Beyond the Blueprint: A Real-World Guide to Effective Claims Mitigation for Project and Commercial Managers

This leadership thought piece aims to provide practitioners with actionable insights to prepare, think critically, and ensure they fulfil their professional duty of care—to employers, contractors, and themselves. With over two decades in contract advisory and dispute resolution, my experience goes beyond theory. It’s rooted in hands-on involvement with delivery teams on major CAPEX programmes across the globe. Real-world experience leaves you with battle scars—insights and instincts that contrast with purely academic advice, which can sometimes miss the mark when it comes to on-the-ground relevance. If you're reading this, you probably know what it truly means to deliver complex construction projects, where reality, more often than not, strays far from the textbooks. Mitigating claims effectively isn’t about merely understanding NEC, JCT, or FIDIC; it’s about making correct and considered decisions, with the full facts and levers available to you, understanding the strategic and practical implications at play.

For those familiar with my approach, they will recognise my guiding principle: irrespective of the size of your organisation, the contract armoury is the same—what truly matters is the proficiency and expertise with which your team deploys it!

Can you anticipate the challenges before they hit your critical path? How do you navigate the unforeseen without sinking your budget? With claims accounting for over 36% of project costs (Arcadis Global Construction Disputes Report 2023), and over 70% of construction projects facing cost overruns or delays (Chartered Institute of Building), applying contracts practically is vital to safeguarding project success and your bottom line.

This guide dives deep into the key clauses, best practices, and case law insights necessary to help project and commercial managers like you effectively mitigate claims. Let's explore not only what's within the contracts but also the nuances neither NEC nor JCT nor FIDIC might have fully accounted for—questions and situations only a seasoned practitioner will encounter.

1. NEC Contracts: Mastering Z Clauses and Early Warnings

NEC contracts, especially NEC3 and NEC4, emphasise collaboration and proactive risk management. However, the implications of Z clauses are often overlooked. These tailored amendments can quickly disrupt even the best-laid plans, making it crucial to understand them thoroughly to avoid potential pitfalls.

Are You Ready for Bespoke Z Clauses?

Z clauses are contract-specific amendments that often modify standard NEC principles, altering notification requirements, risk allocations, or payment conditions. The question is: are you fully aware of their impact? Are you confident your project team understands them, or are you operating under the assumption that all periods and obligations are as per the unamended contract? It's often not until a dispute arises that the real implications of Z clauses become clear.

Clause 61.3 (Notification of Compensation Events): NEC3 and NEC4 require a contractor to notify the Project Manager of a Compensation Event within eight weeks. But what if a Z clause has amended this to a stricter period? Are your processes built to identify and act on potential Compensation Events within a tightened timeframe?

Real-World Application: On a significant rail project in the UK, a contractor missed the shortened Z clause notification period of four weeks instead of the standard eight. The contractor lost the right to claim an extension of time and additional costs due to this missed deadline. According to the RICS, over 50% of claims are unsuccessful because of a failure to meet contractual notice periods, often due to misunderstandings of bespoke amendments like Z clauses.

Assessing Compensation Events Under Clause 63.1: When a Compensation Event arises, how are you assessing its impact on both time and cost? Have you quantified the indirect impacts, or are you leaving money on the table by only considering the obvious direct costs?

Best Practices from Real Life: A complex infrastructure project faced delays due to unforeseen site conditions. By using Clause 63.1 to proactively assess all direct and indirect impacts, the contractor recovered additional costs and secured an extension of time. However, disputes arise in 35% of projects due to insufficient assessment of compensation events and failure to consider all potential cost implications (Chartered Institute of Arbitrators).

2. JCT Contracts: Variations, EOTs, and the Real Cost of Late Notices

JCT contracts are the cornerstone of UK building contracts. But how often are variation claims seen as an afterthought? Are project managers actively reviewing their obligations, or is the focus solely on getting the job done? Effective management of variations, extensions of time (EOT), and changes is often the difference between a project staying profitable or turning into a loss-making venture.

Variation Management (Clause 2.26): Variations are a leading cause of disputes. Are you formalising every change in scope, or are some adjustments made on-site, only to be challenged later? Failure to properly notify and document variations can lead to major disputes over cost and time.

Real-World Issue: A London-based developer found themselves in a drawn-out dispute when their contractor couldn't prove that a series of apparent "agreed" variations had ever been formalised in writing. The employer refused to pay, leading to claims and counterclaims that stalled project completion. RICS research highlights that nearly 60% of construction disputes in the UK are due to poorly managed variations and lack of proper documentation.

Extensions of Time (Clause 2.24): When a delay arises, it’s not unusual for the delivery team to jump into action to remedy the issue on-site, focusing on mitigation. However, this instinct can often lead to overlooking the immediate need to address the contractual requirement for an EOT. Failure to provide timely notice risks exposure to liquidated damages and rejected claims. The contractual landscape, therefore, often results in conflicting priorities between swift remedial action by the project team and the obligations to follow proper contract procedures.

Case Law Insight - Walter Lilly & Co Ltd v Giles Mackay and DMW Developments Ltd [2012]: This case clarified that even when concurrent delays occur (one by the contractor and one by the employer), the contractor can still be entitled to an extension of time for the employer’s delay. Do you have the documentation to back this up? Are your schedules robust enough to differentiate the causes of delays effectively?

3. FIDIC Contracts: Navigating the Claims Minefield

FIDIC contracts bring their own challenges. From international disputes to strict timelines, the process of making and resolving claims under FIDIC contracts requires diligence and expertise.

Clause 20.1 (Claims Notification): FIDIC mandates a strict 28-day notice period for claims. Are your processes nimble enough to flag potential claims and draft notices within this period? Delays in gathering supporting evidence should not prevent timely notification; otherwise, you risk being time-barred.

Real-World Challenge: On a Middle East airport project, the contractor failed to issue a timely claim notice within the 28-day period due to delays in assembling evidence. The employer rejected the claim, and the contractor's right to recover time and costs was lost. A CIArb study noted that over 40% of claims under FIDIC fail because of insufficient compliance with notice requirements.

Extension of Time (Clause 8.4): FIDIC’s Clause 8.4 provides for EOTs, but have you considered all angles when preparing your claim? How robust is your programme analysis when it comes to substantiating these EOT claims?

Case Law Insight - Van Oord UK Ltd v Allseas UK Ltd [2015]: The court underscored the strict need for compliance with notification requirements in FIDIC contracts. Failing to notify on time may lead to losing the right to claim, reinforcing the importance of a proactive and structured approach to claim management.

4. Change Control and Proactive Claims Prevention

Change is inevitable in construction projects. Uncontrolled or poorly managed changes are often a major source of disputes and claims. Both NEC and JCT contracts provide mechanisms to manage changes, but proactive change control is critical to prevent claims.

Proactive Thought: Are you treating change control as a defensive tactic to avoid claims, or as an opportunity to engage positively and improve project delivery? Effective change control should be collaborative, involving all stakeholders early on. Get buy-in from clients, subcontractors, and design teams to ensure transparency and manage expectations.

Regular Engagement and Ownership: Hold regular change control meetings that include the entire project team—commercial managers, site engineers, and client representatives—to identify and assess variations before they become disputes. The project team should collectively own the change log to ensure visibility and accountability for how changes impact the critical path and budget.

Standard Procedures and Impact Assessment: Establish clear SOPs for documenting changes promptly, with a focus on their impact on time, cost, quality, and risk. By treating each change as an opportunity to refine processes and improve project delivery, the team can make informed decisions and maintain strong client relationships while meeting contractual obligations.

Real-World Best Practice: The Heathrow Terminal 5 project is widely considered a success in change management. The project utilised early warnings and collaborative workshops to address variations effectively. Regular risk and change meetings, engaging all stakeholders, kept variations on track and avoided escalation into claims.

5. The Housing Grants, Construction and Regeneration Act 1996 and Adjudication

The Housing Grants, Construction and Regeneration Act 1996 (HGCRA), commonly known as the "Construction Act," is a cornerstone of the UK construction industry. In 2011, the Act was amended to improve dispute resolution and payment practices in construction contracts. These changes were introduced through Part 8 of the Local Democracy, Economic Development and Construction Act 2009 and took effect in October 2011.

The 2011 amendments enhanced the right to adjudication, making it quicker and easier to resolve disputes, and strengthened payment provisions to ensure better cash flow and transparency. One key change was to reinforce the prohibition of "pay-when-paid" clauses, which means that payments cannot be conditional on a third party making payment, except in cases of insolvency.

Are you making full use of these provisions, particularly the right to adjudication, to resolve disputes swiftly and ensure timely payments? These tools can be crucial to protecting your project's financial health and ensuring compliance with UK construction law.

Adjudication as a Lifeline: When disputes arise, are you leveraging your right to a swift decision through adjudication? It allows for an interim binding resolution within 28 days, crucial for cash flow and project continuity.

Real-World Application: A contractor on a major residential development faced a payment dispute with the employer, threatening project continuity. By using adjudication, they secured a binding decision in their favour within a month, enabling cash flow to be maintained and work to continue without further delays.

Conclusion: Mastery Through Collaboration and Skill

Contracts are not just legal documents—they are instruments of collaboration. Their effectiveness is directly tied to your skill and knowledge. It's not about who has the largest organisation or the most resources, but who can best utilise the tools at their disposal. True mastery in mitigating claims comes from fully understanding the contracts, anticipating risks, and using every available clause as an opportunity to engage, manage, and lead.

When you treat the contract as a living, breathing document—understanding every obligation and right, and communicating openly with your team, clients, and partners—you create a project environment where disputes can be resolved before they escalate. Collaboration, transparency, and proactive management become your strongest tools.

As with most things, it's refreshing to find the time to pen down these thoughts. Despite this being the 11th condensed draft, the effort to make it as concise and helpful as possible aims to assist my peers, both old and new. I hope that these insights will serve as a valuable resource, prompting reflection and action in your own practice.

Remember, regardless of the size of your organisation, we all have access to the same contractual tools. It truly is about the skill of your team in using them effectively. By embracing collaboration and honing our expertise, we not only mitigate claims but also elevate the standards of our industry.

In the complex world of construction, success is built on solid foundations—both literal and contractual. May this guide serve as a blueprint for navigating the challenges ahead, helping you to build not just projects, but lasting professional excellence.

Disclaimer:The views and opinions expressed in this article are those of the author and are intended for informational purposes only. They do not constitute legal advice, nor should they be relied upon as such. While every effort has been made to ensure the accuracy of the content, the author accepts no responsibility or liability for any errors or omissions, or for any loss or damage of any kind arising out of the use of, or reliance on, this information. Readers are advised to seek independent legal counsel for advice and guidance on specific legal issues and contractual matters.