Project claims are request for additional remuneration / compensation due to additional and not expected costs. They are commonplace in all types of projects, since the complexity of the reality often exceeds that which has been contracted. In large projects, it is their size that gives them a strategic aspect. According to Arcadis, the average claim is 30.7M$ US in 2020; and their resolution takes an average of 15 months. That’s why claims are so feared.
Claims are often associated with bad reputation, damaged customer relationship, loss of future turnover, litigation / arbitration, exorbitant costs for the lawyer and the claimant, monstrous work that has to be done additionally by the project manager or the design engineer on top of their works.
Often, the strategic aspect of a claim is only understood by very experienced project managers. Strategic, because what cannot be avoided, must be prepared with great care in order not to suffer but on the contrary to proactively manage it.
Indeed, a well-designed reporting documentation can not only help to build a better claim memorandum, but above all it allows to detect problems upstream in order to solve them when they are still cheap and easy to solve. In fact, all studies prove that there is a real correlation between early problem detection and a project delivered within the costs, quality and schedule.
By taking the claim aspect into account early on in your reporting process, you take control of the profitability of your project. It’s not about making claims for any topic, but about being ready just in case; and especially it is about detecting the stumbling blocks early on in order to solve them as soon as possible.