Effective record keeping pays off in the long term
As disputes increase in the GCC’s construction market, contractors will have to implement diligent record-keeping policies to file successful claims
I’m not the first to write about this subject and I probably won’t be the last, but it appears that the importance of up-to-date records to the success of a claim is not getting through to many in the industry.
As project managers, contract administrators, commercial managers, and the like, it is your job to ensure that your organisation is correctly advised about record keeping, and that – instead of being limited to recording correspondence and drawing submittals – it is taken seriously.
A claim situation can seem a long way off when your new project is just out of the box, and to even think of a claim at this stage might seem impertinent. However, how many projects have you worked on that have considerable overruns, with the parties being millions apart in their evaluations of the final contract sum? How many claims, large or small, have been rejected due to a lack of substantiation? To fail to reiterate the importance of contemporary record keeping to site-team members would be a disservice.
It is necessary to implement policies, capture records in a timeous manner, and identify who shall be responsible to execute these strategies. These should be measurable, and should be addressed in the contractor’s internal progress meetings.
But why are contemporaneous records important, and why do you have to go to the trouble and considerable effort of maintaining them? The stipulations of standard contractual conditions typically used in this region answer those questions.
FIDIC’s Red and Yellow contracts require the contractor “to keep such contemporary records as may be necessary to substantiate any claim”.
The records may be monitored by the engineer, and he may instruct that further contemporary records are maintained. The contractor then has 42 days from the notice date to provide a fully detailed claim, with full supporting particulars.
Whilst not fatal to a claim, a lack of records may have prejudiced or prevented the engineer from undertaking a proper investigation of the claim, which can be detrimental to the claimant’s chances.
A claimant has to satisfy the entitlement, causation, and quantum elements to successfully pursue a claim, and contemporaneous records are a powerful tool in any claimant’s armament.
But what are contemporary or contemporaneous records? Considering the importance of this much-used phrase, it can be surprising to learn that there is little judicial guidance about it.
However, this was answered as a point-of-law question in the case Attorney General of the Falkland Islands v Gordon Forbes Construction Falklands (No. 2), where acting Judge Sanders held that “contemporary records meant original or primary documents, produced or prepared at about the time giving rise to the claim, whether by or for the contractor or employer.” He also concluded that the making of the record did not need to be instantaneous, and whether a record would be regarded as contemporaneous would depend on the facts surrounding its making.
Documents needed to support or rebut specific elements are a function of the claim. The following is not an exhaustive list, but these records should be updated regularly: progress schedules, progress photographs, timesheets, labour and plant allocation sheets, site engineer’s diaries, and so on.
Contemporaneous documents prepared before a delay are as important as those documents prepared after an event for comparison purposes. Tender budgets, rate build-ups, and productivity information should also be safely stored, as these records are important means of demonstrating changed circumstances.
Regardless of any sophisticated argument formulated by the party prosecuting or rebutting a claim, few if any will be able to undermine well-maintained contemporary records. They are your best form of evidence – ignore them at your peril.