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Distinctive Aspects of Delay Claims

and Variation Claims #Article33
Ilamparithi BoologaSundaraVijayan
40K Followers | Expert International Contracts |
Construction Claims | Disputes | Forensic Delay…

September 1, 2023

1.1 Delay Claims: A delay claim constitutes a formal request initiated by

one of the contractual parties within an Engineering, Procurement, and
Construction (EPC) or construction contract. This request aims to secure
either an extension of the originally stipulated project completion timeline
or equitable compensation. These claims arise as a response to unforeseen
and uncontrollable events that disrupt the project schedule, events that
the contracting party asserts are beyond their reasonable control.

1.2 Variation Claims: Variation claims encompass the formal submission of

a request by a contracting party participating in an EPC or construction
contract. The objective of this claim is to seek adequate compensation for
the additional costs incurred or modifications necessitated due to
alterations in project specifications, scope, or design. These alterations are
introduced and authorized by the client, architect, or other entities
empowered to make such decisions within the contractual framework.

2. Causal Attributes:

2.1 Delay Claims: The genesis of delay claims can be traced to external
forces that exert their influence beyond the reasonable sphere of control
of the contractor. These external forces often take the form of acts of
nature, force majeure events, unforeseen conditions at the project site, or
actions instigated by third parties. These forces collectively impede the
regular progress of the project, leading to the emergence of the delay
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claim.
 2.2 Variation Claims: Variation claims find their roots in authorized
changes that are instituted into the original project requirements. These
changes are typically introduced by authorized entities such as clients or
architects, leading to the introduction of new elements, modifications in
design, adjustments to specifications, or changes in the initially defined
scope of work within the contract.

3. Documentation and Substantiation:

3.1 Delay Claims: The successful substantiation of a delay claim hinges on

the meticulous maintenance of comprehensive documentation. This
documentation must intricately detail the specific event or circumstance
that triggered the delay, elucidate the precise manner in which the delay
impacted the project timeline, and outline the proactive mitigation
measures that were undertaken to counteract the reverberations of the
delay.

3.2 Variation Claims: To substantiate a variation claim, it is imperative to

meticulously document the nature of the introduced changes, the
deviations from the original contractual terms, and a clear breakdown of
the supplementary costs that were incurred due to these alterations.

4. Responsibilities and Entitlements:

4.1 Delay Claims: Contractors who encounter project delays that are
genuinely beyond their control are well within their rights to seek
entitlement to both an extension of the project completion timeline and
financial compensation. These entitlements are pursued in accordance
with the contractual stipulations that govern such situations.

4.2 Variation Claims: Contractors are not only obligated to execute

variations as directed by authorized entities but are equally entitled to
claim rightful compensation for the additional costs that arise as a direct
consequence of implementing these authorized changes.

5. Resolving Disputes and Quantum Assessment:

5.1 Delay Claims: The resolution of delay claims predominantly unfolds

through negotiation, mediation, or other alternative dispute resolution
mechanisms stipulated within the contract. The core objective of these
processes is to meticulously assess the merit of the claim, accurately
quantify the required extension of time, and arrive at an equitable
determination of the financial compensation attributable to the extended
timeline.

5.2 Variation Claims: Variation claims are effectively resolved by engaging

in a structured change order process, involving negotiations between the
involved contracting parties. The primary aim of these negotiations is to
arrive at a consensus regarding the quantum of compensation that is
justified to offset the financial implications arising from the authorized
alterations to project specifications, scope, or design.

6. Expert Involvement:

6.1 Delay Claims: Instances of delay claims often necessitate the expertise
of scheduling consultants or Delay analysts. These experts play a pivotal
role in assessing the precise impact of the delay on the project timeline
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 and subsequently determining the requisite adjustments needed to
account for this impact using the right methodology of delay analysis.

6.2 Variation Claims: The successful resolution of variation claims may

entail collaborating with quantity surveyors, engineers, or relevant experts.
These experts provide invaluable insights into quantifying the tangible
financial ramifications that accompany the approved changes and the
subsequent requisites to address these changes.

7. Legal Implications and Mitigation:

7.1 Delay Claims: The legal implications associated with delay claims
encompass disputes that revolve around issues of liability, responsibility,
and the legitimacy of the claim itself. The mitigation efforts in this context
involve undertaking reasonable measures to alleviate the adverse effects
of the delay and adhering meticulously to the contractual procedures that
pertain to promptly notifying the opposing party about the delay.

7.2 Variation Claims: Legal implications related to variation claims entail

negotiations concerning the precise quantum of compensation and strict
adherence to the contractual processes governing the initiation and
execution of changes. To mitigate potential conflicts, diligent and timely
notification of the alterations and their corresponding financial
implications is essential to facilitate a harmonious resolution.

Within the intricate landscape of Engineering, Procurement, and

Construction (EPC) and construction contracts, the ability to distinguish
between delay claims and variation claims is of paramount importance. A
profound comprehension of their distinct attributes empowers contractual
parties to effectively navigate challenges, manage expenses, and facilitate
the seamless progression of projects. This nuanced understanding
contributes to upholding the integrity of construction contracts and
ultimately culminates in the realization of successful project outcomes.

#constructiondisputes #constructionclaims #contractdisputes

#internationalcontracts #arbitration #ADR #EPC #contractmanagement
#projectmanagement #contractlifecycle

For Claims and Contracts management services contact

ilam@pragmaticpc.com
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 #constructionclaims #delayanalysis #SCL #Constructioncontracts
#contractmanagement #claimsmanagement #Delayclaims
#variationclaims

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OMER Civil Engr (PE), MCIArb, FICCP • 2nd 1y

Contracts Specialist at Surbana Jurong Group Pakistan. Top experience as C…

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