Claim Avoidance – The Service That Nobody Wants (Apparently!)

 

After more than 20 years selling, managing, and delivering claims and expert services, I can count the number of claim avoidance commissions I’ve seen on the fingers of one hand.

It’s not for lack of trying. Claim avoidance has always been an “offered service line.” Yet in practice, it’s the one nobody seems to buy.

Take this scenario:

A contractor has just won a SAR 1 billion complex, multi stakeholder, fast-track, Red Book style contract (with contractor design elements). So, risky from the start.. Delay damages accrue daily against multiple key dates and can cap out at SAR 100 million in only three months. The baseline programme will be the primary yardstick by which all future progress – or lack of it – is judged.

How much do you imagine the contractor is willing to pay for a specialist claims review of that programme?

Given the potential exposure, you’d expect the answer to be “a lot.” Whatever figure you’re imagining, divide it by ten. No – divide it by one hundred. Now you’re closer.

And this hasn’t changed in twenty years.

Why?
  • Over-optimism: nobody likes to think about claims at the start.
  • Culture: talking about “claims” so early is seen as negative, even defeatist, inside contracting organisations.
  • Margins: when profit can be 3% or less, every fil is scrutinised – and claim avoidance feels like a cost, not an opportunity.
  • Internally Covered: the planning team are assumed to have “dealt with it” in their baseline build-up.

But here’s the truth: planners and claims specialists are not the same.

Planners build baseline programmes. There is craft, extensive construction process knowledge and logic in what they do. But planners are not claims specialists, and they don’t think like them. Claims specialists may have been planners once, but they’re built differently. They think in terms of risk and opportunity. They’re weighing how to protect entitlements, how to shape the logic around employer risks, and how to get the programme approved without tipping their hand.

It’s an art. And when a claims specialist works alongside the in-house planner, the risks reduce and the opportunities increase dramatically – at minimal cost.

So, for me the answer is obvious: yes, this is a worthwhile investment.

But the industry still resoundingly says “no.”

And after twenty years, I still don’t understand why.

 

David Brodie – Stedman 

davidbrodiestedman@dispute-iq.com