In contract management, and more broadly for anyone involved in complex projects, it is essential to understand what a "claim" is and where its boundaries lie. For many companies, particularly in France, a "claim" is often seen as a mark of distrust or a declaration of war. That negative perception creates needless tension, complicates the management of contracts and, above all, obscures the opportunities that lie behind a claim. In other, more advanced organisations (Anglo-Saxon ones in particular), a claim is neither more nor less than a contractual mechanism to be used judiciously. This article therefore sets out to shed some light on claims: first by recalling the general principles (A), then by looking at the difficulties inherent in claim management (B), and finally by offering a few pointers and best practices on the subject (C).
A. General principles of the claim
1. Definition of a claim
Let us begin this article with the basics: what is a claim? First, we should make clear that we are talking here about the "contractual claim", because the word carries a very different meaning in other fields, marketing for example. We suggest opening the discussion with a literal approach, by looking at how Collins defines the word. The famous British dictionary tells us that a claim is, literally, a "demand or assertion". The absence of any vocabulary drawn from litigation or the courts gives us a first clue as to what a contractual claim is, and what it is not.
Turning next to definitions of the contractual claim itself, and taking the well-known FIDIC suite as an illustration (see our article on the subject), Article 1.1.5 defines a claim as: "a request or assertion by one Party to the other Party for an entitlement or relief under any Clause of these Conditions or otherwise in connection with, or arising out of, the Contract or the execution of the Works".
Taken together, these various sources allow us to define a claim as a request made under a contract, relating principally to price or to time.
2. The difference between a claim and a dispute
For far too many companies, particularly in France, the contractual claim is often seen as a mark of distrust or a declaration of war. This negative view creates needless tension and complicates the management of contracts. Yet in other organisations, particularly those in Anglo-Saxon countries that are more advanced in contract management, the claim is simply regarded as a standard contractual mechanism. It is a process that aims to clarify the terms of the contract and to ensure that each party's obligations are met.
Drawing a clear line between a claim and a dispute is crucial: a claim is a legitimate request to adjust or interpret contractual terms, whereas a dispute arises only when a claim fails to reach a consensual resolution. It is therefore essential not to confuse the two, so as to avoid needless escalation and to foster calmer, more effective contract management.
To illustrate the difference between a claim and a dispute, take the wording used by the "DAU" (Defense Acquisition University), for which a claim is "a written demand or assertion by one of the parties seeking: (i) the payment of a sum of money, (ii) the adjustment or interpretation of contract terms, or (iii) any other relief arising under or relating to the contract". The DAU goes on to specify that "a contract dispute exists when a claim remains unresolved after preliminary discussion between the representatives of the contracting parties".
In short, if there is one thing to remember, it is that a claim is not a dispute, even if it can lead to one.
3. What is a claim for?
Now that we have set out what a claim is and how it differs from a dispute, it is time to turn to the third fundamental question of this first chapter: what purpose does a claim serve? There are many grounds for a claim, whether to notify a departure from the contract, a breach or a defect, to seek payment for additional works, and so on.
Our view at Prime Conseil is that in many sectors, the claim is one of the main levers of project profitability. We are not alone in taking that view, since according to McKinsey, in the construction industry: "players make money from claims rather than from good delivery". From there, it is only a short step to saying that claim management is essential to the life of any complex project.
In any event, bear in mind that the claim is a useful tool, inseparable from the lifecycle of a complex contract. Preparing a claim is not an act of aggression towards your counterparty, just as receiving a claim is not a declaration of war.
So think of the claim as an important lever for the sound and profitable performance of a contract and, if you are reluctant, remember that there is little chance your counterparty will be.
B. The main difficulties associated with claims
Having explained the fundamentals of the contractual claim, it is now time to reveal an unfortunate truth: managing claims is rather complicated (or at the very least "not that simple", for those who see the glass half full).
Several reasons explain why claim management is still a fairly underdeveloped discipline in France, which in turn creates numerous difficulties in international contracts.
1. Formal requirements and admissibility of a claim
Let us start with form, since there is no prescribed format (save in the very rare contracts where templates have appeared in the schedules). The structure and form of a claim can vary from one project to another, depending on its nature, the objective pursued, and so on. Most claims, however, are drafted along the following lines:
- Statement of facts: a recap of what happened, in as much detail as possible, together with the difficulties or consequences encountered.
- Legal and contractual grounds: here you set out what the contract stipulates, or more generally the legal and regulatory obligations that apply (for example on personal data, health and safety, and so on)
- Causation or liability: establish the link between the facts and the consequences, in order to show that the recipient of the claim is indeed responsible, if only in part
- Financial and/or schedule impacts: give an estimate (more or less detailed, depending on what the claim procedure in the contract requires) of the costs and/or delays arising from the situation.
With practice, the form of the document is a relatively straightforward difficulty to master. The conditions for a claim to be admissible, on the other hand, are (too) often unknown or forgotten, creating a difficulty that can lead to the claim being rejected outright. Many contracts, particularly those based on FIDIC standards, set precise conditions, notably time limits, for a claim to be admissible. Failing to know the contract and the deadlines for submitting a claim can result in rejection on grounds of time-bar.
It is therefore essential to know these admissibility rules and conditions well, and ideally to map them out and circulate them internally so that nothing is missed.
2. The difficulty of getting the substance of the claim right
Once the admissibility and formal requirements are under control, the level of difficulty rises again when we come to the substance.
A good claim is one that is well documented and robust on the substance, setting out as unambiguously as possible the sequence: triggering event – loss – causation. In practice, though, the situation is rarely clear-cut, because a claim often arises in the middle of a project, a test campaign, a construction site, a plant, and so on, in conditions that hardly encourage stepping back for a factual, rational analysis of the situation. You will frequently be dealing with verbal commitments, questionable evidence (all the more so in the age of AI and deepfakes) and an inaccurate account of events, all combined with a shortage of time and resources and, sometimes, a hint of bad faith or of the subjectivity inherent in human relationships.
In short, the suddenness of a situation, together with the fact that the main players in a claim, at least when the triggering event occurs, are very often field staff with little exposure to the subject, makes activities such as tracing a chain of responsibility or obtaining probative evidence extremely complex in practice. The contract manager must therefore regularly show inventiveness, guile and, above all, persistence in order to reconstruct a reliable history. Combined with the deadlines for issuing a claim (see paragraph 1 above), this difficulty does not always allow quality claims to be prepared.
3. Corporate culture
The third and final factor making claim management complex, and by no means the least, is corporate culture. As we noted briefly in the introduction, French companies, and Latin-culture companies more generally, have a very different relationship with the contract from their Anglo-Saxon counterparts.
In most companies, the contract is the lawyers' business and the claim (wrongly associated with litigation) is to be avoided in order to preserve good relations between stakeholders. This relationship with the contract does not lend itself to handling claims efficiently and effectively, since the various players on a project will feel less involved, and may even be wary or distrustful, when a claim has to be prepared. At the opposite extreme, within these companies with uneven contractual cultures, once the decision to prepare a claim has been taken, those same players tend to approach it aggressively rather than collaboratively, making the subject even more complex than it already is.
Together, these three factors are the main difficulties we observe in the drafting and handling of claims. The good news is that with a modicum of method, the right tools and proper training, they can be overcome so that the claim genuinely becomes a lever for profitability.
C. Claim management best practices
In contract management, and in our case claim management, best practices abound and templates are legion, but above all they must be tailored to a corporate culture, to an industry, and even to the expectations and particularities of the counterparty or counterparties. Even so, within this jungle of tools, processes and methods, three broad families of good practice stand out, whether you are a large construction group or an SME subcontracting in electronics.
1. Adopt a process and tracking tools
There is no shortage of SaaS tools to help you with document management (EDM), contract management & administration (CLM) or construction site management (BIM). To give a concrete example of a tool worth putting in place, we can mention our partner Smartpreuve, whose application allows operational teams to document claims with concrete evidence, in a matter of seconds, from their smartphone. This is a perfect example of technology serving people, with an immediate ROI in claim management.
At Prime Conseil, however, we are firm believers in the people-process-technology trio and we recommend that you never neglect the two Ps (People & Process) by relying on a piece of technology that is supposed to change your life! Clarifying the internal claim process (who? what? how? when?) and setting it down in writing, within a CMP (Contract Management Plan) or failing that within a PMP (Project Management Plan), will make that process explicit and keep oversights and lapses to a minimum. On top of that, running an awareness session (or contract awareness) led by the contract manager will mobilise every team, from the project office to site staff, around what is at stake in a claim.
Finally, embedding claim management at the heart of contract performance is a practice we see far too rarely, yet one that delivers significant results. Many meetings and events during the life of a contract make it possible to identify potential claim situations, sometimes in advance (project meetings, site visits, project documentation reviews, HSE reports, and so on). Allowing the contract manager to attend these events and to access these documents is therefore a guarantee of quality in claim management.
2. Have a claim strategy
To manage claims effectively, it is essential not to take an aggressive approach. Coming at a claim sabre in hand risks creating tension and making the situation worse rather than resolving it. You must think carefully, ideally by bringing several stakeholders together to enrich the debate, about the message you want the claim to convey. That communication must be clear, measured and consistent with the facts.
It is crucial to assess the potential impacts of a claim before submitting it. That means not only the financial and time aspects, but also the repercussions for the relationship with your counterparty. A claim must reflect a fair assessment of the situation, avoiding any exaggeration that could undermine the credibility of your position.
Consistency between the claim and reality is essential. A claim must always rest on verifiable, documented facts. To maintain that consistency, it is important to keep a rigorous objectivity in analysing the situation. If at some point it becomes apparent that the claim is unfounded, it is crucial to have the courage to raise your hand internally and say so. Having internal processes that make such escalation easy is indispensable if you are to avoid unfounded claims that could erode trust and cooperation between the parties.
Restraint and relevance are also key. It is important not to overuse claims, so as to preserve their impact and effectiveness. Excessive recourse to claims can indeed be perceived as constant aggression, reducing their effectiveness and souring contractual relations. Varying the communication channel according to the seriousness of the subject is also good practice. An email may be enough for minor adjustments, for instance, whereas a face-to-face meeting may be more appropriate for more complex or sensitive matters.
In short, a well-defined claim strategy allows you to navigate contractual setbacks calmly. That means considered communication, an accurate assessment of impacts, unwavering objectivity and measured use of claims. By adopting these best practices, companies can turn contractual challenges into opportunities to strengthen their relationships and improve their overall performance.
3. Do not neglect the drafting
The last best practice may seem obvious, but the quality of the drafting plays a crucial part in whether a claim is accepted. You must be concise and factual so as not to blur the message. A well-drafted claim goes straight to the point, setting out the facts and the requests clearly and without padding. Clear, concise communication avoids misunderstandings and makes contractual issues easier to resolve.
When drafting a claim, it is also essential to strip out emotion and subjectivity. Personal feelings and opinions have no place in a document of this kind. A claim must remain neutral and professional, based solely on verifiable facts. This helps to keep the tone respectful and constructive, and so avoids inflaming tensions. Being didactic is another essential good practice. The claim must be understandable to everyone involved, including those who are not familiar with every aspect of the contract. To that end, it can be useful to have the document reviewed internally to make sure it is clear and accessible. Colleagues who were not directly involved in the situation can bring a fresh eye and identify potential ambiguities.
Drafting a claim also calls for a certain amount of guile and drafting skill. Knowing the contract and its clauses inside out is crucial if you are to avoid the trap of "anything you say may be used against you". Every assertion must be backed by solid evidence and every word chosen with care to prevent any unfavourable interpretation. Finally, a good claim must demonstrate a thorough understanding of the contract. That means citing the relevant clauses precisely and showing how they apply to the situation at hand. Such rigour strengthens the credibility of the claim and improves the chances of a favourable outcome.
In conclusion, drafting a claim is a delicate task that calls for clarity, objectivity and precision. By being concise, factual and didactic, while showing skill and a thorough knowledge of the contract, you can produce effective claims that help resolve disagreements and strengthen contract management overall.
Conclusion
In conclusion, claim management is an essential component of contract management, making it possible to clarify and adjust contractual terms so that projects are delivered as well as possible. In France, it is crucial to change the negative perception attached to claims and to see them as legitimate contract management tools. By clearly distinguishing claims from disputes, companies can avoid needless conflict and improve the profitability of their projects. By adopting structured practices and raising teams' awareness of what is at stake in claim management, organisations can turn the process into a lever for profitability and success.