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

The Engineer fails to promptly deliver to the Contractor drawings that are necessary to start the construction work or critical instructions for the execution thereof resulting in causing delays and cost to the Contractor;
The requirements of the Contracting Authority contained errors which were impossible to identify earlier than the time when the Contractor actually identified them;
The Contracting Authority cannot ensure access for the Contractor to the site where he will implement the Project  within the period or on the date specified in the Contract;
The Contractor is dealing with physical conditions that were impossible to anticipate during the drafting of the Tender Documents and the Contract;
The Contractor of a public work project locates, during the execution of excavations, fossils, coins, documents or other items of geological or archaeological interest and is called upon by the Engineer to handle the issue and to protect the findings from damage
The testing of materials, mechanical equipment and works of the Contractor of a public work project is delayed due to liability of the Contracting Authority;
The Engineer instructs the Contractor to suspend the progress of the Project being executed;
The Contracting Authority removes work volume from the Contract scope of the Contractor with a view to implement them by own means or another Economic Operator;
The Contracting Authority delays with the check of completion of the contract and in fact, of a public work project;
The Contractor of a public work project is called upon by the Engineer to investigate the cause of a defect for which he is not responsible;
A Law, Regulation or other Administrative Act is promulgated or amended resulting in causing an increase in the expenses of the Contractor for the execution of the Contract;
The public work or any materials or mechanical equipment on or near the construction site or on the way to the construction site suffer destruction or damage due to manifestation of one of the special risks (as these are set forth in the model contracts for public works);
The public work or any part thereof or the mechanical equipment or materials that will be incorporated in it, suffer loss or damage which is due to the special risks of the Contracting Authority or combined with other risks. The Contractor restores this damage or loss following the instruction of the Engineer and claims the amount for such restoration;
The Contracting Authority fails to fulfil its obligations as these are set forth related with the insurance for damages to people and property (case of a public work project);
Following the issue of the Acceptance Letter conditions arise beyond the control of the Contractor and the Contracting Authority, which render impossible or illegal for any one or for both parties the fulfilment of their contractual obligations. In this case the Contractor may claim his payment for the work that has been executed.
The Contract is terminated due to liability of the Contracting Authority and the Contractor raises a claim for an additional amount covering the loss or damage to the Contractor due to the termination of the Contract.
The Contractor of a public work project suspends his works or lowers the rate of the works and incurs additional expenses (provided there is a relative provision in the specific contract)


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):

Fails to examine the claim within a reasonable period and include the amount in an interim payment certificate which will be considered as due to the Contractor;
Fails to notify, within a reasonable period, the Contractor about the additional evidence that must be submitted;

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:

The Contractor fails to effect or to maintain the effect of insurance for damages to people or property (manufacturer's risk) provisioned in the Contract and the Contracting Authority undertakes to do it itself by paying the required premium. The Contracting Authority can then claim this amount from the Contractor.
The Contracting Authority incurs expenses in cases of rechecking of the materials and mechanical equipment of the Contractor that were found to have defects or not to comply with the specifications and requirements of the Contract. The Contracting Authority may claim such expenses from the Contractor, which means that it will require that these are deducted from the amounts owed to the Contractor.

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.

© 2007 Republic of Cyprus, Treasury of the Republic, Public Procurement Directorate
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