will there be contractual penalties/ liquidated damages for delays?
- Force Majeure
The current COVID-19 pandemic (coronavirus pandemic) is forcing everyone on a global level to adapt both private and professional habits and plans to the constantly changing conditions. Nobody has any experience of managing the consequences of planning principles that change on an hourly basis. What appear to be sensible, adequate measures for dealing with the situation, may be considered inadequate shortly thereafter, because the initial conditions have changed.
This also applies to your project work. As well as mandatory healthcare measures and those required to contain the pandemic, a second step is also necessary to ensure that people do not lose their livelihoods. Impending contractual penalties as a result of massively delayed completion dates for investment projects pose a threat.
2020-01-10. Claims Management – responsibility of Purchasers? Or maybe not?
- Corporate organisation
- Business roles
- Plant operators
"Are you a contract & claims manager? Or a lawyer?! No? But surely a purchaser?" Small talk starts this way if a contract & claims manager loses explanatory words about their day-to-day work in projects and their efforts to deal with the consequences of ambiguities in the project contract as well as minor and major disasters within the project.
2019-07-29. Claims Management -panacea or matter of course?
- No saviour
- Standard methodology
- Wrong assumption
In December 2017 GPM Deutsche Gesellschaft für Projektmanagement e.V. (“German Association for Project Management”, hereinafter: “GPM:), by its own estimation “the largest competency network of project management experts in the European continent” published on its website information on a seminar being organised by it entitled “Claims Management the Panacea”. In our article we explain why we do not consider claims management as a panacea.
2018-09-25. The burden of proof – why should retrospective claim management be avoided?
- Proof of claim
The term burden of proof sounds onerous, appearing to involve a lot of time and trouble. Burden of proof often becomes troublesome as soon as it's a matter of retrospectively substantiating a fact with verifiable reasoning in such a way that everyone will then believe this previously only alleged fact and no longer be in any doubt about the truth of this fact.
2017-09-15. Claims-Management-Strategy: Structured decision-making-process in claim situations.
- Decision making
FOR-DEC. A decision-making model from manned aviation adapted to claims management in industrial projects.
FOR-DEC is a method for structured decision-making in manned aviation developed by members of the staff of the German Aerospace Center (DLR). The FOR-DEC method aims at making decisions in a dynamic environment which are not influenced by precipitate impulses and are not based on the gut feeling of individual actors.
2017-07-19. The first claim is the most important.
- Right time to claim
- Duty to cooperate
The management of projects in special-purpose mechanical engineering always comes with substantial risks for the contractor. He will need to be circumspect in how to approach the project, as the machinery commissioned by the client tends to be highly innovative, not to mention the tight project schedule and fairly parsimonious budget. So to avoid slipping into the red, contractors must include the methods of structured contract & claim management as integral parts of the project as early as the quotation phase. The following article investigates the aspects that the contractor should certainly address.
2017-07-07. Scheduling requirements for industrial projects.
- Scheduling basics
- Forensic delay analysis
Industrial projects labour frequently under cost pressure that is merely compounded by extremely tight schedules during realisation. Project scheduling must adhere to certain structures in order to ensure that progress remains transparent for the purchaser and contractor alike. This article investigates what these structures are, and why clear scheduling procedures to manage disturbances in construction processes need to be firmly anchored in the contracts.
(This briefing has been published in German magazine "ChemieTechnik" on 2017-06-21)
2017-05-22. Business for engineers: The project contract.
- Commercial awareness
- Need to know
Complex investment projects in plant engineering / custom-built machinery commonly experience significant volatility in terms of the contractual scope. Murky technical specifications, disruptions in building processes, obstructions of construction work and additional or reduced volumes in contractual performance ordered by the Employer require careful and judicious actions on the part of everyone involved. The following article explores which actions are necessary and who must know and implement them in practice.
2016-12-03. Claims & Contract Management: Founded on good project management.
- Fair approach
- Transparent management
Claims & contract management requires teamwork in industrial projects. How must a company be organised to ensure high-quality claims & contract management as a team assignment? Excellent project management is the key to successful claims handling.
Everyone who has contributed to – not just industrial – projects will be familiar with the ‘Magic Triangle of Project Management’ and its three vertices of ‘Time’, ‘Costs’ and ‘Quality’. But what makes this triangle ‘magic’? It’s very simple: the degrees of these three vertices are individually dependent on the degrees of the other two vertices. Merely reducing the available time during which project objectives must be achieved will almost inevitably curtail the quality that can feasibly be reached in the project. Any attempt to alleviate this reduction will automatically increase the outlay needed to fulfil the project objectives, leading to greater costs. So it might not be entirely ‘magic’, but it is par for the course when working on projects.
2016-09-28. Contract Drafting for Major Plant Construction –How it's Done, published in "Process-worldwide".
- Coming to force clauses
Dear money and the darned time — Putting contracts into force — When two parties sign a contract for a major plant construction, the first step in the implementation of a project is done. But how the execution of such project contracts should ideally be designed in order to minimize risks for the subsequent project?
2016-06-30. The role of the design engineer in claims management, published in "Economic Plant".
- Commercial Awareness
- Additional Costs
Claims management involves, or so it seems at least, legal provisions and commercial issues in industrial projects. The purpose of claims management is to handle situations in project implementation where one contract party wants something that the other one does not want to give up, appropriately and in compliance with the contract. This sounds like hassle of a kind that no one really wants to deal with, particularly if one has been trained as an engineer and is responsible purely for the technical design of a system in a project. This article explains why claims management is not just a task for lawyers and commercial managers in a project and the range of tasks in claims management that are also incumbent on the technical disciplines.
2016-06-16. The Process Organisation in Claims & Contract Management (Part 2).
- Corporate Organisation
- Business processes
Our "Process Organisation in Claims & Contract Management (Part 1)" journal article published on 12.05.2016 described the organisational tools that are required during the tender-phase in order to assess the potential risks and anticipated execution complexity of a future project. Our article also dealt with the need to prepare the contract negotiations for a future project as a team, and with the structure of transferring information from the tender to the execution phase (engineering & construction/ manufacturing phase) of a project once a contract has been received. Part 2 of our previous journal article focuses on which tools are required for the process organisation of claims & contract Management during the project execution phase.
2016-05-26. “Anti-Claims-Management” vs. “Claim Management”.
- Polemic paper
- War & peace
In the past 4-5 years, the term “anti-claims-management” has attracted more and more attention from those that deal professionally with the execution of complex projects in construction, plant engineering and custom-built machinery. In the present article, the term “anti-claims-management“ is examined as to whether, in our opinion, it is well-chosen or perhaps actually counterproductive for joint projects of Employers and Contractors.
2016-05-12. The Process Organisation in Claims & Contract Management (Part 1).
- Corporate organisation
- Business processes
In May 2016, our article "Claims & Contract Management als Teamaufgaben" (“claims & contract management as Team Tasks”), published in the German trade magazine Chemietechnik ("Chemical Technology"), looked among other things at claims & contract management as an integral management system within project management that needs to be organised both in its set-up and its execution. The setting-up of claims & contract Management describes the tasks, competences and responsibilities of the various team members in the claims & contract management of the project. But what is covered by the execution workflow of claims & contract management and why is it needed? This present article gives an overview of these instruments for the tender phase of a project. Upcoming articles will look at the instruments that are used in the engineering and the engineering/manufacturing phases.
2016-04-19. The Importance of Documentation in Claims Management. Interview of Mr Jürgen Hahn, expert for claims management, conducted by SOBIS Software GmbH.
- Securing claims
The German term “Nachtragsmanagement”, better known in professional circles simply as “claims management”, has had in the past and to an extent continues to have negative connotations in the German-speaking countries. It is associated with notions of confrontation, unjustified demands, judicial conflicts and poor client relations. As a result, many companies neglect or circumvent concrete discussion or active implementation of effective claims management.
In order to provide our readers with an insight into the importance and status of documentation for efficient claims management in the execution of industrial investment projects, Mrs Annabell Degler of SOBIS Software GmbH interviewed Mr Jürgen Hahn, an expert in this area.
2016-03-31. The Claims Management Handbook for Projects.
- Pull together
Our specialist article, "The Mission Statement for Claims & Contract Management in Companies", is aimed at ensuring that all employees involved in project acquisition and execution act in a concerted and methodically uniform manner with regard to claims & contract management. It emphasises the importance of a claims & contract management mission statement for a firm. This mission statement inserts a framework for action for all staff regarding claims & contract management. The definition of a mission statement and its significance for a company is an almost metaphysical approach, which must be applied during day-to-day project business The question justifiably is raised as to how this strategic corporate mission statement can be anchored in daily project business for all those involved. And how can this still-metaphysical approach help make project execution what it should be: contractually compliant and low-risk?
2016-03-11. The Magical Triangle of Claims Management.
- Commercial awareness
- Holistic understanding
"Magical triangles" are familiar from many subject areas. Project management is no exception. Here, the interactions of the three factors, "time"; "budget”; and quality”, must be harmonised in the project. However, it is less known that this "magical triangle” can be adapted to the matter of claims management as well.
2016-02-26 The Contract Analysis. A "wild thing"?
- Method knowledge
- Contract design
- How does it work?
Besides identifying the mutual performances that the parties are obliged to render to each other, it is important to identify what rights and obligations one’s own company has under the contract and what opportunities and risks arise from them. In the case of project contracts consisting of numerous documents, this can involve varying degrees of difficulty. A structured approach can be a great help. This article describes what such an approach might look like.
2016-02-12. The risk of contract award for the Contractor.
- Claim prevention
- Contract design
- Coming into force
It is certainly more than gratifying when the work that goes into an extensive offer regarding the design, production, delivery, installation and commissioning of technical systems leads to an order being placed by the customer. However, a project can be overshadowed from the outset by obstacles arising long before the actual problems involved in the project implementation. This specialist article explains how the contractor can avoid such obstacles.
2016-01-31. The mission statement for claim and contract management in companies.
- Corporate organisation
- Menagement policy
If there was a such a person as the best claims & contract manager in the world, or better still if you could find him/her and employee him/her in your own company, what would his/her expertise be worth? Would he/she be able to single-handedly improve the commercial results of project implementation? This is rather unlikely, after all both project implementation and project initiation are team-based tasks, of which claims & contract management should be integral components. This specialist article elucidates some basic aspects of the permanent anchoring of claims & contract management in companies in the industrial project business.