QDR introduces claims prevention processes during the development of the contract execution strategy. These services allow our clients to incorporate corrections, clarifications, and dispute resolution processes into the contract documents before they are executed.
QDR considers a fact that in the contracts world of projects worldwide, on average, about 25% of the investment comes from cost overruns due to changes in the order, and an additional 10% is associated to Overruns caused by claims, which is a threat to the business: we wish to influence the way the Owners (from both sides), deal with Claim processes, almost always reactive, meaning… they resolve conflicts when the Claim is already at the “table”.
At QDR we appreciate the harsh reality that budget overruns due to change orders and claims are far too common for major contracts worldwide. We are working to significantly influence the way that owners, construction managers, and contractors deal with claims, to improve contract execution for all stakeholders.
Existing processes are almost entirely reactive, focusing on resolving conflicts only after one party has experienced damages and a claim is already on the table: we prefer eminently proactive approach, understanding that the best time to avoid claims is before the contract is executed.
We apply our review process to the contract scope definition documents to identify different possible interpretations of contract terms, latent conflicts, and lack of clarity in scope or contractual responsibility. We call these claims gaps, because they are the sources of the controversies and conflicts that escalate into formal Claims.
The greatest claims risks can be identified and should be addressed before the contract is signed. For those that are not addressed, a set of formal but simple procedures can be established to ensure timely resolution. Those procedures can be incorporated into the contract or into a partnering agreement, if desired by the parties.
Our usual deliverable is a Claims Prevention and Management Plan for the contract under study, and the preparation effort depends on the complexity of the contract, the volume and availability of ad-hoc documents, and the participation of key customer personnel.
While every contract is unique, the most common and most costly sources of claims can be identified and are almost entirely preventable. Early Claims Gap Analysis is one of the highest value services that we can provide, because it allows us to resolve claims at the lowest possible cost for everyone, by preventing them before they arise.
Claims Gap Analysis Methodology (Opportunities & Risks)
The Opportunities analysis and Risk analysis, in general, is carried out to the:
- All contractual documentation (Documentary Baseline)
- Bidding and execution process (Baseline of the Bidding and Execution Process)
- Structure and contents of the resulting contract (Baseline of the Contract)
- Technical-administrative functions that the organization has arranged for the administration of the contract and the relationships that derive from it (Baseline of the Organization)
- Planning and Programming of the execution (Baseline of the Schedule)
- Structure and contents of the resulting contract (Baseline of the Contract)
Some typical Deliverables:
- Report “Opportunities, Lines of action and Recommendations to raise Potential Critical Claim Disputes”
- Rapporteurship, Facilitation of the internal workshop “Analysis of Opportunities to raise Potential Critical Disputes of Claim”.
- Report “Identification of Gaps and Action Plan for their control / mitigation”
- Rapporteurship, Facilitation of the internal workshop “Residual Risk Analysis for the gaps detected”.
The service is carried out with QDR methodologies, it takes 10 to 18 weeks to carry out the work, a term that is a function – and depends – on the complexity of the case, the volume and availability of key documents and availability of customer staff.
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