Claims and Management under FIDIC Standards
Claims management plays a vital role in preserving project budgets, schedules, and contractual balance in the intricate world of international construction. The International Federation of Consulting Engineers created the FIDIC Conditions of Contract, which offer a thorough and methodical approach to managing claims with a focus on prompt notification, documentation, and unbiased resolution.
The FIDIC contracts’ structured claim management process is covered in detail in this blog, along with important requirements, dispute procedures, benefits and drawbacks, typical claim situations, difficulties, and tactics for effectively avoiding and resolving claims.
What is a Claim Under FIDIC?
A formal request for relief, compensation, or entitlement made by one party to the other due to a situation or event that impacts the performance of contractual obligations is known as a claim under the FIDIC Conditions of Contract. This might entail:
Extra time to finish the project (also known as an extension of time, or EOT)
Extra money to cover unanticipated expenses
Depending on the event’s impact and nature, either or both
FIDIC contracts specify precise procedures for the notification, validation, and settlement of claims (specifically in Clause 20 of the 1999 edition and Clause 20 & 21 in the 2017 edition).
Types of Claims Under FIDIC
FIDIC broadly categorizes claims into two primary types:
1. Contractor’s Claim
These are allegations made by the contractor, typically as a result of:
Postpone the project’s advancement
Raise the cost of construction
Impose extra requirements that weren’t anticipated at the time of tendering
Common Grounds for Contractor’s Claims:
| Cause | Relevant FIDIC Clause | Typical Claim |
|---|---|---|
| Employer’s delay or default | Clause 8.4, 1.9, 13.1 | Extension of Time (EOT), cost for idle resources |
| Unforeseeable physical conditions | Clause 4.12 | Time and cost relief for unexpected ground conditions |
| Variations | Clause 13 | Cost + EOT for additional scope |
| Force Majeure / Exceptional Events | Clause 19 (1999) / Clause 18 (2017) | EOT, possibly cost if not excluded |
| Delay in approvals or instructions | Clause 1.9, Clause 8.1 | EOT, cost escalation due to decision delays |
Examples of Claims Made by Contractors:
Example 1: Drawing Approvals Are Delayed
The contractor is awaiting updated structural drawings. They file a claim under Clauses 8.4 and 1.9 for idle labor costs and 14 days of EOT.
Example 2: Unexpected Ground Situations
The contractor comes across unexpected rock strata while excavating. Clause 4.12 is used to make a claim for the extra expenses of rock excavation and EOT.
Example 3: Divergences in Purview
The drainage layout is altered per the engineer’s instructions. In order to implement the updated design, the contractor files a claim under Clause 13.3 for $50,000 and 10 days EOT.
2. Employer’s Claims
The employer filed these claims, usually as a result of:
Delays or defaults by the contractor
Failure to adhere to the requirements
Property or work damage
Other violations of the contract
Common Grounds for Employer’s Claims:
| Cause | Relevant FIDIC Clause | Typical Claim |
|---|---|---|
| Contractor’s delay | Clause 8.7 | Liquidated Damages (LD) for delay |
| Defective work/materials | Clause 7.5 | Cost of rectification or deduction from payment |
| Contractor’s failure to complete | Clause 15.2 | Termination, recovery of completion costs |
| Damage to property or people | Clause 17 | Claim for indemnity or insurance |
Examples of Claims Made by the Employer:
Example 1: Completion Delay
The contractor doesn’t finish by the due date. Clause 8.7 allows the employer to deduct $10,000 for each week of delay.
Example 2: Electrical installations that are flawed
Inspections conducted after handover show non-compliant wiring. Clause 7.5 allows the employer to claim remedial costs.
Example 3: Inability to Advance Work
Progress is not consistently maintained by the contractor. After giving notice in accordance with Clause 15.1, the employer ultimately ends the agreement and deducts the re-engagement expenses from the contractor’s performance security.
Key Differences: Contractor vs Employer Claims
| Aspect | Contractor’s Claim | Employer’s Claim |
|---|---|---|
| Who initiates? | Contractor | Employer |
| Common basis | Delays, additional costs, variations, unforeseen events | Delay damages, defects, breach of contract |
| Objective | To gain time/money/relief | To recover costs or enforce compliance |
| Managed by | Clause 20 (Claims Procedure) | Clause 2.5 (1999) or Clause 20.2 (2017) |
| Dispute path | Engineer → DAAB → Arbitration | Engineer → DAAB → Arbitration |
Key Aspects of FIDIC Claim Management
1. Timely Notice (Clause 20.1)
The need for prompt notification is one of the cornerstones of FIDIC claim management. Within 28 days of learning (or should have learned) of the incident or situation giving rise to a claim, the contractor is required to notify the engineer. The possible financial or contractual ramifications should be mentioned in this written notice. If the contractor doesn’t meet this deadline, they risk losing their entitlement unless they can demonstrate that there were extraordinary circumstances that warranted the notification delay. This provision guarantees proactive handling of claims and early notification of possible problems to all parties.
2. Submission of a Detailed Claim
The contractor has 42 days from the date of the event or circumstance (or as agreed with the engineer) to submit a fully detailed claim after the initial notice. This submission needs to contain:
A thorough explanation of the situation or event
The claim’s contractual foundation
supporting documentation, facts, and evidence
A precise estimate of the financial impact and/or time extension
This stage guarantees that statements are supported by factual analysis and documentation rather than being ambiguous or conjectural, allowing the engineer to fairly evaluate them.
3. Timeline for the Engineer’s Response
The engineer has 42 days from the date of submission of the detailed claim to reply. The engineer’s job is to objectively assess the claim and either:
Give your full or partial approval to the claim.
Give reasons to refute the assertion.
Ask for more information or supporting documentation.
In addition to guaranteeing that the contractor receives a decision on time, this structured timeline encourages efficiency and accountability in the claims assessment process.
4. Provisional Claims for Continued Occurrences
FIDIC permits contractors to file interim claims on a monthly basis for events that have long-lasting impacts, like protracted inclement weather, political upheaval, or a protracted delay in site access. These claims track the overall cost or delay over time and are cumulative. The contractor is required to submit a final consolidated claim that summarizes the entire impact after the event’s effects have subsided. Instead of waiting until the project is finished, this method enables continuous disruptions to be documented and paid out gradually.
5. Pathway for Dispute Resolution
The FIDIC contract specifies a multi-tier dispute resolution pathway in the event that the claim cannot be settled by the Engineer’s decision or if one of the parties is unhappy with the result:
In order to swiftly settle disputes, the Dispute Avoidance/Adjudication Board (DAAB), a standing or ad hoc body of impartial experts, renders legally binding but not final decisions.
Amicable Settlement: A mandatory 28-day negotiation period is offered to settle the disagreement amicably before it escalates further if either party is unhappy with the DAAB’s ruling.
International Arbitration: If a friendly resolution is not possible, the matter is taken to international arbitration, which is governed by the contract and frequently by ICC rules. The arbitrator’s ruling is final and enforceable.
This tiered system maintains the contractor’s right to seek legal remedies while offering several avenues for resolution if necessary.
Common Claim Scenarios Under FIDIC
| Scenario | Cause | Relevant FIDIC Clause | Typical Resolution |
|---|---|---|---|
| Extension of Time (EOT) Claim | Weather delays, late approvals, force majeure | Clause 8.4 | Notify, submit claim, Engineer reviews; possible DAAB escalation |
| Additional Cost Claim | Inflation, site access delays, scope changes | Clause 13, Clause 4.12 | Claim with cost breakdown and evidence; may involve Engineer/DAAB |
| Employer’s Delay or Instruction | Late drawing approvals, delayed site access | Clause 1.9, Clause 13.1 | Contractor submits EOT/cost claim; Engineer determines entitlement |
| Unforeseen Ground Conditions | Unexpected soil or water table issues | Clause 4.12 | Notice + geological evidence; Engineer evaluates and grants relief |
| Disruption due to Variations | Multiple scope changes affect sequencing | Clause 13.3 | Submit claim with delay impact analysis; Engineer or DAAB reviews |
| Late or Incomplete Payments | Disputes on interim certification | Clause 14.7 | Engineer must clarify; unresolved issues go to DAAB or arbitration |
Benefits of the FIDIC Claims Process
| Benefit | Description |
|---|---|
| 🎯 Reduced Disputes | Structured process helps identify and address issues early |
| ⏱️ Timely Resolution | Strict timelines maintain workflow and minimize project delays |
| 📂 Improved Contract Management | Promotes active recordkeeping and contractual discipline |
| ⚖️ Fair and Transparent | Roles and responsibilities are clearly defined |
| 📣 Proactive Communication | Forces timely dialogue between contractor, engineer, and employer |
Challenges and Limitations
| Challenge | Impact |
|---|---|
| 📉 Missed Deadlines | Losing claim entitlement due to late notice is common |
| 📚 Heavy Documentation Burden | Requires consistent, accurate records—challenging for under-resourced teams |
| 💸 Costs of Dispute Resolution | Escalating to DAAB or arbitration adds significant cost |
| ⚠️ Subjectivity in Engineer’s Role | Engineer’s impartiality may be questioned, especially if hired by employer |
| ✍️ Poor Claim Drafting | Vague or unsupported claims often rejected or delayed |
How to Prevent FIDIC Early Risk Identification Claims and Disputes
Organize collaborative risk assessment workshops both before and after the award.
Educate Project Teams on FIDIC
Make sure the PMs and site engineers are aware of the triggers for clauses and notice periods.
Keep Your Communications Timely and Clear
Misunderstandings are avoided through frequent meetings with the engineer.
Maintain Thorough Records
Letters, site photos, delay notifications, and daily logs are all essential.
Make use of standing DAABs
Escalation is avoided with quicker resolution and unofficial guidance.
Draft Timetables and Scopes That Are Realistic
Steer clear of extremely strict deadlines, which frequently lead to EOT claims.
Prospects for FIDIC Claims Management in the Future
Digital Claims Portals: Using tools like Aconex and CEMAR to automate and monitor claim processing.
BIM integration: 4D/5D BIM for tracking costs and delays in real time.
AI in Claims Analysis: The early application of AI to identify events that can be claimed.
Climate-Related Claims: Increased force majeure claims brought on by wildfires, heat waves, and floods.
Updated FIDIC Editions: New editions might improve digital evidence standards and claim timelines.
Important Provisions Controlling Claims in FIDIC Agreements
Important Provisions Controlling Claims in FIDIC Agreements
A number of important provisions that outline the legal and procedural framework for handling claims are included in the FIDIC Conditions of Contract. Every clause has a distinct function in determining claim events, defining rights, and directing the resolution process.
Clause 1.9 (Delayed Drawings or Instructions): If the engineer fails to deliver the required drawings or instructions on time, resulting in a delay or an increase in costs, the contractor may file a claim under this clause. It is frequently used in projects with a lot of design where timely approvals are necessary for sequencing.
Clause 4.12 (Unforeseeable Physical Conditions): This clause allows the contractor to make a time and cost claim if they come across ground conditions that were not reasonably foreseeable at the time of tender. Common examples include subterranean obstacles or rock where soft soil was anticipated.
One of the most often cited clauses is Clause 8.4 (Extension of Time). It offers a list of acceptable delay circumstances that allow a contractor to request an Extension of Time (EOT), including extreme weather, force majeure, or employer-caused delays.
Clause 13 (Variations and Adjustments): The engineer’s ordered variations frequently change the original scope, requiring more work or causing disruption. The pricing and handling of claims for time or cost adjustments are described in Clause 13.
Clause 14 (Contract Price and Payment): This section addresses any delays in interim or final payments. The contractor may file a financial claim if the engineer or employer does not certify or pay on schedule.
Employer’s claims may result from liabilities pertaining to the loss or damage of the works, which are governed by Clause 17 (Care of the Works and Indemnities). On the other hand, the contractor may sue for losses brought on by third-party activities or employer meddling.
Clause 20 (FIDIC 1999) and Clauses 20 and 21 (FIDIC 2017): For claims and disputes, these are the main procedural provisions. They set deadlines for notification (28 days), detailed submission (42 days), the engineer’s decision (42 days), and, if required, escalation to arbitration or the Dispute Avoidance/Adjudication Board (DAAB).
The framework for identifying, submitting, and resolving claims under FIDIC contracts is shaped by these provisions taken together. Protecting one’s contractual rights and making sure that claims are handled effectively and legally require a thorough understanding of them.
Typical Errors in FIDIC Claim Processing
Even though FIDIC contracts are structured, common management mistakes cause many claims to be undermined or lost completely. Notifying on time is one of the most common errors. A strict 28-day notice period is imposed by Clause 20.1 (FIDIC 1999) and Clause 20.2 (FIDIC 2017); failure to comply with this can result in the automatic forfeiture of entitlement, unless there is an extraordinary reason for the delay.
Inadequate or disorganized evidence is another crucial mistake. Strong supporting documentation, such as daily reports, letters, schedules, photos, and financial records, is required for claims. Submissions that are not this thorough are frequently denied or contested.
Another common problem is misquoting or misinterpreting FIDIC clauses. A claim’s credibility before the Engineer or the Dispute Board may be damaged by using improper contractual bases or referencing unrelated clauses, which can give the impression that the claim is unprofessional and unsupported.
Inconsistencies in the claim narrative are frequently caused by communication breakdowns, whether they occur between the contractor and the engineer or between the contractor’s site and head office teams. A claim may be complicated or rendered invalid by verbal agreements that are not documented in writing, unclear instructions, and delayed approvals.
Lastly, a lot of contractors make claims that are overly broad, made too late, or sound overly combative. Timeliness, thoroughness, objectivity, and presentation as a professional contract administration process rather than a confrontation are all necessary for a FIDIC claim to be successful.
In addition to increasing the likelihood of a successful claim outcome, avoiding these errors fosters a more positive, cooperative project environment.
Step-by-Step Claim Lifecycle in FIDIC
The sequential and highly structured lifecycle of the FIDIC claim process is intended to encourage early resolution and reduce disputes. Usually, it starts when a claimable event takes place, like a change in scope, an unforeseen ground condition, or a delay in approvals. To maintain their right to make a claim, the contractor must notify the engineer as soon as this occurs, usually within 28 days. Clause 20 (FIDIC 1999) or Clause 20.2 (FIDIC 2017) govern this crucial step.
Within 42 days of receiving the notice, the contractor has to draft and submit a thorough claim. Include supporting documentation, such as logs, photographs, and delay analysis reports, along with a clear statement of the event’s history, contractual foundation, factual circumstances, and time and cost impact.
The claim must be reviewed and answered by the engineer within 42 days of submission. The claim may be fully accepted, partially accepted, or rejected by the engineer. The claim may be taken to the Dispute Avoidance/Adjudication Board (DAAB) if the parties don’t agree with the Engineer’s conclusion. Clause 21 provides for international arbitration or an amicable settlement as a last resort if DAAB proceedings fail to produce a resolution.
Comprehending this lifecycle guarantees that employers and contractors adhere to the proper procedures, honor deadlines, and reduce the possibility of losing rights.
Modern FIDIC Claim Management Tools and Technologies
Digital tools are becoming more and more important in improving the accuracy and efficiency of FIDIC claim management as construction projects get more complicated. One popular platform that is well-known for matching FIDIC workflows is CEMAR (Contract Event Management and Reporting). It keeps an audit trail of events, automates notice submissions, and simplifies contract administration—all of which are essential for creating claims that can be defended.
Oracle’s cloud-based document control platform, Aconex, makes it possible to manage correspondence, variation orders, RFI tracking, and approvals efficiently. It guarantees that all contractual communications are accurately documented and available, which is particularly helpful when substantiating claims or resolving disputes.
For critical path tracking, resource planning, and delay analysis, Primavera P6 is essential. When creating time impact analyses for Extension of Time (EOT) claims, contractors utilize it to conduct forensic schedule reviews, which are crucial.
Additionally, scheduling can be integrated with 3D/4D models using programs like Autodesk’s BIM 360 and Synchro 4D. This aids in visualizing the order of tasks and evaluating the immediate effects of interruptions on operations and user interfaces. When presenting claims to engineers or adjudicators, these platforms improve clarity, particularly in disputes involving delayed access or variation impacts.
Employers and contractors can increase their capacity to handle claims proactively under FIDIC contracts, decrease administrative burdens, and improve transparency by integrating these tools.
The Engineer’s Function in Resolving Claims
The engineer is a key player in FIDIC contracts, serving as both the contract administrator and the first arbiter of a claim. Assessing the veracity of claims, deciding on time extensions, verifying payments, and promoting equitable communication between the Employer and the Contractor are all duties of the Engineer.
Although the Engineer is usually appointed by the Employer, Clause 3.5 (FIDIC 1999) and Clause 3.7 (FIDIC 2017) require the Engineer to act impartially and fairly. Theoretically, the engineer must confer with both parties, try to reach a consensus, and render a just decision based on the contract and the facts. This neutrality may be questioned in reality, though, particularly if employer influence or commercial pressure is thought to be present.
Many contracts now stipulate that the engineer must be impartial and independent, or even that the engineer must give written justifications for all decisions in order to ensure fairness. The DAAB may be consulted when disagreements emerge regarding the impartiality or judgment of the engineer.
In the end, the engineer plays a critical role in either averting conflicts through early intervention or serving as the initial decision-maker in the official dispute resolution procedure. The success of the FIDIC claim procedure depends on their capacity to manage contractual obligations, act impartially, and document openly.
Claim Documentation Best Practices
Under FIDIC, timely and accurate documentation is essential to effective claim management. Even legitimate claims could be discounted or rejected in the absence of reliable proof. Daily site records that document worker presence, equipment use, work progress, and any interruptions are the foundation of any well-supported claim. When making time claims based on unfavorable conditions, weather logs are essential, particularly in areas that are prone to intense rainfall or extremely high temperatures. Regularly taking, timestamped, and cataloging photos and videos will help to visually document site conditions, finished projects, and challenges faced. By contrasting actual and planned progress and highlighting areas impacted by delays or variations, regular progress reports aid in creating a timeline of events. Last but not least, comprehensive records of all emails, letters, RFIs, site instructions, and other correspondence and approvals help to make clear what was discussed, decided upon, or overlooked. It is important to keep a claims file up to date from the beginning, not only when issues occur.
Impact of Poor Claim Management on Project Outcomes
Construction projects may suffer major, long-term repercussions from poor claim management. In the short term, it can result in budget overruns since unreported or insufficiently justified delays and extra expenses go unpaid. Claims that are handled poorly frequently lead to strained relationships between the engineer, contractor, and employer, which can impede collaboration and possibly halt the progress of a project. The issue may escalate into drawn-out arbitration or litigation, raising costs and postponing the final project close-out, when early resolution mechanisms fail because of missing records or delayed action. Additionally, a contractor with a reputation for making rash or poorly-prepared claims runs the risk of losing future business from donors, international organizations, or clients in the public sector. In severe circumstances, subpar claim performance could even result in disqualification from future prequalification or blacklisting.
Differences Between FIDIC 1999 vs. FIDIC 2017 Claim Procedures
When compared to the 1999 edition, the FIDIC 2017 edition introduced a number of noteworthy updates to the claims and dispute resolution procedure. The division of employer and contractor claims into separate procedural pathways is among the most noticeable changes: Contractor claims are now covered by Clause 20, and employer claims are now covered by Clause 20.2.5, which replaced Clause 2.5 of the 1999 version in 2017.
Another significant change is that, in the 2017 edition, the DAAB (Dispute Avoidance/Adjudication Board) was established as a standing board that operated throughout the project, as opposed to the 1999 edition when it was usually appointed on an as-needed basis. With a focus on early warning notices, transparent evaluation, and binding decisions unless challenged, the 2017 version of the timelines has been clarified and made more enforceable.
Overall, FIDIC 2017 emphasizes proactive management, dispute avoidance, and digital-friendly documentation, encouraging parties to resolve disagreements before they escalate. While more demanding in terms of procedural discipline, it promotes fairness and real-time problem solving.
Role of Contract Administrators and Claim Consultants
It is becoming more widely acknowledged that having knowledgeable Contract Administrators or Claim Consultants on board is crucial for intricate FIDIC projects. These experts serve as a liaison between legal, technical, and administrative departments, guaranteeing that all notifications, claims, and modifications are filed in compliance with the terms and deadlines of the contract. Contract administrators make sure that both the employer and the contractor keep accurate records and carry out their procedural duties. Independent claim consultants add value to large-scale or high-risk projects by drafting or reviewing claim documents, performing forensic delay analysis, and offering strategy advice during disputes. Their participation strengthens the foundation for negotiation or adjudication, enhances claim quality, and helps prevent procedural errors.
Their unbiased viewpoint is particularly helpful when feelings or business demands obstruct productive communication, providing both sides with a respectable and expert route to settlement.
Sample FIDIC Claim Template and Format Guide
Using a structured format is crucial to guaranteeing that claims are coherent, defendable, and compliant with contracts. The following sections are commonly found in a well-prepared FIDIC claim document:
An event summary is a succinct description of what took place, when it occurred, and why it qualifies as a claim event.
Contractual Basis: Consult the particular FIDIC clause or clauses that support the claim.
Chronology of Events: A timeline that highlights important dates, directives, and advancements.
Supporting Documents: Include pertinent site logs, emails, weather reports, photographs, and records.
Cost and/or Delay Analysis: To illustrate the impact, use cost breakdowns or critical path method (CPM) schedules.
Claim Statement: Clearly state the time, money, or both that are being claimed, along with the amounts and durations of each.
Importance of Collaborative Claim Resolution Culture
Claims don’t have to be hostile, despite what many people think. Claims are not viewed as a sign of failure but rather as a normal part of contract administration in the best-managed projects, which actually promote a collaborative culture. Important elements of this culture include open communication, clear documentation, and a shared dedication to finding early solutions to problems. Fairness and efficiency are promoted by employers who actively examine and accept legitimate claims. Contractors are more likely to be respected and heard if they interact positively rather than combatively. This philosophy is supported by instruments such as early risk registers, standing DAABs, and frequent contract review meetings.
In the end, a collaborative approach results in better project outcomes, healthier business relationships, and fewer formal disputes—especially in long-term, multi-phase developments.
Effective claims management under FIDIC is a discipline that combines contractual expertise, procedural precision, and strategic communication. When handled correctly, it not only protects a contractor’s entitlements but also ensures a fair, transparent process for all stakeholders—minimizing disruption and preserving relationships.
Whether you’re working on a $5M road project or a $5B rail corridor, understanding the nuances of FIDIC claim procedures can be the difference between profit and loss, delay and delivery, dispute and resolution.
Enquiry at : admin@keleaders.com
Whatsapp: 0044 790 125 9494
For more details visit our website : www.keleaders.com