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.
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