Claims In International Projects In Ethiopia
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Date
2003-06
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Addis Ababa University
Abstract
Claims are an inevitable fact of life in the construction industry. Whether in local or
International contract projects, the issue of claims remains the same. In the context of civil
engineering projects, claims are a demand for money or time extension or both to which one
party rightly or wrongly assumes that he has a right.
With the advent of the liberalization of the economy and availability of funds from
international financers, there has been a surge of large-scale civil engineering construction in
the Ethiopian construction industry. This is particularly evident in the road sector, where the
Ethiopian government, has been investing a substantial amount of money with the assistance of
International financers like the World Bank.
While this large scale investment in the construction sector has been a major step in the right
direction, this venture has been beset with unfortunate incidences of claims ranging in millions
of birr and sometimes even in excess of 100% of the project costs. In this regard therefore, the
objectives of this thesis are to investigate the causes of these claims and to propose a possible
remedy as to the handling of similar incidents in the future.
Whilst claims are an inevitable fact in the construction industry, future handling of such
incidents will have to depend not on an attitude of resignation, but on developing a healthy
understanding of their occurrence and formulating a strategy of minimizing risks associated
with such occurrences. In this aspect one of the main observations of this research work has
been the fact that the Ethiopian construction industry seriously lacks, qualified engineering
professionals with an appropriate level of training in construction management, international
contract administration and claims handling.
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It appears that the provisions of the FIDIC forms of contract may not be well understood
within the circles of Ethiopian engineering professionals. This has led in many instances to
avoidable cases of claims, costing the Ethiopian government millions of birr. It is, therefore,
mandatory that the Ethiopian construction industry, especially those responsible for running
international projects, take a serious step to institute better contract management, they should
also initiate exposure to international contract procedures, enforce training, develop regulated
pre-tender document preparation and better bid evaluation measures. It is also essential that the
process of pre-qualification for both consulting and contracting firms be mandatory in the
administration of international projects.
The findings of this research indicate that of the 10 international projects surveyed, all of them
have experienced claims related to late handing over of site, rights of way problems as well as
design errors, or late submission of drawings by the supervising consultants. This is indicative
of inadequate contract administration practices. 80% of them have also experienced claims
related to weather conditions.
It can easily be observed that a major portion of the claims could have been mitigated, had
there been a coordinated effort to administer the contracts in accordance with the expressed
terms and conditions stipulated in the agreement. In the future, the Ethiopian construction
industry needs to focus on the development of adequate project management skills and
enhance the contract administration capacity of its practicing professionals, with particular
emphasis on international projects. The establishment of a “ think-tank” of experts with
appropriate negotiation skills, overseeing international projects can also assist towards this
objective.
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Keywords
Projects