6.5.4 Claims management
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Claims may, theoretically, be submitted during the execution of the Contract by the Contractor or Contracting Authority, however the most common case is that of the submission of a claim for additional remuneration by the Contractor of a public work project due to the fact that the actual conditions of project execution were found to be different than those described in the Tender Documents - Terms of Reference. A characteristic example is the case in which the Tender Documents and the Contract provided for the excavation and removal by the Contractor of e.g., 600m3 of rock while in practice the under soil was exceptionally rocky and required the use of special machinery for the excavation and removal of 120.000m3 of rock.
The list below includes a presentation of the main reasons for which the Contractor may raise a claim for additional remuneration6 [ The Contractor is entitled to make a claim for the extension of the term of completion of the Project that he has undertaken through the contract when for reasons that are not due to his performance and working method the completion of the Project within the time prescribed in the contract becomes impossible. However, the claim for extension is considered and presented in this Guide as a request to change the contractual term of execution of the Project and thereby it is covered in Paragraph 6.5.1. ].
Checklist 6-5: Main reasons for which the Contractor may raise claim for additional remuneration
For the Contractor to be able to claim additional payment he is required to provide the Engineer with a notice of his intention, with copy to the Contracting Authority, within 28 days (unless otherwise specified in the contract) from the moment of the first occurrence of the event on which such claim is based. Furthermore, from that moment on the Contractor is required to keep continuously all of the evidence that are necessary to document the claim that he wishes to submit subsequently.
The Engineer immediately following the notice of the Contractor and without this meaning that the Contracting Authority acknowledges its responsibility, is required to inspect the evidence that the Contractor is collecting and maintains and possibly indicate additional information that must be kept and submitted as evidence and documentation material of the claim. Within a period of 28 days from the moment that the Contractor gave notice to the Engineer (or within a different equally reasonable period to be agreed between Contractor and Engineer) the Contractor is required to submit a Report with fully documented evidence for the amount claimed and for the basis of his claim. If the event on which the claim was based has subsequent results, then this Report shall be considered as interim and the Contractor is required to submit further interim reports which will include a summation of the amounts claimed and any additional documentation to support the claim. In these cases, the Final Report must be submitted to the Engineer within 28 days after the end of the event that caused the claim.
The Project Manager (or Engineer in the case of public works) is not required to examine the claim of the Contractor when such claim has not been submitted pursuant to the terms of the Contract. However, should he deem that the specific claim must be examined, the final amount which may be approved for the Contractor must be less than the amount which would have resulted if the Contractor had followed what is set forth in the contract and therefore the Contracting Authority had promptly proceeded with actions to reduce its costs.
The claims must be examined by the competent physical persons, roles or bodies as these are defined in the Regulations which every Contracting Authority is required to abide by. In the case where the Contracting Authority is a Ministry, Department or Service that belongs to a Ministry or Independent Office or Independent Service of the Republic of Cyprus, the decisions on claims are made depending on the total of the claim by the same bodies who make decisions related with the requests for modifications of the contract, that is, the Project Manager (or the Engineer), Departmental Committee for Variations and Claims and Central Committee for Variations and Claims (Regulation 115/2004).
The claim of the Contractor may be accepted in whole as long as he has submitted sufficient evidence of justification. In this case he is entitled to include the approved amount in any of his interim payments, which is certified by the Project Manager (or the Engineer). In a case where the documents are not sufficient to document the claim of the Contractor in its entirety, the Project Manager (or the Engineer) is obliged to evaluate the part of the claim that is substantiated by the evidence submitted and certify the amount due, informing the Contractor either of the final rejection of the entire or other part of the claim or to submit further evidence in order to evaluate it.
If the Contractor submits complete evidence of justification and the Project Manager (or the Engineer):
or if the Contractor submits evidence which, even incomplete, may substantiate a certain payment against but the Project Manager (or the Engineer) omits to determine this payment within a reasonable time,
then the Contractor is entitled to interest (from the lapse of the reasonable period) for the amount which will finally be accepted that he is entitled to receive.
Indicative cases in which the Contracting Authority may have a claim against the Contractor of a public work are the following:
A common case in which the Contracting Authority makes a claim against a Supplier is the case where the Acceptance Committee for specific products considers that the products show deviations from the specifications which however are not essential in order to affect their use, and proposes the acceptance of the supplies at a reduced price. In such a case the Acceptance Committee must record the events and its proposal for the acceptance of the products at a reduced price in a special Report which it must refer to the competent body (pursuant to the Regulations applicable for decisions on claims per type of Contracting Authority) for the final decision. The decision of the competent Body must be notified to the Acceptance Committee which will then have to issue, depending on the decision, the Acceptance or Rejection Certificate.
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