Construction claims in United Arab Emirates: Types, causes,

and frequency
Essam K. Zaneldin
*
Department of Civil and Environmental Engineering, United Arab Emirates University, P.O. Box 17555, Al Ain, United Arab Emirates
Received 3 November 2005; accepted 17 February 2006
Abstract
The construction industry in the United Arab Emirates is considered the largest single industry, yet, it is also very complex and the
most fragmented industry as it involves multidisciplinary participants. In this multidisciplinary environment, claims appear to hinder the
completion of construction and cause delays in delivering projects. This research presents the results of a study of the types, causes, and
frequency of construction claims in the emirates of Dubai and Abu Dhabi in UAE using a data from 124 claims for a variety of projects
in the two emirates. The data were analyzed and the results of this analysis along with recommendations on how to reduce/prevent claims
in construction are then presented.
2006 Elsevier Ltd and IPMA. All rights reserved.
Keywords: Claims; Construction industry; Contracts; International projects
1. Introduction and background
The United Arab Emirates (UAE) government is invest-
ing billions of dollars every year in new facilities to improve
the infrastructure of the country. Modern cities have risen
from the barren desert, connected by a vast network of
rst-class roads and linked to the outside world by modern
airports and ports. Housing compounds, schools, hospi-
tals, shopping malls, telecommunications, electricity and
water, luxury hotels, and recreational facilities have all
been provided in a short space of time. The majority of
these projects are being constructed in Dubai and Abu
Dhabi Emirates.
In view of the above, and considering the giant size of
these projects, it is not surprising that the number of claims
continues to increase. Construction claims are considered
by many project participants to be one of the most disrup-
tive and unpleasant events of a project [1]. According to
Vidogah and Ndekugri [2], however, claims are becoming
a way of life and, indeed, an indispensable part of modern
contract systems. In UAE, construction claims, normally
seen in almost every construction project, are direct results
of the ongoing growth in the construction industry in the
country. In general, claims are common in construction
projects and can happen as a result of several reasons that
can contribute to delaying a project and/or increasing its
costs. Finishing a project on schedule is a dicult task to
accomplish in the uncertain, complex, multiparty, and
dynamic environment of construction projects [3]. To
enhance the chances of success, contractors submitting
claims must closely follow the steps stipulated in the con-
tract conditions, provide a breakdown of alleged additional
costs and time, and present sucient documentation [4].
On the other hand, project owners need to follow an over-
all comprehensive step-by-step procedure for tracking and
managing the claims submitted by contractors [57].
Once a claim has been presented, the owner and con-
tractor can come to an agreement concerning the claim
and, thereby, create a change order or a modication, or
they may disagree and create a construction contract dis-
pute. Analyzing the various types and causes of claims is
an important task to resolving these claims [8,9]. Since pro-
0263-7863/$30.00 2006 Elsevier Ltd and IPMA. All rights reserved.
doi:10.1016/j.ijproman.2006.02.006
*
Tel.: +971 3 713 3043; fax: +971 3 762 3154.
E-mail address: essamz@uaeu.ac.ae.
www.elsevier.com/locate/ijproman
International Journal of Project Management 24 (2006) 453459
INTERNATIONAL JOURNAL OF
PROJECT
MANAGEMENT
ject participants are becoming more aware of the high costs
and risks associated with claims and their litigation, the
construction industry needs to develop methodologies
and techniques to reduce or prevent claims. Even though
construction claims are frequent and their resolution is dif-
cult, many times legal advice is not sought because it is
not available or because it is expensive [10,11].
Several attempts were made in the literature to study the
types of construction claims and determine their main
causes and ways of avoiding them. Scott [7] conducted a
survey to investigate the causes and mechanisms that are
used to prepare and evaluate delay claims in United King-
dom. Hartman and Snelgrove [12] evaluated the eective-
ness of written contract language to communicate risk
apportionment between contracting parties. Al-Khalil
and Al-Ghay [13] determined the most important causes
of delay claims in public utility projects in Saudi Arabia
based on the frequency and severity of these causes.
There is still, to a great extent, a lack of information
related to the causes of construction claims in UAE and
the ways to prevent or minimize them. This research, there-
fore, presents the results of a study of the types, causes, and
frequency of construction claims in the emirates of Dubai
and Abu Dhabi using a data collected for 124 claims
related to dierent projects in the two emirates. The data
are analyzed to identify problem areas and recommenda-
tions to reduce claims in construction projects are then
presented.
2. Scope of this study
Information for 124 claims related to dierent construc-
tion projects in Dubai and Abu Dhabi Emirates in UAE
were collected. The data were collected from 71 dierent
entities (29 contractors, 33 consultants, and 9 owners) in
the two emirates. The reason of choosing these two emir-
ates is that they represent around 78% of all investments
in the country (see Fig. 1), according to the UAE industrial
statistics report [14]. Based on their main area of specialty,
the proles of the 71 entities are shown in Table 1. The 71
owners and rms were asked to provide information
related to types of projects, amounts of claims requested
by contractors, amounts awarded by owners, and the
method used to resolve each claim. The data for the 124
claims were mainly extracted from owners, consultants,
and contractors claims database. Data of claims that were
resolved by arbitration were examined against those listed
in the UAE Arbitration Committee database while data
of claims that were resolved by litigation were examined
by reviewing Abu Dhabi and Dubai court rulings.
Owners and rms were also asked to provide informa-
tion related to types of claims, causes of claims, and fre-
quency of each type and cause by lling a questionnaire,
in which they choose one of ve possible options for the
frequency of each type and cause of claims: (1) never; (2)
rare; (3) average; (4) frequent; and (5) very frequent. The
data were then analyzed and a detailed analysis of the data
is shown in the following section.
3. Data analysis
The data collected represent various types of projects
constructed over a period of around ve years (from
2000 until 2004, inclusive). The types of projects include
buildings, roads and highways, water and sewer lines,
power plants, airports, in addition to a variety of other
types. The distribution of the types of projects is shown
in Fig. 2 with road and building projects having the highest
percentage among all other types (34.7% and 30.6%,
respectively). The data collected were analyzed and a
detailed discussion of the analysis is shown in the following
subsections.
3.1. Types of claims and their frequency
The data received indicated that the types of claims in
construction projects in UAE can be classied into six
main types: (1) contract ambiguity claims; (2) delay claims;
(3) acceleration claims; (4) changes claims; (5) extra-work
9.2%
0.7%
4.9%
1.6%
5.8%
23.3%
54.5%
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%
Abu Dhabi
Dubai
Sharjah
Ajman
Raas Al-Khaimah
Umm Al-Quwain
Al-Fujairah
E
m
i
r
a
t
e
Percent of Investment
Fig. 1. Percent of investments in all emirates in UAE.
Table 1
Proles of respondents
Type of respondent Number of
respondents
Number of claims Company main area of specialty
Residential and commercial Industrial Roads and highways Heavy construction
Owner 9 18
Designer/consultant 33 57 12 1 15 5
Contractor 29 49 10 2 11 6
Total 71 124
454 E.K. Zaneldin / International Journal of Project Management 24 (2006) 453459
claims; and (6) dierent site condition claims. To provide a
realistic idea about the frequency of each type of claims,
rms were asked to ll a questionnaire in which they
choose one of ve possible options for the frequency of
each type of claims, as mentioned in the previous section.
A weight in a scale from 0 to 4 was given for each of the
ve frequencies with a weight of 0 for never, 1 for rare,
2 for average, 3 for frequent and 4 for very fre-
quent. No weight was given when no response was pro-
vided. The frequencies for each type of claims received
are listed in Table 2. Responses for the changes type of
claims, for example, indicated that one rm did not
respond, 4 rms responded as never, 9 responded as
rare, 22 responded as average, 21 responded as fre-
quent, and 14 responded as very frequent. Data of
Table 2 were analyzed and a weighted average was calcu-
lated for each type of claims as follows:
Weighted Average
X
W
i
xX
i
=N; 1
where W
i
is the weight assigned to the ith option; X
i
is the
number of respondents who selected the ith option; and N
is the total number of respondents (71 in this study).
To better understand the importance of each type of
claims, an importance index percentage was then calculated
as follows:
Importance Index Weighted Average 100=4. 2
The importance index values for each type of claims are
shown in Table 3. For example, the weighted average for
the changes type of claims = (0 4 + 1 9 + 2 22 +
3 21 + 4 14)/71 = 2.42. The importance index for this
type of claims = (2.42 100)/4 = 60.5%. The results of this
analysis indicate that changes claims are the most fre-
quent type of claims. This type of claims was ranked rst
with an importance index of 60.5%. Extra-work claims
Sewer Lines,
12.1%
Power Plants,
3.2%
Roads, 34.7%
Buildings,
30.6%
Other, 4.0%
Airports, 4.0%
Water Lines,
11.3%
Fig. 2. Distribution of the types of the 124 projects.
Table 2
Frequency of each type of claims
Types of claims No response Never Rare Average Frequent Very frequent
Contract ambiguity claims 7 14 23 15 8 4
Delay claims 3 6 14 20 21 7
Acceleration claims 5 14 19 15 10 8
Changes claims 1 4 9 22 21 14
Extra-work claims 2 4 10 18 23 14
Dierent site conditions claims 1 11 22 23 9 5
Table 3
Ranking of each type of claims based on their frequencies
Types of claims Importance index (%) Rank
Changes claims 60.5 1
Extra-work claims 60.2 2
Delay claims 51.1 3
Dierent site conditions Claims 40.5 4
Acceleration claims 39.1 5
Contract ambiguity claims 32.7 6
Table 4
Ranking of each cause of claims based on their frequencies
Causes of claims Importance
index (%)
Rank
Change or variation orders 55.0 1
Delay caused by owner 52.5 2
Oral change orders by owner 51.4 3
Delay in payments by owner 48.9 4
Low price of contract due to high competition 48.6 5
Changes in material and labor costs 46.1 6
Owner personality 45.1 7
Variations in quantities 44.7 8
Subcontracting problems 44.0 9
Delay caused by contractor 43.7 10
Contractor is not well organized 43.7 10
Contractor nancial problems 43.7 10
Bad quality of contractors work 42.6 13
Government regulations 40.1 14
Estimating errors 39.1 15
Scheduling errors 39.1 15
Design errors or omissions 38.4 17
Execution errors 37.7 18
Bad communication between parties 37.7 18
Subsurface problems 37.0 20
Specications and drawings inconsistencies 35.6 21
Termination of work 35.6 21
Poorly written contracts 33.8 23
Suspension of work 33.8 23
Accidents 33.1 25
Planning errors 32.7 26
E.K. Zaneldin / International Journal of Project Management 24 (2006) 453459 455
were ranked second with an importance index of 60.2%
while contract ambiguity claims were ranked last with
an importance index of 32.70%. The ranks of all types of
claims are listed in the last column of Table 3.
3.2. Causes of claims and their frequency
The data received indicated that there are 26 possible
causes of claims. Similar to what is explained in the previ-
ous subsection for types of claims, rms were asked to
choose one of ve possible options for the frequency of
each cause of claims: never, rare, average, frequent, and
very frequent with a weight for each in a scale from 0 to
4. Responses for the frequency of the change orders
cause of claims, for example, indicated that 4 rms did
not respond, 4 responded as never, 13 responded as
rare, 18 responded as average, 21 responded as fre-
quent, and 11 responded as very frequent.
A weighted average was calculated using Eq. (1) for each
cause of claims and the importance index percentage was
then calculated using Eq. (2), as shown in Table 4. The
results of this analysis indicate that change orders are
the most frequent cause of claims with an importance index
of 55% while delay caused by owner was ranked second
with an importance index of 52.5%. Planning errors cause
of claims was ranked last with an importance index of
32.7%. The ranks of all causes of claims are listed in Table 4.
3.3. Claim amounts requested by contractors and awarded by
owners
Further analysis was also performed to nd the fre-
quency of claims for dierent amounts requested by con-
tractors and awarded by owners. In general, claim
amounts requested by contractors range from $111,350 to
$167,245,000. Fig. 3 shows the frequency of claims for dif-
ferent amounts requested by contractors. The gure indi-
cates that the majority of claims (44 claims) are less than
or equal to $2.5 million. The next highest frequency (30
claims) is in the range from $2.5 to $5 million. A total of
only 11 claims are above $20 million. The solid line plotted
in Fig. 3 shows the cumulative percentage for the number
of claims for each range of claim amounts requested by
contractors. It can be observed from the gure that the
amounts requested by owners for around 60% of the claims
are less than $5 million.
44
30
8 8
10
3
7
3
11
0
5
10
15
20
25
30
35
40
45
50
0
-
2
.
5
2
.
5
-
5
5
-
7
.
5
7
.
5
-
1
0
1
0
-
1
2
.
5
1
2
.
5
-
1
5
1
5
-
1
7
.
5
1
7
.
5
-
2
0
>
2
0
Amounts Requested by Contractors (Millions of US$)
F
r
e
q
u
e
n
c
y
0%
20%
40%
60%
80%
100%
120%
C
u
m
u
l
a
t
i
v
e

P
e
r
c
e
n
t
a
g
e

f
o
r
t
h
e

N
u
m
b
e
r

o
f

C
l
a
i
m
s
Fig. 3. Frequency of claims for amounts requested by contractors.
65
4
10
2 2 2
9
0
10
30
40
50
60
70
0
-
0
.
5
0
.
5
-
1
1
-
1
.
5
1
.
5
-
2
2
-
2
.
5
2
.
5
-
3
3
-
3
.
5
3
.
5
-
4
>
4
Amounts Awarded by Owners (Millions of US$)
F
r
e
q
u
e
n
c
y
0%
20%
40%
60%
80%
100%
120%
C
u
m
v
e

P
e
r
c
e
n
t
a
g
e
f
o
r
t
h
u
m
b
e
r

o
f

C
l
a
i
m
s
16
14
20
u
l
a
t
i
e

N
Fig. 4. Frequency of claims for amounts awarded by owners.
456 E.K. Zaneldin / International Journal of Project Management 24 (2006) 453459
On the other hand, the amounts awarded to contractors
by owners range from $0.00 to $21,674,650. Fig. 4 shows
the frequency of claims for dierent amounts awarded by
owners. As illustrated in the gure, the majority of claims
(65 claims) are below $0.5 million. The next highest fre-
quency (16 claims) is in the range between $0.50 and $1
million followed by 14 claims in the range from $1 to
$1.5 million. The solid line of Fig. 4 shows the cumulative
percentage for the number of claims for each range of claim
amounts awarded by owners. As can be depicted from the
gure, the amounts awarded by owners for more than 76%
of the claims are less than $1.5 million.
To give a better understanding of these numbers, claim
amounts were grouped based on the type of project and the
ratios of the amounts requested by contractors and those
awarded by owners were then calculated, as shown in Table
5. These ratios indicated that, on average, only 16% of
claim amounts requested by contractors are awarded by
owners, as shown in the bottom of the last column of Table
5. This can also provide an idea about the risk associated
with each type of project. To owners, it can be assumed
that the higher the ratio, the higher the risk associated with
this type of projects. Based on this assumption, sewer-line
projects with only 0.04 ratio provided the lowest risk to
owners while power-plants with a ratio of 0.78 provided
the highest risk.
4. Case study
A sample case study of a claim is presented in this sec-
tion. The case is about a contractor specialized in the con-
struction of residential and commercial buildings. The
contractor was asked by an owner to build a 42-story res-
idential building using a lump-sum type of contract. The
building consists of ve dierent apartment types. During
construction, the owner changed the internal layout of
one type and made changes to the internal nishes of
three types of apartments. The contractor submitted a
claim to the owner asking for $5,895,000 as a compensa-
tion for the additional costs resulting from the owners
changes. This amount is due to the changes in the speci-
cations of the internal nishes and, therefore, the con-
tractor did not ask for any time extension. After
studying and analyzing the contractors claim, the owner
found that these changes do not worth more than
$950,000. After several meetings to negotiate this issue,
the two parties agreed to settle this claim for an amount
of $1,050,000. Although this represents only 17.8% of the
original amount requested, the contractor accepted this
amount as they are normally loath to use arbitration or
go to court to resolve disputes. This is because of the long
time and high costs associated with these two methods of
resolution. Several other cases of claims were also studied
and it was found that changes made by owners represent
the most frequent type and cause of claims in construc-
tion projects in UAE, which supports the ndings of this
study.
5. Methods used to resolve claims in UAE
According to the UAE Civil Procedures Code, disput-
ing parties in any construction project may resolve and set-
tle any claim using the normal resolution channels: (1)
negotiation; (2) mediation; (3) arbitration; or (4) litigation.
According to this study, the majority of construction
claims in UAE (77.1%) are resolved using negotiation, as
shown in Fig. 5. The gure also shows that only 4.9% of
claims were resolved using litigation. This conrms that
rms are quite reluctant to go for litigation because of
the long time and high costs and risks associated with this
method of resolution.
Table 5
Summary of claim amounts based on project types
Type of project Number
of claims
Amounts requested
by contractors (US$)
Amounts awarded
by owners (US$)
Ratio of amount
awarded/amount
requested
Airports 5 82,439,674 8,027,358 0.10
Buildings 38 216,414,118 32,481,009 0.15
Power-plants 4 34,692,123 27,137,759 0.78
Roads 43 289,461,685 42,416,886 0.15
Sewer-lines 15 356,301,608 14,897,655 0.04
Water-lines 14 138,126,605 30,570,853 0.22
Others 5 36,173,170 29,635,870 0.82
Total 124 1,153,608,983 185,167,390 0.16
Mediation: 12.2%
Arbitration: 5.7%
Litigation: 4.9%
Negotiation: 77.1%
Fig. 5. Resolution methods and the frequency of their use.
E.K. Zaneldin / International Journal of Project Management 24 (2006) 453459 457
6. Recommendations of industry practitioners
Industry practitioners and experts from Dubai munici-
pality and Abu Dhabi Planning Department were asked
to provide recommendations on how to prevent/reduce
claims and how to deal with such claims in case they hap-
pen. Based on their recommendations, the following are
some rules-of-thumb on how to reduce/prevent claims in
construction projects:
1. Allow reasonable time for the design team to produce
clear and complete contract documents with no or
minimum errors and discrepancies.
2. Establish ecient quality control techniques and
mechanisms that can be used during the design pro-
cess to minimize errors, mismatches, and discrepan-
cies in contact documents.
3. Have a clearly written contract with no ambiguity.
4. Read the contract several times before signing it to
understand any unclear clauses.
5. Have a third party to read contract documents before
the bidding stage.
6. Use special contracting provisions and practices that
have been used successfully on past projects. Useful
information can be found in ASCE booklet [15],
which is about avoiding and resolving disputes during
construction.
7. Develop cooperative and problem solving attitudes
on projects through a risk-sharing philosophy and
by establishing trust among partners (e.g., the owner
and the contractor). This concept is known in the lit-
erature as partnering.
8. Implement constructability during the dierent stages
of a project.
9. Establish a strategy on how to deal with tighter
scheduling requirements.
10. Have signed change orders before starting doing
these changes on site.
11. Maintain proper job records on a timely manner
including time sheets, diary records, reports, photo-
graphs, records of labors and weather and its eect
on progress, progress of the construction, site instruc-
tions, etc.
7. Concluding remarks
This study can be used to identify several problem areas
in the construction process in UAE. Steps should be taken
to clarify any issues or conicts that may arise in these
common problem areas. One of the common problem
areas is the changes type of claims which, according
to this study, was the most frequent type of claims and
needs special consideration. Extra-work type of claims
came second and contract ambiguity was ranked last.
It can also be concluded from this study that change
orders are the most frequent cause of claims while delay
caused by owner was ranked second. Planning errors
were ranked last, indicating that it is the least frequent
cause of claims.
According to the results of this study, it is recom-
mended that special consideration should be given to con-
tract clauses dealing with change orders, disputes,
variations and extra works conditions, and delay. The best
means to cope with risk of construction claims is to reduce
or avoid them altogether. There are certain fundamental
means of reducing the number of claims encountered.
The main and essential steps that can be taken to mini-
mize risks and deal with the aforementioned identied
causes include: (1) allowing reasonable time for the design
team to produce clear and complete contract documents;
(2) having a clearly written contract with no ambiguity
by using special contracting provisions and practices that
have been used successfully on past projects; (3) develop-
ing cooperative and problem solving attitudes on projects
through a risk-sharing philosophy between the owner and
the contractor.
It is expected that the ndings of this research will assist
all parties to a contract reduce liability by avoiding the
main causes of claims and, accordingly, minimize delays
and cost overruns in construction projects. The suggested
comments are also necessary for proper project manage-
ment, which is far more advantageous and protable than
seeking advice of a construction claim consultants after the
dispute is entrenched. The latter course often takes place
too late and is too costly.
Acknowledgments
The author of this research thanks the Research
Aairs of the United Arab Emirates University and
gratefully acknowledge their support. The author also
thanks Dubai municipality and Abu Dhabi Planning
Department for the valuable information they provided
for this research.
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