Contract Types and Claim Frequency
5 minutes
5 Questions
In the PMI Construction Professional (PMI-CP) framework, the contract type is one of the strongest predictors of how often claims arise. It sets how risk is shared, how clearly scope is defined, and what incentives each party has. Claims usually follow from risk that is unclear, poorly allocated or underpriced. Fixed-price or lump-sum contracts place most cost and performance risk on the contractor. The contractor profits only by delivering within the agreed price, so any change, differing site condition, design error or owner-caused delay becomes a potential claim. Claim frequency is typically high, especially when tender documents are incomplete or competitive bidding has driven margins down. Disputes often concern change orders, scope interpretation and delay or disruption costs. Unit-price contracts pay for actual measured quantities at agreed rates. This reduces disputes over quantity variations, but claims still arise over measurement methods, rate adjustments when quantities change significantly, and work that falls outside defined pay items. Cost-reimbursable (cost-plus) contracts shift most risk to the owner. Contractors have less reason to claim because their costs are covered. Disputes instead focus on whether costs are allowable, reasonable and properly documented, and on fee calculations. Guaranteed Maximum Price (GMP) contracts are a hybrid. They generate claims about whether work is a scope change that adjusts the GMP or falls within contingency. Time-and-materials contracts produce disputes about labor hours, productivity and billing accuracy. The delivery method also matters. Design-bid-build separates designer and builder, which increases claims over design errors and coordination. Design-build consolidates responsibility, reducing design-related claims. Integrated Project Delivery and alliancing use shared risk and reward pools, so claim frequency is lowest. The PMI-CP lesson is that claim prevention starts at procurement. The project manager should: - Select a contract type that matches scope maturity. - Allocate each risk to the party best able to manage it. - Draft clear change, notice and dispute-resolution clauses. - Maintain rigorous documentation. These steps reduce claims and support fair, timely resolution when claims do occur.
Contract Types and Claim Frequency: A Complete Guide for the PMI-CP Exam
Introduction
In construction and complex project environments, the type of contract you choose does far more than set the price. It decides who carries which risks, how change is handled, and how often disputes and claims arise. For the PMI Construction Professional (PMI-CP) certification, the link between contract types and claim frequency is a core idea within Claims and Dispute Resolution. This guide covers four things: why the topic matters, what it is, how it works, and how to answer exam questions on it with confidence.
Why Contract Types and Claim Frequency Matter
Claims are among the costliest and most disruptive events on a construction project. They drain management time, delay completion, strain relationships and can end in arbitration or litigation. Understanding how contract structure drives claim frequency lets project professionals do the following:
- Choose the right contract for the project's level of scope certainty, complexity and risk.
- Anticipate where claims will come from and plan controls to prevent or manage them.
- Allocate risk fairly, so that each risk sits with the party best able to control it.
- Protect relationships by reducing adversarial behavior.
- Budget realistically for contingency, administration effort and dispute resolution costs.
A badly chosen contract type is one of the leading root causes of claims. On the exam, PMI expects you to recognize that preventing claims starts at procurement, not after the dispute appears.
What It Is: The Core Concept
Claim frequency is how often claims occur under a given contractual arrangement. It depends mainly on three things:
1. How risk is allocated between owner and contractor.
2. How complete and certain the scope is when the contract is signed.
3. How payment is tied to performance and to changes.
When a contract transfers a large share of risk to one party, especially risks that party cannot control, that party has a strong incentive to recover losses through claims. When scope is unclear but the contract assumes it is fixed, every difference between expectation and reality becomes a possible claim.
The Main Contract Types and Their Typical Claim Profiles
1. Fixed-Price / Lump-Sum Contracts (Firm Fixed Price, FFP)
- Risk allocation: Most cost risk sits with the contractor.
- Best suited for: Well-defined scope with complete design (for example, traditional Design-Bid-Build with full drawings).
- Claim frequency: Often HIGH when scope is incomplete or conditions change. The contractor is paid a set amount, so any extra work, design error, differing site condition or owner-caused delay pushes them to file change requests and claims to protect their margin.
- Common claim triggers: Scope gaps, design errors and omissions, differing site conditions, owner delays, ambiguous specifications.
- Key insight: Fixed price does NOT mean fewer claims. It means the contractor has a strong motive to claim whenever the baseline shifts.
2. Fixed Price with Economic Price Adjustment (FP-EPA)
- Risk allocation: Mostly with the contractor, but inflation and commodity risk are shared through indexed adjustments.
- Claim frequency: Moderate. Material price escalation claims drop sharply on long-duration projects.
3. Fixed Price Incentive Fee (FPIF)
- Risk allocation: Shared through a target cost, a share ratio and a ceiling price.
- Claim frequency: Moderate. Disputes tend to focus on target adjustments and how performance is measured.
4. Cost-Reimbursable Contracts (Cost Plus Fixed Fee, Cost Plus Incentive Fee, Cost Plus Award Fee, Cost Plus Percentage of Cost)
- Risk allocation: Most cost risk sits with the owner.
- Best suited for: Uncertain or evolving scope, emergency work, research or highly complex projects.
- Claim frequency: Generally LOW for scope and cost claims, because the contractor is reimbursed for actual costs. Disputes tend to involve allowability of costs, audits, fee calculations, award fee judgments and documentation.
- Caution: Cost Plus Percentage of Cost (CPPC) rewards higher spending. It is discouraged and is prohibited in many public procurement systems.
5. Time and Materials (T&M)
- Risk allocation: Mostly with the owner. It is a hybrid of fixed unit rates and open-ended quantities.
- Best suited for: Small or undefined work, staff augmentation, urgent repairs.
- Claim frequency: Low for scope claims, moderate for billing disputes about hours, rates and productivity. A not-to-exceed (NTE) cap is often added.
6. Unit Price / Measurement Contracts
- Risk allocation: The contractor carries the risk on the price per unit. The owner carries the risk on quantities.
- Claim frequency: Moderate. Claims arise from quantity variations, especially large overruns or underruns that trigger requests to re-rate items, and from measurement disputes.
7. Guaranteed Maximum Price (GMP)
- Risk allocation: Costs are reimbursed up to a cap, above which the contractor bears overruns. Savings are often shared.
- Claim frequency: Moderate. Disputes often concern what is inside or outside the GMP, use of contingency and scope definition at the time the GMP was set.
Delivery Methods and Their Effect on Claims
Delivery methods interact with contract types:
- Design-Bid-Build (DBB): Owner and designer are separate from the contractor. Claims are often higher because design risk stays with the owner and the parties' relationships are separate and potentially adversarial.
- Design-Build (DB): A single point of responsibility for design and construction. Design-error claims against the owner fall, but disputes can shift to whether owner requirements were met.
- Construction Manager at Risk (CMAR): Early contractor involvement improves constructability and lowers later claims. It is often combined with a GMP.
- Integrated Project Delivery (IPD) / Alliancing / Relational Contracts: Shared risk and reward, collaborative decision-making and often waivers of claims among parties. Claim frequency is LOWEST because incentives are aligned.
- Public-Private Partnerships (PPP): Long-term, complex risk transfer. Claims tend to center on change in law, force majeure and revenue risk.
How It Works: The Mechanics Behind Claim Frequency
The Risk-Incentive Principle
Each party acts in its own economic interest. The more cost risk a contractor carries, the more carefully it watches every deviation from the baseline and the more readily it claims. The more cost risk the owner carries, the fewer scope claims there will be, but the owner must invest heavily in oversight, auditing and cost control.
The Scope Certainty Principle
Match the contract type to scope maturity:
- Scope well defined: fixed-price contracts work well and claims stay manageable.
- Scope partially defined: incentive, GMP or unit price contracts are better.
- Scope poorly defined: cost-reimbursable or T&M contracts are appropriate.
A mismatch, such as forcing a lump sum on an immature design, is a classic recipe for frequent claims.
The Risk Allocation Principle
Risk should be given to the party best able to control, manage or insure it. Pushing uncontrollable risks (for example, unknown subsurface conditions) onto contractors leads to the following:
- Inflated bids that include risk premiums.
- More claims when those risks occur.
- Disputes over interpretation of the contract.
Clauses that reduce claims include differing site conditions clauses, price escalation clauses, clear change order procedures and defined notice requirements.
Contract Language and Administration
Even the right contract type will generate claims if it has:
- Ambiguous or conflicting documents with no order of precedence.
- Unclear notice provisions and time bars.
- Weak change management processes.
- Poor documentation such as daily logs, RFIs and correspondence.
Standard Forms
Standard contract forms (for example, FIDIC, NEC, AIA and ConsensusDocs) carry built-in risk allocation philosophies.
- NEC emphasizes collaboration and early warning, which tends to reduce claims.
- FIDIC Red Book is a re-measurement (unit price) contract where the employer designs.
- FIDIC Yellow Book is design-build.
- FIDIC Silver Book is EPC turnkey, with heavy contractor risk.
- Knowing that the Silver Book transfers more risk to the contractor helps explain claim behavior.
Claim Prevention Strategies Linked to Contract Type
- Select the contract type based on scope certainty and risk analysis.
- Use clear, complete contract documents with an order of precedence.
- Include fair risk allocation clauses.
- Set up robust change control and early warning mechanisms.
- Use partnering, dispute review boards (DRBs) and dispute avoidance boards (DABs).
- Keep thorough records and run contract administration proactively.
- Run constructability reviews and involve the contractor early.
Summary Table (Text Form)
- Firm Fixed Price: Contractor carries the risk. Scope must be clear. Claim frequency is high if scope changes.
- FPIF / FP-EPA: Shared risk. Claim frequency is moderate.
- Unit Price: Shared risk (price and quantity). Claim frequency is moderate, driven by quantities.
- GMP: Shared risk with a cap. Claim frequency is moderate, driven by scope definition.
- Cost Plus: Owner carries the risk. Scope claims are low; cost-allowability disputes are possible.
- T&M: Owner carries the risk. Scope claims are low; billing disputes are possible.
- IPD / Alliance: Risk is shared collectively. Claim frequency is lowest.
Exam Tips: Answering Questions on Contract Types and Claim Frequency
Tip 1: Identify who bears the risk. Before reading the options, ask: under this contract, who loses money if costs rise? That party is the most likely claimant, or the one who must control costs.
Tip 2: Link scope certainty to contract choice. If a scenario describes incomplete design, evolving requirements or unknown conditions, the best answer usually moves away from firm fixed price toward cost-reimbursable, GMP, unit price or collaborative models.
Tip 3: Remember that fixed price does not mean fewer claims. A common trap is assuming lump sum contracts are dispute-free. On poorly defined projects they often produce the most claims.
Tip 4: Choose prevention over reaction. PMI favors proactive answers. When asked how to reduce claim frequency, prefer options such as selecting an appropriate contract type, clarifying scope, fair risk allocation, early warning, partnering or dispute avoidance boards. Avoid answers that jump to litigation or arbitration.
Tip 5: Watch for collaborative keywords. Terms like shared risk and reward, integrated team, alliance and IPD signal the lowest claim frequency.
Tip 6: Know the dispute focus of each type.
- Fixed price: scope, changes, delays, differing site conditions.
- Cost plus: allowability, audits, fees.
- Unit price: quantities and measurement.
- GMP: in-scope versus out-of-scope, contingency.
- T&M: hours, rates, productivity.
Tip 7: Apply the best-able-to-control rule. If a question asks how to allocate a risk fairly, choose the party that can best control, mitigate or insure it. Unfair allocation increases claims.
Tip 8: Read scenario details carefully. Phrases like design is only 30 percent complete, subsurface conditions are unknown, owner wants cost certainty or long duration with volatile material prices each point to a specific contract type (cost plus or GMP, a differing site conditions clause, fixed price, and FP-EPA respectively).
Tip 9: Eliminate extreme answers. Options that say a contract type eliminates all claims or always causes disputes are usually wrong. Choose nuanced answers about tendencies.
Tip 10: Connect to contract administration. Even with the right contract type, poor documentation, missed notice periods and weak change control raise claims. If the question concerns an existing contract, the answer may focus on administration rather than changing the contract type.
Sample Question Walkthrough
Question: An owner awards a firm fixed price contract for a tunnel project where geotechnical investigations were limited. Shortly after excavation begins, the contractor encounters unexpected rock formations. What is the MOST likely outcome, and what should have been done to reduce it?
Reasoning: Under FFP the contractor carries cost risk, but the unknown subsurface conditions were not within its control. A claim for differing site conditions is highly likely. The preventive measure would have been more thorough geotechnical investigation, a differing site conditions clause, or a contract type (such as unit price or cost-reimbursable) better suited to the uncertainty.
Best answer pattern: A differing site conditions claim will likely be filed. Proper risk allocation and contract selection at procurement would have reduced it.
Key Takeaways
- Contract type directly shapes risk allocation, incentives and therefore claim frequency.
- Mismatches between scope certainty and contract type are a major root cause of claims.
- Fixed price contracts move risk to contractors and can produce frequent claims when scope is unclear.
- Cost-reimbursable contracts reduce scope claims but require strong owner oversight.
- Collaborative delivery models produce the fewest claims.
- On the exam, think proactively, identify the risk bearer, match contract type to scope maturity and favor dispute avoidance.
If you understand these relationships, you will be able to analyze scenario questions, pick the best contract strategy and explain why claims arise. These are essential skills for the PMI-CP exam and for real-world project leadership.
In construction and complex project environments, the type of contract you choose does far more than set the price. It decides who carries which risks, how change is handled, and how often disputes and claims arise. For the PMI Construction Professional (PMI-CP) certification, the link between contract types and claim frequency is a core idea within Claims and Dispute Resolution. This guide covers four things: why the topic matters, what it is, how it works, and how to answer exam questions on it with confidence.
Why Contract Types and Claim Frequency Matter
Claims are among the costliest and most disruptive events on a construction project. They drain management time, delay completion, strain relationships and can end in arbitration or litigation. Understanding how contract structure drives claim frequency lets project professionals do the following:
- Choose the right contract for the project's level of scope certainty, complexity and risk.
- Anticipate where claims will come from and plan controls to prevent or manage them.
- Allocate risk fairly, so that each risk sits with the party best able to control it.
- Protect relationships by reducing adversarial behavior.
- Budget realistically for contingency, administration effort and dispute resolution costs.
A badly chosen contract type is one of the leading root causes of claims. On the exam, PMI expects you to recognize that preventing claims starts at procurement, not after the dispute appears.
What It Is: The Core Concept
Claim frequency is how often claims occur under a given contractual arrangement. It depends mainly on three things:
1. How risk is allocated between owner and contractor.
2. How complete and certain the scope is when the contract is signed.
3. How payment is tied to performance and to changes.
When a contract transfers a large share of risk to one party, especially risks that party cannot control, that party has a strong incentive to recover losses through claims. When scope is unclear but the contract assumes it is fixed, every difference between expectation and reality becomes a possible claim.
The Main Contract Types and Their Typical Claim Profiles
1. Fixed-Price / Lump-Sum Contracts (Firm Fixed Price, FFP)
- Risk allocation: Most cost risk sits with the contractor.
- Best suited for: Well-defined scope with complete design (for example, traditional Design-Bid-Build with full drawings).
- Claim frequency: Often HIGH when scope is incomplete or conditions change. The contractor is paid a set amount, so any extra work, design error, differing site condition or owner-caused delay pushes them to file change requests and claims to protect their margin.
- Common claim triggers: Scope gaps, design errors and omissions, differing site conditions, owner delays, ambiguous specifications.
- Key insight: Fixed price does NOT mean fewer claims. It means the contractor has a strong motive to claim whenever the baseline shifts.
2. Fixed Price with Economic Price Adjustment (FP-EPA)
- Risk allocation: Mostly with the contractor, but inflation and commodity risk are shared through indexed adjustments.
- Claim frequency: Moderate. Material price escalation claims drop sharply on long-duration projects.
3. Fixed Price Incentive Fee (FPIF)
- Risk allocation: Shared through a target cost, a share ratio and a ceiling price.
- Claim frequency: Moderate. Disputes tend to focus on target adjustments and how performance is measured.
4. Cost-Reimbursable Contracts (Cost Plus Fixed Fee, Cost Plus Incentive Fee, Cost Plus Award Fee, Cost Plus Percentage of Cost)
- Risk allocation: Most cost risk sits with the owner.
- Best suited for: Uncertain or evolving scope, emergency work, research or highly complex projects.
- Claim frequency: Generally LOW for scope and cost claims, because the contractor is reimbursed for actual costs. Disputes tend to involve allowability of costs, audits, fee calculations, award fee judgments and documentation.
- Caution: Cost Plus Percentage of Cost (CPPC) rewards higher spending. It is discouraged and is prohibited in many public procurement systems.
5. Time and Materials (T&M)
- Risk allocation: Mostly with the owner. It is a hybrid of fixed unit rates and open-ended quantities.
- Best suited for: Small or undefined work, staff augmentation, urgent repairs.
- Claim frequency: Low for scope claims, moderate for billing disputes about hours, rates and productivity. A not-to-exceed (NTE) cap is often added.
6. Unit Price / Measurement Contracts
- Risk allocation: The contractor carries the risk on the price per unit. The owner carries the risk on quantities.
- Claim frequency: Moderate. Claims arise from quantity variations, especially large overruns or underruns that trigger requests to re-rate items, and from measurement disputes.
7. Guaranteed Maximum Price (GMP)
- Risk allocation: Costs are reimbursed up to a cap, above which the contractor bears overruns. Savings are often shared.
- Claim frequency: Moderate. Disputes often concern what is inside or outside the GMP, use of contingency and scope definition at the time the GMP was set.
Delivery Methods and Their Effect on Claims
Delivery methods interact with contract types:
- Design-Bid-Build (DBB): Owner and designer are separate from the contractor. Claims are often higher because design risk stays with the owner and the parties' relationships are separate and potentially adversarial.
- Design-Build (DB): A single point of responsibility for design and construction. Design-error claims against the owner fall, but disputes can shift to whether owner requirements were met.
- Construction Manager at Risk (CMAR): Early contractor involvement improves constructability and lowers later claims. It is often combined with a GMP.
- Integrated Project Delivery (IPD) / Alliancing / Relational Contracts: Shared risk and reward, collaborative decision-making and often waivers of claims among parties. Claim frequency is LOWEST because incentives are aligned.
- Public-Private Partnerships (PPP): Long-term, complex risk transfer. Claims tend to center on change in law, force majeure and revenue risk.
How It Works: The Mechanics Behind Claim Frequency
The Risk-Incentive Principle
Each party acts in its own economic interest. The more cost risk a contractor carries, the more carefully it watches every deviation from the baseline and the more readily it claims. The more cost risk the owner carries, the fewer scope claims there will be, but the owner must invest heavily in oversight, auditing and cost control.
The Scope Certainty Principle
Match the contract type to scope maturity:
- Scope well defined: fixed-price contracts work well and claims stay manageable.
- Scope partially defined: incentive, GMP or unit price contracts are better.
- Scope poorly defined: cost-reimbursable or T&M contracts are appropriate.
A mismatch, such as forcing a lump sum on an immature design, is a classic recipe for frequent claims.
The Risk Allocation Principle
Risk should be given to the party best able to control, manage or insure it. Pushing uncontrollable risks (for example, unknown subsurface conditions) onto contractors leads to the following:
- Inflated bids that include risk premiums.
- More claims when those risks occur.
- Disputes over interpretation of the contract.
Clauses that reduce claims include differing site conditions clauses, price escalation clauses, clear change order procedures and defined notice requirements.
Contract Language and Administration
Even the right contract type will generate claims if it has:
- Ambiguous or conflicting documents with no order of precedence.
- Unclear notice provisions and time bars.
- Weak change management processes.
- Poor documentation such as daily logs, RFIs and correspondence.
Standard Forms
Standard contract forms (for example, FIDIC, NEC, AIA and ConsensusDocs) carry built-in risk allocation philosophies.
- NEC emphasizes collaboration and early warning, which tends to reduce claims.
- FIDIC Red Book is a re-measurement (unit price) contract where the employer designs.
- FIDIC Yellow Book is design-build.
- FIDIC Silver Book is EPC turnkey, with heavy contractor risk.
- Knowing that the Silver Book transfers more risk to the contractor helps explain claim behavior.
Claim Prevention Strategies Linked to Contract Type
- Select the contract type based on scope certainty and risk analysis.
- Use clear, complete contract documents with an order of precedence.
- Include fair risk allocation clauses.
- Set up robust change control and early warning mechanisms.
- Use partnering, dispute review boards (DRBs) and dispute avoidance boards (DABs).
- Keep thorough records and run contract administration proactively.
- Run constructability reviews and involve the contractor early.
Summary Table (Text Form)
- Firm Fixed Price: Contractor carries the risk. Scope must be clear. Claim frequency is high if scope changes.
- FPIF / FP-EPA: Shared risk. Claim frequency is moderate.
- Unit Price: Shared risk (price and quantity). Claim frequency is moderate, driven by quantities.
- GMP: Shared risk with a cap. Claim frequency is moderate, driven by scope definition.
- Cost Plus: Owner carries the risk. Scope claims are low; cost-allowability disputes are possible.
- T&M: Owner carries the risk. Scope claims are low; billing disputes are possible.
- IPD / Alliance: Risk is shared collectively. Claim frequency is lowest.
Exam Tips: Answering Questions on Contract Types and Claim Frequency
Tip 1: Identify who bears the risk. Before reading the options, ask: under this contract, who loses money if costs rise? That party is the most likely claimant, or the one who must control costs.
Tip 2: Link scope certainty to contract choice. If a scenario describes incomplete design, evolving requirements or unknown conditions, the best answer usually moves away from firm fixed price toward cost-reimbursable, GMP, unit price or collaborative models.
Tip 3: Remember that fixed price does not mean fewer claims. A common trap is assuming lump sum contracts are dispute-free. On poorly defined projects they often produce the most claims.
Tip 4: Choose prevention over reaction. PMI favors proactive answers. When asked how to reduce claim frequency, prefer options such as selecting an appropriate contract type, clarifying scope, fair risk allocation, early warning, partnering or dispute avoidance boards. Avoid answers that jump to litigation or arbitration.
Tip 5: Watch for collaborative keywords. Terms like shared risk and reward, integrated team, alliance and IPD signal the lowest claim frequency.
Tip 6: Know the dispute focus of each type.
- Fixed price: scope, changes, delays, differing site conditions.
- Cost plus: allowability, audits, fees.
- Unit price: quantities and measurement.
- GMP: in-scope versus out-of-scope, contingency.
- T&M: hours, rates, productivity.
Tip 7: Apply the best-able-to-control rule. If a question asks how to allocate a risk fairly, choose the party that can best control, mitigate or insure it. Unfair allocation increases claims.
Tip 8: Read scenario details carefully. Phrases like design is only 30 percent complete, subsurface conditions are unknown, owner wants cost certainty or long duration with volatile material prices each point to a specific contract type (cost plus or GMP, a differing site conditions clause, fixed price, and FP-EPA respectively).
Tip 9: Eliminate extreme answers. Options that say a contract type eliminates all claims or always causes disputes are usually wrong. Choose nuanced answers about tendencies.
Tip 10: Connect to contract administration. Even with the right contract type, poor documentation, missed notice periods and weak change control raise claims. If the question concerns an existing contract, the answer may focus on administration rather than changing the contract type.
Sample Question Walkthrough
Question: An owner awards a firm fixed price contract for a tunnel project where geotechnical investigations were limited. Shortly after excavation begins, the contractor encounters unexpected rock formations. What is the MOST likely outcome, and what should have been done to reduce it?
Reasoning: Under FFP the contractor carries cost risk, but the unknown subsurface conditions were not within its control. A claim for differing site conditions is highly likely. The preventive measure would have been more thorough geotechnical investigation, a differing site conditions clause, or a contract type (such as unit price or cost-reimbursable) better suited to the uncertainty.
Best answer pattern: A differing site conditions claim will likely be filed. Proper risk allocation and contract selection at procurement would have reduced it.
Key Takeaways
- Contract type directly shapes risk allocation, incentives and therefore claim frequency.
- Mismatches between scope certainty and contract type are a major root cause of claims.
- Fixed price contracts move risk to contractors and can produce frequent claims when scope is unclear.
- Cost-reimbursable contracts reduce scope claims but require strong owner oversight.
- Collaborative delivery models produce the fewest claims.
- On the exam, think proactively, identify the risk bearer, match contract type to scope maturity and favor dispute avoidance.
If you understand these relationships, you will be able to analyze scenario questions, pick the best contract strategy and explain why claims arise. These are essential skills for the PMI-CP exam and for real-world project leadership.
Test mode:
PMI-CP - Contract Types and Claim Frequency Example Questions
Test your knowledge of Contract Types and Claim Frequency
Question 1
Under lump-sum pricing, how does the maturity of scope definition at contract award relate to the frequency of claims during execution?
Question 2
On a lump-sum building contract, the owner and contractor accept that six directed variations are changes. Every one still turns into a pricing dispute, because each is negotiated from a new estimate prepared from scratch. The contract includes a schedule of rates that, by its terms, applies to varied work of similar character to the original scope. Which approach BEST reduces further valuation disputes on this contract?
Question 3
On a program's first phase, all packages were lump sum. The owner's claims team spent most of its effort assessing contractor entitlement for scope changes and differing site conditions. Phase two will use cost-reimbursable contracts with a fixed fee, and the claims team will stay the same size. How should the project manager redirect the claims team's effort for phase two?
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More Contract Types and Claim Frequency questions
15 questions (total)
Other Claims and Dispute Resolution concepts
Adjudication, Arbitration and LitigationChange Orders Versus ClaimsClaim Documentation and Contemporaneous RecordsClaims Prevention Through Front End PlanningCommunication Practices That Prevent DisputesDelay, Disruption and Acceleration ClaimsDelivery Methods and Claim FrequencyDispute Review BoardsEarly Resolution of ClaimsLessons Learned and Historical Claims DataNegotiation and Mediation of DisputesNotice Requirements and Time BarsProblem Areas That Generate ClaimsQuantifying Claim Cost and Time ImpactsRoot Cause Analysis of ClaimsSelecting a Dispute Resolution TechniqueThe Claims Process and Key Intervention PointsThe Risk Framework as Claims Reduction