Claims In International Projects In Ethiopia

Claims are an inevitable fact of life in the construction industry. Whether in local orrnInternational contract projects, the issue of claims remains the same. In the context of civilrnengineering projects, claims are a demand for money or time extension or both to which onernparty rightly or wrongly assumes that he has a right.rnWith the advent of the liberalization of the economy and availability of funds fromrninternational financers, there has been a surge of large-scale civil engineering construction inrnthe Ethiopian construction industry. This is particularly evident in the road sector, where thernEthiopian government, has been investing a substantial amount of money with the assistance ofrnInternational financers like the World Bank.rnWhile this large scale investment in the construction sector has been a major step in the rightrndirection, this venture has been beset with unfortunate incidences of claims ranging in millionsrnof birr and sometimes even in excess of 100% of the project costs. In this regard therefore, thernobjectives of this thesis are to investigate the causes of these claims and to propose a possiblernremedy as to the handling of similar incidents in the future.rnWhilst claims are an inevitable fact in the construction industry, future handling of suchrnincidents will have to depend not on an attitude of resignation, but on developing a healthyrnunderstanding of their occurrence and formulating a strategy of minimizing risks associatedrnwith such occurrences. In this aspect one of the main observations of this research work hasrnbeen the fact that the Ethiopian construction industry seriously lacks, qualified engineeringrnprofessionals with an appropriate level of training in construction management, internationalrncontract administration and claims handling.rnxvrnIt appears that the provisions of the FIDIC forms of contract may not be well understoodrnwithin the circles of Ethiopian engineering professionals. This has led in many instances tornavoidable cases of claims, costing the Ethiopian government millions of birr. It is, therefore,rnmandatory that the Ethiopian construction industry, especially those responsible for runningrninternational projects, take a serious step to institute better contract management, they shouldrnalso initiate exposure to international contract procedures, enforce training, develop regulatedrnpre-tender document preparation and better bid evaluation measures. It is also essential that thernprocess of pre-qualification for both consulting and contracting firms be mandatory in thernadministration of international projects.rnThe findings of this research indicate that of the 10 international projects surveyed, all of themrnhave experienced claims related to late handing over of site, rights of way problems as well asrndesign errors, or late submission of drawings by the supervising consultants. This is indicativernof inadequate contract administration practices. 80% of them have also experienced claimsrnrelated to weather conditions.rnIt can easily be observed that a major portion of the claims could have been mitigated, hadrnthere been a coordinated effort to administer the contracts in accordance with the expressedrnterms and conditions stipulated in the agreement. In the future, the Ethiopian constructionrnindustry needs to focus on the development of adequate project management skills andrnenhance the contract administration capacity of its practicing professionals, with particularrnemphasis on international projects. The establishment of a “ think-tank” of experts withrnappropriate negotiation skills, overseeing international projects can also assist towards thisrnobjective.

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