Operational framework to settle contractual claims in construction projects

Abstract

Delays are frequent and recurring in construction projects, mostly in developing countries. Several factors pertaining to modes of operation in the local construction industry contribute to construction delays. Contractual claims are integral and an important feature of construction project's life. Often times, delay-related contractual claims in construction projects is a controversial issue that often leads to disputes and conflicts between contractual parties due to its ambiguity and complexity. Literature have shown over the last decade a range of problems that have consistently resulted in construction delay and significant costs to all contractual parties due to contractual claims in almost all types of construction projects. Therefore, to achieve more time efficiency on construction projects, comprehensive studies on common problems resulting in routine delays due to contractual claims is essential. Such studies need to pinpoint the most relevant causes of delay that have to be monitored carefully in order to avoid the construction delays. Thus, this study adopted a quantitative research method. Closed ended and open ended questions were designed in the quantitative instrument for the quantitative survey. Descriptive and Principal Component Analysis was employed for data analysis to develop an operational framework for evaluating delay related claims in the South African construction industry. Findings from the analysis of data revealed several factors through which, when appropriately evaluated will reduce the incidence of contractual claim to minimum if not completely eliminated in construction project. The study has found that delay-related claims are increasingly emerging and have become the most common and costly problem in construction projects which not only deny the client timely access to the completed facility but disrupt the overall performance of the building project. This study also concludes that the contractual claims that often lead to dispute during execution of building projects are; Change order claim, Variation order claim, Cost and expense claims and Dayworks claim. Therefore, evaluation of these claims must be given careful assessment during the construction phase of a building project to forestall its attendant consequence on project performance. Inconsistencies in the operational dealings with contractual claims in the South African construction industry showed that; release of payment emanating from claims, quality of management and design coordination, nonavailability of specified materials and change in micro economic policy are the most significant in evaluation factors which must be considered in evaluation of accurate and undisputed contractual claims. This study also affirmed that the three principal components that lead to claim and dispute when combined explained 49% of the total variance. Also, it was concluded that arbitration is most appropriate for dispute due to; shortage of materials, claims in fluctuation of the materials price, physical environmental consideration, and conflict of interest among the project team. Litigation is most appropriate to resolve dispute due to access to the construction site. While mediation is most suitable for dispute due to; inability of the client to understand design, the choice of the procurement process, delay in release of payment emanating from claims, lack of prompt delivery of materials by the suppliers, interference with utility lines and extreme weather condition. Lastly, Negotiation is most suitable for dispute arisen from constructability of the design and non-availability of specified materials.