Management of the Holyrood building project (PDF ... - Audit Scotland

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2.94 Agreeing final accounts includes
the process of negotiating:
• claims from contractors against
the client for extra costs, for
example as a result of delay
outside the contractors’ control or
additional work
• claims for set off (reduction) by
the client against contractors
where the client has incurred
extra costs because of the
contractors’ poor work or under
performance.
2.95 Project management are
monitoring action by the cost
consultant and construction manager
whose responsibilities include the
initial examination of claims and
recommendations to the client about
settlement. The consultants have
audited claims for delay costs as the
work has progressed. If agreement
on any account cannot be reached by
negotiation with a contractor there is
the option for either party to seek
adjudication, arbitration or litigation.
2.96 In April 2004 project
management concluded that the
general approach should be to advise
the Corporate Body in the
Summer/Autumn of 2004 on issues
in relation to the handling of all claims
and seeking guidance on the
framework to be adopted. Project
management recognise there is
scope for obtaining legal advice on
some matters relating to claims in
advance of providing advice to the
Corporate Body. At the time of
preparing this report project
management had identified several
possible claims cases where action
may be required, but there was no
agreed register of issues or actions
to be considered. Project
management was considering an
independent review of all claim
negotiations, because of the need to
be certain that very significant
increases in package costs could be
justified in each case.