11 minutes reading time (2255 words)

What are claims? How to write a claim that convinces your Engineer/Employer: Contractor’s prospective

Claims are an essential part of Engineering, Construction and Project Management (ECPM) day-to-day activities. It is probably impossible to imagine a project without a claim, if not, then a project wherein the claim situation never arose. Writing claim, reviewing and recommending is one of the functions of professionals in project controls and contract administration domains of ECPM industry.

History of claim writing and recommendation goes back to dates when modern legal systems came into its existence. However, till date in the ECPM industry writing claim remains challenging. Ratio to claim submission and their approval in first time are very low. One of the reasons for this is due to incomplete claim submission and following wrong methodology while writing the claims.

What is a claim?

Let us start with what is a claim? The simplest definition can be “A claim is to assert; to urge; to insist one’s own or as one’s right under the terms of contract or under law.”

However in ECPM industry the term claim is often used for either a right to additional time to complete the works or to additional payment and very often the combination of both.

Type of Claims

a. Claims for Variation

Variation claims are the simplest form of claims. Variation may result from changes in quantities, quality, level, position, dimensions, changes to sequence and timing and likewise. In the simple terms of variation is something that changes the nature of project.

In most standard forms of contract the Engineer issues variation instruction that initiate a claim for variation. Generally, Contractor and is not allowed to vary the works without a written instruction of the Engineer.

Claims for variation is the Contractor’s assertion of the compensation which he considers to be entitled for the varied works.

b. Claims for Extension of Time (EOT)

EOT claims is the second most common type of claims after variation. EOT claims are Contractor’s assertion on additional time for those delays occur to the project other than the default of the Contractor. These delays or additional time requirements may be caused by variation, exceptionally adverse weather conditions, unforeseeable shortage of availability of resources, delays attributed to Employers/Engineer such as late issue of drawings, instructions, late handover of site or work front etc.

Awarding Extension of Time prevents Employer to deduct liquidity damages or penalty from the Contractor.

One of the essential part of EOT claims are delay analysis. There are several standard methods to perform delay analysis. Please refer to our blog here to understand delay analysis methods in detail.

c. Claims for Additional Payment due to Prolongation

Additional Payment due to Prolongation relates to EOT claims. This is a sum payable to the Contractor on account of his prelims activities and sometimes overheads & profit to compensate for his over stay on the project during the extended duration. Additional Payment due to Prolongation is applicable only when the delays in the project is solely attributed to the Employer or other than the default of the Contractor.

d. Acceleration Claims

Occasionally it happens on the project that the Contractor has to deploy additional resources in order to increase the pace of the works to complete the project within lessor duration than that was planned at the initial stages of the project. Acceleration claims comes under this category. Following are the costs heads under which the Contractor may incur additional costs due to acceleration of works:

1.Extended working hours.

2.Additional mobilization cost resulted due to increase of plants and labor.

3.Loss of efficiency of the plants and equipment, and loss of productivity of labor due to deployment of additional resources.

e. Disruption Claims

Sometimes it may happen that the information was provided to the Contractor in a haphazard way, not matching to his planned sequence of work. It may also happen that the work front was released in a non-sequential manner. Variation of work may also lead to additional resources. In these cases Contractor would not be adequately compensated by measurement of the works, additional or otherwise, at unit rates in the contract will of quantities and asked for additional amount.

Disruption claims are the most complex form of claims in ECPM contracts.

f. Claims due to change in the legislation:

It is possible that the change in government legislation especially those related to taxation, may lead to changes in the cost incurred by the contractor. This may require an appropriate adjustment to the contract price and therefore may lead to a claim. While the entitlement of such claim is easy to establish, on the other side the substantiation in the terms of desired compensation can be tricky at several times. For example, say, certain change in legislation results into increase of fuel prices. In a multidisciplinary project it would be very difficult task to establish what would be the impact of increased fuel costs on the contract price.

g. Some less common type of claims

Apart from the most common type of claims mentioned above, there are several more type of claims which are not so frequent in ECPM industry and they are as below:

a.Termination Claims: this is applicable when one party prematurely terminates the contract.

b.Cost of Corrective Action Claim: this claim is made by the Employer against the Contractor due to improper design or execution of works.

c.Tort Claims or Claims under the law: such types of claim raises when the contractual relationship is totally collapsed. These types of claims are generally handled by legal professionals and is beyond the discussion of this blog.

Building block of a claim:

Now when we have understood what the claims are and their types, it is now the time to get into the grooves of writing and presenting claims.

A good claim document shall follow a natural flow of - the event that caused damage, who is responsible for the occurrence of the event and who is entitled for the compensation, what is the extent of the damage and what is the compensation sought.


Let us take a typical example to understand this. Say, the Employer failed to provide design information to the Contractor on time which delayed the project. In this example the cause of delay will be failure to provide information on time. The Employer shall be liable for this delay and the Contractor shall be entitled for a compensation against Employer fault. Damages are delay to the project and economic loss to the Contractor. At last, the compensation shall be in the form of Extension of Time and the prolongation cost and that must be substantiated.

Now let us understand each building blocks of claims in detail:


Events that may cause a raise of a claim can be:

By Employer, that may raise to a claim by the Contractor

- Change in scope

- Late Notice to proceed

- Delay in making Site available to Contractor

- Delay in release of Design Information

- Delay in Release of Provisional Sub Item

- Funding changes

- Suspension of works

- Delay in Appointing Nominated Contractor

- Delay in providing approval to Contractor

- Delay in obtaining statuary approval (in Employer scope)

- Delay in sourcing utilities (power, water etc.) for testing and commissioning

- Defective contract documents

- Instruction to accelerate

-Termination of contract

- Differing site condition

By Contractor, that may raise to a claim by Employer

- Failure to meet the serviceability requirements

- Failure to finish the project on time

-Third-party damages


Whether the Employer or the Contractor is entitled for compensation or not, it is determined by the contract or by the law. If the claim is made under the contract, it shall define the entitlement.

Let's take the example of delays. Let me refer to the clauses 8.4 of FIDIC 1999 Red Book that defines the contractor’s entitlement of Extension of Time due to delays not caused by his defaults.

8.4 Extension of Time for Completion

The Contractor shall be entitled subject to Sub-Clause 20.1 [Contractors Claims] to an extension of the Time for Completion if and to the extent that completion for the purposes of Sub-Clause 10.1 [Taking Over of the Works and Sections] is or will be delayed by any of the following causes:

(a) a Variation (unless an adjustment to the Time for Completion has been agreed under Sub-Clause 13.3 [Variation Procedure]) or other substantial change in the quantity of an item of work included in the Contract.

(b) a cause of delay giving an entitlement to Extension of Time under a Sub-Clause of these Conditions.

(c) exceptionally adverse climatic conditions.

(d) unforeseeable shortages in the availability of personnel or Goods caused by epidemic or governmental actions. or

(e) any delay, impediment or prevention caused by or attributable to the Employer, the Employer’s Personnel, or the Employer’s other Contractors on the Site.

Similarly, in other type of claims the contracts becomes tool to determining the liability and entitlement of the claim.


Damages are nothing but the losses caused by an act by one party to the other. Damages are generally the financial losses made by the Contractor or the Employer.

The categorization of damages are similar to the Causes.

Damages to the Contractor can be:

- Damages for delay

- Disruption damages

- Acceleration damages

- Damages for differing site conditions

- Damages for change in scope

- Damages for loss of profits

- Damages for termination of contract

Damages to the Employer can be:

- Liquidity damage claims

- Delay damages

- Damages for termination (contract terminated by the Contractor)


Substantiation is the last and most important element of a claim. In a claim situation, the onus is on the claimant to prove that he has suffered damages and therefore should be compensated for the same. Substantiation is providing evidences and proving that the claimant has suffered damages. Following are the document supportive evidences:

- Document Forming Contract

- Site-progress data (Daily, weekly, and/or monthly)

- Daily staff, labour and plant records

- The Contract programme

- As-built or Updarted schedule

- Request for Inspection and Approval (RFIA)

- Progress records to show activities started, in progress, on hold, suspended or completed

- Engineer Instructions and Variation Orders

- Material deliveries records

- Drawing register

- Correspondence

- Meeting minutes

- Notices to Claims

- Site memos

- Photographs with date records

- Site measurement records

- Daywork records for additional works

- Purchase orders and invoices

Art of Claims Presentation

A successful substantiation of a claim relates to how the claim is presented. While the arguments and the contents of the substantiation hold the key to a successful claim preparation, in the meantime, the importance of the presentation of the claim is equally important.

Let's discuss the key factors for making effective claims:

It should be A Stand-Alone Document: The principle is – ‘the story must be complete in itself’. All the external references, relevant facts and other related document upon which the claim is based upon must be annexed to the claim.

User-Friendly Information Flow: It would be good to write a claim keeping in mind its reader. It is always good to have executive summary that explains the brief of all the claim blocks and then a detailed narrative explaining each and every elements of the claim. They must reach its logical conclusion. If the inferences are made in a way that the argument of the claim is based upon various facts and documents, then use of a narrative that explains the relationship of events, documents, facts et cetera is desired. It is also recommended to not to assume that the reader has full knowledge of the claim situation and the project.

Writing Style: Proper use of grammar is recommended. Abbreviations must be explained. It is also recommended to use contractual terms in the way they are defined in the contract. Terms that are not common in practice must be avoided. Wherever the additional information is to be presented, but, the information may lead to a hindrance in the flow, use of annexures are recommended.

Proper Document Management: Claims must be submitted in a proper filing system. Appropriate covers and separators must be used. Table of contents is a must and pages should be numbered. Below is an example of table of contents of an Extension of Time claim:

- Front cover

- Table of Contents

- Executive summary

- Statement of claim

A. Narrative on relationship between Cause and Effect

B. Chronology of Event

C. Summary of Notice to Claim served by the Contractor

- Contract particulars

- Method of delay analysis

- Details on the Extension of Time requested

- Details on the claim for additional payment

- Appendices:

A: Contract Exhibits

B: Baseline Schedule Summary

C: Delay Analysis Schedule

D: Calculation of Additional Cost and Relevant Cost Supporting Information.

Some Additional Tips

Claim is something that is not liked by the Engineer and Employer. Writing claim, negotiating and winning is resource intensive task. Therefore, before submitting the claim the Contractor must understand the seriousness of the claim and the likely outcome.

While claim substantiation and presentation remains an important component of winning a claim. However, merely substantiation and presentation is not enough. To win a claim Contractor will require overall claimed negotiation strategy. Some claims are complicated such as Extension of Time claims that requires delay analysis. Prior to embarking on a journey of the claim, the Contractor must ensure that he has required resources to perform analysis and present the claim.

Earned Value Professional (EVP): Why you should st...
An Introduction to Delay Analysis Methods


No comments made yet. Be the first to submit a comment
Already Registered? Login Here
Wednesday, 22 September 2021
If you'd like to register, please fill in the username, password and name fields.

.... Protrain is Engineering, Construction and Project Management (ECPM) e-Learning portal. We provide an opportunity for ECPM professionals to enhance their skills and knowledge to international standards while still being away from classrooms ....