Tips for public sector owners
Claims on megaprojects are almost always inevitable, particular in urban projects. The top 100 projects under development in Canada are valued at $199 billion, with 23 transit projects valued at $46 billion, an average of approximately $2 billion per project.1
Most of these are light rail projects (LRTs) running through densely populated urban areas. In many of these projects third party consultations are increasingly complex, the number of stakeholders and interfaces require more careful coordination, design approvals require more staff, and contractors resort to carry high risk premiums in their bids on many DBF (Design Build Finance) and P3 projects.
In this environment, delay claims, disputes and litigation are increasing faster than ever before. Based on our experience reviewing urban transit contract claims, it is not unusual for claims values to range between 10-20% of the contract value. Considering this impact on tax payer dollars, many owners are increasing their focus on strengthening their in-house claims management functions.
In helping to avoid, identify, and settle claims efficiently we have compiled some tips and leading practices for public sector owners. But let’s start with six typical root causes for claims.
Some typical root causes for project claims include:
Every owner organization is different. In house capacity and experience in devising commercial strategies to avoid or settle claims varies. There are no hard and fast rules that apply to every organization, but the following are some claims leadership considerations for project owners.
1 Renew Canada, Top 100 Projects
© 2021 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
For more detail about the structure of the KPMG global organization please visit https://home.kpmg/governance.