14.1 GENERAL
The General Conditions of Contract makes provision for the Contractor to claim additional payment. In all cases the Contractor should, in accordance with GCC Clause 64, notify his intention to claim within the period of time stated in the Contract, citing the clause and sub-clause under which it is being brought. Should any claim not cite the clause(s) then the Contractor is to be asked to provide this information before further action is taken. A standard reply letter to the Contractor in respect of this case is given in Appendix 7.24.1.
Should the Contractor refuse or be unable to cite the clause(s), then this is to be brought to the attention of the Engineer who should give instructions on the matter.
Should the Contractor fail to give notification within the period stated in the Contract, then the claim should not be considered. Standard reply letters in respect of this case as shown in Appendices 7.24.2 & 7.24.3 shall be issued by the Engineer accordingly.
After receiving notification, the Engineer may wish to exercise powers under the Contract to call for detailed and contemporary records to be maintained, and the ER should recommend this course of action if it appears that any special record is necessary. Standard letters concerning the discussed subject are at Appendices 7.24.4 & 7.24.5.
It is not uncommon that the Contractor submits notification to claim for time extensions and additional costs under different clauses of the GCC. To facilitate future claim assessment, it is advisable to assign separate claim numbers for time extension and cost claims and use the appropriate standard letters described above, with modifications where necessary.
14.2 HANDLING OF CLAIMS
The analysis and evaluation is to be carried out by the ER for the approval of the Engineer. Full details of the analysis and evaluation are to be presented on a separate file with copies of all supporting information such that any officer called upon to examine the claim at a later date will have all the necessary information and reasoning to hand.
The method of analysis and evaluation of a claim is a matter for professional judgement but some aspects will be common to many claims such as:
(a) Evaluation must be based on the provisions of the Contract, which are either expressed or reasonably implied. If there are no provisions, then no claim under the Contract can be considered. The Engineer may not evaluate a claim for breach of Contract that is not dealt with by the contract terms. Such claim shall be referred to LA(W), DEVB.
(b) Notification of the claim should be made within the period of time stated in the General Conditions of Contract.
(c) The Contractor must be able to support the details submitted.
(d) The Contractor should have taken all reasonable steps to mitigate the effects of the situation that gave rise to the claim.
After giving notice of a claim, the Contractor is to provide full and detailed particulars as soon as is reasonable. Should any detail not be supported by site diaries or other records maintained by the site supervisory staff, the ER shall request the Contractor to supply supporting information. If the Contractor fails to provide the full details required, the Engineer should consider writing to the Contractor setting out what in his opinion is a reasonable period of time for such submissions. If the Contractor fails to respond or provide sufficient reason, then the evaluation of the claim is to proceed as provided for in Clause 64(6) with all reasonable speed.
The ER shall contest any ill founded parts of the claim, indicating that clarification is being sought on behalf of the Engineer for the Contract and that no outright rejection is being given. Any doubt as to the validity of a claim or any part thereof may be referred to the Departmental Contract Adviser for an opinion, who may refer the matter further to LAD(W), DEVB if considered necessary. Requests for further details from the Contractor, if required, should not be used as a means of delaying the evaluation. On the other hand, whenever a Contractor makes an invalid argument, in particular when this has major cost implications, it should be rejected by the Engineer in no uncertain terms.
The reasons behind every claim are to be considered by the works division and should it appear that the circumstances giving rise to the claim could be repeated then the matter is to be reported in brief to the design division for necessary action.
The correspondences of sensitive nature related to claims should be filed in a confidential manner. The following correspondences/documents should be classified as confidential:
(i) Documents/correspondences related to the Engineer’s assessment of the claims (including claim analysis and evaluation) that are not going to be disclosed to the Contractor;
(ii) Legal advice on claims, the disclosure of which will put Government in an unfavourable position in claims negotiation;
(iii) Documents/correspondences related to extra-contractual settlement of claims, such as Controlling Officer’s recommendations to FSTB, the ceiling figure of any monetary offer and waiving of any rights etc., the disclosure of which will put Government in an unfavourable position in extra-contractual settlement of claims; and
(iv) Any other documents/correspondences the disclosure of which will put Government in an unfavourable position in claims processing.
For detailed guidance of the processing of claims, reference should be made to
“Guidelines for Claims Management and Conduct of Negotiations in Works Contracts under the Public Works Programme” prepared by DEVB (then WB) and promulgated under S for W’s memo ref. WB(W) 206/32/5(97) dated 30.12.97. Such Guidelines should be available from the Departmental Contract Advisor. The Guidelines provide guidance for claims
management with the objective of resolving contractual claims efficiently without delay. It is imperative to note that all claim notifications received from the Contractor should be duly logged chronologically in a claims register maintained on site and in the head office in accordance with paragraph 5.2.1.3 of the Guidelines.
14.3 AUTHORITY TO SETTLE CLAIMS
It should be noted that the certification of claims should be made under the relevant clauses in the GCC and should not be confused with valuing variations. The standard letter at Appendix 7.25 may be issued for certifying claims made under the Contract.
It should be noted that, pursuant to SPR Appendix V(B), the officer who is delegated the authority by the Controlling Officer may authorise increase in contract sum within certain limit to meet the certified claims or arbitration awards. No such limit is imposed on the Controlling Officer himself, subject to the limit of approved project estimate not being exceeded. As a related issue, reference should also be made to WBTC Nos. 20/2000 &
16/2002, the Brief for consultancy agreements (for consultant-managed contracts) and relevant departmental circulars (for in-house contracts) regarding constraints on duties and powers of the Engineer, and the requirement of reports and response time limits.
On the other hand, in accordance with Item E.I of SPR Appendix V(B), where a claim to be settled is not certified by the Engineer and is not the subject of an arbitration award or an award of the court, the limit of delegated authority of the Controlling Officer to approve such payments is an accumulated value up to $3 million and must be based on the advice of D of J or LAD(W), DEVB. If the limit has been exceeded, a recommendation has to be made to PSTsy to approve such a payment. In considering the settlement of claims not certified by the Engineer, the chance of success of the Employer’s case shall be taken into consideration, even in cases where the chance is considered small.