For those engaged in engineering: construction enterprise visa change claims and counter-claims. Under what circumstances will it be carried out, and the details that need to be paid attention to

"Discussion on Claims and Counter-claims in Construction Projects"

Abstract: Claims and counter-claims are an important part of project construction contract management. Based on the analysis of current misunderstandings about claims and counter-claims, the article clarifies the concepts of claims and counter-claims, and then specifically analyzes the relationship between the two and their effect on the construction market.

Construction projects are affected by natural conditions such as terrain, geology, hydrology, meteorology, etc. The construction conditions are complex, which may cause the project design to be poorly considered or inconsistent with the actual situation, and may also cause various problems in the project construction contract. Such defects bring uncertain risks to the performance of the contract and make claims unavoidable. At present, in the performance of engineering construction contracts in my country, a common phenomenon is the construction claims made by the contractor, and the counter-claims made by the contractor and the supervising engineer in response to the contractor's claims. Construction claims and counterclaims are normal business interactions between owners and contractors during the construction process of engineering projects. Its healthy development plays a very important role in cultivating and developing the construction market and promoting the development of the construction industry. However, due to some one-sided understanding and vague understanding of claims and counter-claims, many contractors and construction units have great disputes and differences in this regard. Therefore, it is necessary for us to re-understand and explore claims and counter-claims, so as to provide useful reference for various units and departments to safeguard their legitimate interests, thereby promoting the healthy development of the field of construction engineering.

1. Current misunderstandings about claims and counterclaims

As for the connotations of claims and counterclaims, there are currently inconsistent opinions in the country, and there are some misunderstandings. Some people believe that claims and counterclaims should be understood and explained based on the provisions of the Contract Law and Conditions of Contract. This type of opinion holds that the claim is two-sided. Party B can make a claim against Party A, and Party A can also make a claim against Party B. This is determined by the equal subject status between Party A and Party B. After the interference incident occurred during the construction of the project, both parties were conducting contract analysis. On the one hand, they want to find favorable terms in the contract as a basis for recovering the losses incurred in the incident as soon as possible. On the other hand, they want to find clauses in the contract that are unfavorable to the other party in the contract, try to shirk their own responsibilities, and prevent their own possible economic losses. Therefore, the means of recovering one's own party's losses are called claims, and the means of preventing and reducing the claims made by the other party to the contract are called counterclaims. In other words, any initiative to make a claim is called a "claim"; any action to refute, modify or reject this "claim" is a "counter-claim". Some people even believe that claims are a process in which the contractor punishes Party A for its fault according to the rights granted by the contract, thereby making up for the losses and making profits. What's more, some contractors don't even know the word claim.

2. International definition of the meaning of claims and counterclaims

According to the international engineering construction claim specifications, claims and counterclaims are generally defined according to the object of the claim, and usually the contractor is The contractor's actual losses caused by reasons other than the contractor's and the request for economic compensation or extension of the construction period from the owner are called "claims". The owner's request for compensation from the contractor for the owner's losses due to the contractor's breach of contract is called a "counterclaim." Moreover, such requirements are based on the principle of compensation for actual losses and do not imply punishment. This definition has been recognized and commonly used by the international engineering contracting community and has a specific and clear meaning. Of course, if in a broad general sense, the contractor can make some kind of claim against the owner, the owner can refute or reject the contractor's claim, that is, make a counterclaim. The subcontractor may make a claim against the general contractor, and the general contractor may make a counterclaim against the claim. The contractor can make a claim against the supplier, and the supplier can also refute the claim, that is, make a counterclaim, etc. However, in the practice of construction claims, claims and counter-claims are generally not understood from a broad perspective, but according to their specific meanings, the contractor's compensation requirements to the industry are called "claims"; the owner's claims to the contractor are called "claims"; Compensation demands made by the contractor are called "counter claims", which generally include two aspects: First, analyze, review and revise the claims made by the contractor, deny its unreasonable demands and accept its reasonable demands. The second is to independently raise claims for loss compensation for the contractor's liability for other defects in the performance of the contract, such as the quality of a certain part of the project failing to meet the requirements of the construction technical regulations or delay in completion.

3. The relationship between construction project claims and counter-claims in actual operation

Construction claims are often a means for contractors to obtain more profits and are also an effective way for them to safeguard their own interests. According to the international definition of claims and counter-claims, we can understand the engineering claims and counter-claims in actual work in my country in this way: In construction projects, claims are normal management business that often occurs between both parties to the contract. We are accustomed to refer the contractor to The owner's claim for compensation for losses is called a "construction claim", and the purpose of the claim is mainly the construction period and costs. The owner's claim against the contractor or the owner's claim against the contractor is evaluated based on the terms of the contract and the unreasonable part of the claim is denied, which is called a "counter-claim".

(1) Claims caused by risks generally include contract risks, political risks, and economic risks, such as skyrocketing prices, changes in natural conditions, complex construction site conditions, changes in various laws and regulations, and the currency of foreign-related projects. Exchange risk, etc. In recent years, due to the continuous expansion of the construction team of my country's construction projects, most construction companies have seriously insufficient tasks. Competition in the construction market has become increasingly fierce. Construction units take advantage of their dominant position to use unfair methods when bidding and signing contracts. Or illegal means are used to transfer risks that should be borne by the owner to the contractor, resulting in an increase in the proportion of risks borne by the contractor. Therefore, such construction claims are often filed by the contractor, and the differences between the two parties are often large.

(2) Claims caused by changes in construction conditions During the construction process, new changes will inevitably occur, especially design changes. The contractor's quotation is calculated based on the original bidding documents and design drawings. According to the terms of the contract, any change in the quantity and nature of the work in the construction drawings, or a change in the construction procedures or construction plans of any part of the project, is a change. If If such changes affect the contractor's costs, the contractor can request a revaluation and an extension of the construction period. In actual construction, such claims often cause disputes, mainly between the owner and the contractor due to their respective interests. Different, deviation from the understanding of "events that an experienced contractor could not foresee" in the terms of the contract.

(3) Claims caused by excessive changes in the quantity of work. During actual construction, the quantity of completed work is often different from the designed quantity. Clause 3 of the fourth edition of FIDIC clearly stipulates that when the contract price changes, the amount of work completed increases or decreases. When it exceeds 15%, the effective contract price is allowed to be adjusted. The reason for the change in the contract price is the change in the project quantity. The main claims are as follows: First, the loss caused by the contractor's construction equipment imbalance. When bidding, according to the project quantities and construction requirements stated in the bidding documents and contract documents, formulate a construction plan, determine the quantity, type, and model of the construction equipment that should be equipped, and organize ordering and transportation to the site accordingly. An increase will inevitably require the addition of new construction machinery or an increase in the number of original machinery, causing unplanned investment by the contractor and expanding the planned cost of the project. If the quantity of work is significantly reduced, it will cause the original equipment to be idle or abandoned, resulting in losses for the contractor. At the same time, changes in the quantity of work will also change the quantity of construction materials prepared by the contractor, leading to claims. Second, due to changes in project quantities, changes in the original construction period may lead to extension of the construction period or rush to work, leading to claims.

(4) Claims caused by extension of construction period and delay. Claims for extension of construction period and delay usually include two aspects: one is the contractor's request to extend the construction period, and the other is the contractor's request for compensation due to reasons other than the contractor. Losses caused by project delays. During the construction of the project, due to the influence of weather, hydrology, geology and other factors, the construction period of the project will be extended or delayed. When the contractor's additional expenses are not compensated, a claim will inevitably result.

(5) Claims caused by accelerated construction

The progress of the project plan is disrupted, affecting the realization of the overall target construction period, resulting in the project not being completed on time, and the economic benefits of the owner being affected , when the owner believes through analysis that the delayed completion of the project will bring significant economic losses or political impact to itself, or when the delay of some projects leads to the delay of a series of projects, the owner can adopt rush measures, issue accelerated construction instructions, and require the contractor to The contractor invests more resources to complete the project and ensure the realization of the overall target construction period. This will inevitably lead to an increase in the contractor's project costs and cause claims from the contractor.

(6) Claims caused by other reasons: the owner breaches the contract and fails to provide the construction site in time as required, fails to deliver construction drawings, equipment and pay the project payment on time, resulting in the contractor's construction team failing to enter the site in time for construction, or The contractor has difficulty in cash flow, which affects the progress of the project and leads to claims.

4. Counter-claims

Since the contractor hopes to make profits by claiming claims, naturally the owners will do everything possible to reduce claims and protect their legitimate interests through counter-claims. Therefore, if there is a claim, there must be a counter-claim. Counterclaims are often used by owners to deal with claims from contractors. Claims and counter-claims are related to offense and defense. During the contract implementation process, the contractor must be able to attack and defend well and combine offense and defense to remain invincible. During the implementation of the contract, both parties are looking for opportunities to claim compensation. Once interference occurs, both parties shirk their responsibilities and attempt to claim compensation. If you cannot effectively make a counterclaim, you will also suffer losses. So claims and counterclaims have an equally important relationship.

(1) Prevent the other party from making claims

Active defense is usually expressed in:

1. To prevent yourself from breaching the contract, you must act in accordance with the contract. By strengthening project management, especially contract management, the other party will not be able to find the reasons and basis for claims. The project was implemented smoothly according to the contract, no losses occurred, no claims were required, the parties to the contract had no disputes, achieved good cooperation results, and everyone was happy.

2. Both parties are often responsible for interference incidents that occur in actual projects. Many contractors adopt a preemptive strategy and file claims first. Strive for a favorable position in the claim, disrupt the opponent's position, and gain the initiative. In addition, filing a claim as early as possible can prevent the claim opportunity from exceeding the time limit of the claim.

(2) Counterattack the other party’s claim request

In order to avoid and reduce losses, it is necessary to counterattack the other party’s claim request. For contractors, this claim may come from the owner, general (sub)contractor, or supplier. The most common measures to counter the other party's claims are:

1. Use our claims to counter (balance) the other party's claims, eventually causing both parties to make concessions or not pay each other.

2. Refute the other party’s claim report, find reasons and evidence to prove that the other party’s claim report does not comply with the contract, is unfounded, inaccurate in calculation, and inconsistent with the facts, so as to shirk or even mitigate your own claims. Liability to compensate yourself so that you will not suffer or suffer less losses.

To sum up, claims and counterclaims are defined based on different claim objects. Their fundamental purpose is to make a compensation request to the other party for an event caused by the other party’s responsibility. Both claims and counterclaims must be based on the contract. The events that occurred must be true and the evidence is conclusive, the cost calculation must be reasonable and accurate, and the liability analysis must be clear. This will make it easier for both parties to handle the contract and reduce disputes and disputes. As the legal system in the construction field becomes increasingly perfect, both parties to the construction project contract should act in accordance with the "game" rules, strictly abide by the internationally accepted FIDIC contract terms, and be honest and trustworthy. Only in this way can the construction project field develop in a healthy and orderly manner.

References

1 Definition of Ran Liping’s claim and counter-claim [J]. Modernization of Construction Management, 2001, (4)

2 Qiu Chuang International Engineering Several issues to note in claims [J]. Engineering Construction and Design, 2001, (1)

3 Chen Guimin Construction Claims and Counter Claims [M]. China Construction Industry Press, 1995

Excerpted from Real Estate E Network: