Evaluation of the Cause and Impact of Claim in Construction Projects: The case of Addis Ababa City Construction Bureau Public Building Projects

Abstract

Construction is perhaps one of the very few rapidly growing industries in Ethiopia over the last few decades. The parties involved in the construction process usually raise claims over multiple issue including time extension and extra cost coverage. The claim is frequently the source of a tension between the contractor and the owner of the construction projects. The claims are usually raised when there is a difference in tender/initial contract sums and final construction prices in Addis Ababa’s public building projects. When these claims are not addressed correctly, they lead to delays, disagreements, and, in some circumstances, project cancellation. This study, designed as a descriptive study, employed both qualitative and quantitative research approaches during the data collection. Contractors, consultants, and clients who took part in public building construction projects were selected through a convenient sampling technique. Questionnaire, Interviews, and document analysis were employed as data collection instruments. The survey was given to 78 participants, and 61 respondents' responses were used in the study, interviews were conducted with 6 participants and case study were conducted with 6 projects, The results have indicated that claims were raised on price escalation, different site conditions, acceleration, disruption, extra work, contract ambiguity, delay, and changes The causes for the claims included extreme weather conditions, design error or omissions, discrepancies between contract documents, termination of contract by one party, unexpected changes in exchange rates, fluctuations in interest and inflation rates, and unexpected changes in material price. Claim contribution to final cost was approximately 3% and the claim contribution to the project duration was approximately 31%. This goes to show that claims contribute about a 3% to the increases in project costs in the study areas. Thus, effectively managing the occurrence of claims in the public building construction projects in different building phases is very important. This study also establish claim submission and administration framework for the Public building project clients and contractors based on PPA 2011 condition of contracts and the framework validate by using six experts. It is recommended that a careful preparation of contract clauses about the claim process could help to deal with claims that are received during execution period of the project.