The Claims Management Handbook for Projects

Successfully implementing a company's claims management strategies in projects.

 

2016-03-31. 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?

 

As often is the case in claims management, and here as well, a document must be written, namely a claims management handbook. The following paragraphs discuss why this is necessary, what it should include, who should write it and who should read it.

 

What a claims management handbook should include and why it is essential for projects.

 

The framework for action for staff at a corporate strategic level is the claims & contract management mission statement. For day-to-day project business, however, it needs to be much more specific than the guidance contained in a relatively abstract claims management mission statement for a company as a whole. More specific means that the claims management handbook is for a single project:

 

  • Defines who the main contract partners in the project are (client, suppliers and contractors);
    • which contractually valid correspondence addresses have been agreed with these,
    • which goods and services they have to provide during the project (overview),
    • which deadlines have been contractually agreed,
    • which risks and opportunities the individual parties have with these main contract partners.
  • Records which version of which contract documentation is effective.
  • Defines which over-arching claims management strategy applies to the entire project (e.g. "moderate/aggressive") and
  • which claims management strategy, derived from the over-arching claims management strategy, applies to each of the main contract partners (client: e.g. "moderate/ defensive");
  • which individual claims management measures have to be implemented with regard to each of the main contract partners:
    • e.g. with regard to the client, no assertion of own claims for amounts below €5,000.00;
    • e.g. with regard to the client, claims over €5,000.00 are always registered within 72 hours of any disruption;
    • e.g. no approval of any overtime by the installation contractor directly on the building site;
    • claims always negotiated with all contract partners within 28 calendar days; subsequent conversion of these into in variation orders where possible;
  • Defines how the structural organisation of a firm's own claims management works:
  • for in-house services;
  • on the construction site;
  • both for in-house services and the construction site, the claims management tasks, competences and responsibilities for the specific project are defined and documented, clearly and redundancy-free, for the roles of:
    • Project Manager;
    • Design Engineer;
    • Procurement Manager;
    • ….;
    • Construction Site Manager;
    • Commissioning Manager;
    • Fitter;
    • The tasks, strengths and responsibilities in claims management for the concrete project are defined and documented clearly and without redundancies.
  • Defines the communication channels for claims management-relevant aspects within the project, both internally and from/to the contract partners.
  • Defines within which deadlines, in what form and by whom the firm must notify each of the main contract partners of any disruptions, deviations, changes and claims.
  • Defines within which deadlines and in which form each of the main contract partners must notify the firm of any disruptions, deviations, changes and claims.
  • Determines how and in what form any disruptions, deviations, changes and claims must be documented and where this documentation must be retained.

 

“One for all. All for one.” Committing the project team to structured claims management.

 

The claims management handbook should be kept as concise as possible, so that it is accepted and used by team members during day-to-day project business. It should not contain any management theory, but clear instructions for everyday project work. In order to make the creation of the claims management handbook time-efficient, the own firm should develop a generic template for this. This generic template should always apply to practical project work; and may only be adapted and scaled to the respective project by means of individual written comments. This adaptation of the manual can be jointly undertaken by the core project team, following the kick-off meeting. The advantage of this is that by involving the core team members in the manual creation ("adaptation"), the specific expertise of each individual specialist discipline is incorporated into the manual. 

 

“Just another useless Management Handbook?”

 

No, absolutely not. As project "ambassadors", the core team members who have co-written the claims management handbook should distribute it to the specialist groups involved in implementing the project. It should be considered a claims management user guide for project XYZ, and therefore as a tool for the operational project business, derived from the strategic corporate objectives. 

 

Note: Don't forget to promptly adapt the content should anything change within the project (strategies, deadlines, etc.), and of course to promptly distribute the revised version to the project team.

(Author: Jürgen Hahn)