Claims Administration
Claims administration is the process of documenting, processing, monitoring, and resolving contested changes, disputes, or requests for compensation between the buyer and seller during contract performance.
Explanation
A claim (also called a dispute or appeal) arises when the buyer and seller cannot agree on a change or compensation for contract-related issues. Claims may result from disagreements about scope interpretation, change order pricing, schedule impacts, defective specifications, or other contractual matters. Effective claims administration prevents disputes from escalating and damaging the buyer-seller relationship.
The claims administration process typically follows the dispute resolution procedure specified in the contract. This usually starts with negotiation between the parties, then escalates to mediation, arbitration, or litigation if negotiation fails. Throughout the process, thorough documentation is essential, including the claim description, supporting evidence, timeline, and all correspondence.
Claims administration is a key activity within Control Procurements. The project manager should work proactively to prevent claims by maintaining clear communication, documenting all agreements and changes, and addressing issues early before they become formal disputes. When claims do arise, they should be handled promptly and professionally.
Key Points
- •Handles contested changes, disputes, and compensation requests
- •Follows the dispute resolution procedure defined in the contract
- •Escalation path: negotiation, mediation, arbitration, litigation
- •Part of Control Procurements; requires thorough documentation
Exam Tip
Claims are processed according to the contract terms. The preferred resolution order is negotiation first, then mediation, then arbitration, then litigation. Documentation is critical throughout.
Frequently Asked Questions
Related Topics
Control Procurements
Control Procurements is the process of managing procurement relationships, monitoring contract performance, making changes and corrections as appropriate, and closing out contracts.
Procurement Negotiations
Procurement negotiations are discussions between the buyer and seller aimed at reaching a mutually acceptable agreement on all terms and conditions of the contract before signing.
Procurement Management Plan
The procurement management plan is a component of the project management plan that describes how a project team will acquire goods and services from outside the performing organization.
Most-studied PMP concepts
High-yield topics our learners drill most before exam day.
Burndown Chart
A Burndown Chart is a graphical representation of work remaining versus time in a Sprint or release, showing whether the team is on track to complete the planned work.
Resource Leveling
Resource leveling is a resource optimization technique in which adjustments are made to the project schedule to keep resource usage at or below a defined limit, often resulting in a longer project duration.
Risk Register
The risk register is a project document that records the details of individual project risks, including their identification, analysis results, response plans, and current status.
Stakeholder Mapping
Stakeholder mapping is the visual representation of stakeholder relationships, influence, interest, or other attributes using grids, matrices, or diagrams to support analysis and engagement planning.
Relative Estimation
Relative Estimation is an agile technique where work items are sized in comparison to each other rather than in absolute units like hours or days, providing faster and more accurate estimates.
Cost Performance Index (CPI)
Cost Performance Index (CPI) is an EVM efficiency metric that measures cost performance as the ratio of earned value to actual cost: CPI = EV / AC.
Schedule Performance Index (SPI)
Schedule Performance Index (SPI) is an EVM efficiency metric that measures schedule performance as the ratio of earned value to planned value: SPI = EV / PV.
Earned Value Management (EVM)
Earned Value Management (EVM) is a methodology that integrates scope, schedule, and cost data to assess project performance and progress objectively.
Power/Influence Grid
The power/influence grid is a stakeholder classification model that groups stakeholders based on their level of authority (power) and their active involvement or ability to affect the project (influence).
Part of
Procurement Management
Test your knowledge
Practice scenario-based questions on this topic with detailed explanations.