Claim Management

PR12-06-01
Process Owner: Sales & Operation
Date: 95/06/15
Prepared by: Process & Quality Management Department

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Claim Management

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PR12-06-01

NAK 2016
All rights reserved. The information in this document belongs to NAK as its property; except those
in which are expressly authorized by NAK through a written consent. All inventions,
improvements, copyrightable definition, designs and products relating to methods, ideas,
concepts, practices, compositions, or products which are resulted / originated from this
documents content and the right to market, license, and franchise of those items / products
shall be the exclusive property of the NAK, and neither the Receiving Party nor its clients shall
have right or title thereto.
The receiver of this document shall keep the information contained herein confidential and shall
protect the same in whole or in part from disclosure and dissemination to third parties.
Disclosure and disseminations to the receiver's employees shall only be authorized just on a
strict need to know basis.

Status

Version

Creation

1.0

Classification

Date

Regular

Finish

95/06/6

95/06/15

Confidential

All departments
Available to

Start

Following departments:
12-

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Claim Management

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Contents
1.

INTRODUCTION ............................................................................................................................................. 3
1.1.
1.2.
1.3.

2.

OVERVIEW ....................................................................................................................................................... 3
SCOPE ............................................................................................................................................................ 3
DEFINITIONS ................................................................................................................................................... 3

INPUTS, OUTPUTS & DESCRIPTION ............................................................................................................. 4

2.1.
2.2.
2.3.

INPUTS............................................................................................................................................................ 4
OUTPUTS......................................................................................................................................................... 4
DESCRIPTION .................................................................................................................................................. 4

3.

RESPONSIBILITY MATRIX ............................................................................................................................ 6

4.

KEY PERFORMANCE INDICATORS:.............................................................................................................. 7

5.

RELATED DOCUMENTS................................................................................................................................. 8
5.1.
5.2.

6.

FORM/CHECKLIST ........................................................................................................................................... 8
INTERFACES .................................................................................................................................................... 8

PROCESS FLOW ............................................................................................................................................ 9

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1. Introduction
1.1.

Overview

A claim occurs when any term of contract is not fulfilled or a need for change is
raised from either Party. Substantially a claim in a particular project is defined
as a demand for a responsibility deemed due or an assertion of right from one
party to the other party. The claim management triggers when a claim is
identified or an announcement of a claim is received by either Party to the
Contract. Project contracts describe project claim management procedures
because we need them in implementation and closure phase of the project in
order to resolve problematic situations that are not covered by the contracts
change management clauses. These claims may include any inquiry for
additional works or extra payments not mentioned in project scope or deductions
for delays that are not previously agreed upon.

1.2.

Scope

The scope of this process includes all customers who work with NAK and all NAK
departments who are involved in project execution with customer, especially
Sales & Operations Department.

1.3.

Definitions
Claim Management Committee: Members include CxO, Claim Manager
and a representative from related department.
Related department could be any department such as Finance, SCM or
Project Management.
Project manager is directly responsible for identification or receiving the
claim, also assessing the scope, root causes, complexity and
approximation of loss in a claim.
Claim manager is in charge of assessing contractual aspects of a claim
including responsibility analysis and determining legal obligation to
indemnify a claim. In the process, Claim Manager and project manager
conduct the loss inspections and negotiation with customers to minimize
respective losses.

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CEO

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2. Inputs, Outputs & Description

2.1.

2.2.

Inputs
Received claim notification
Relevant documents and evidences that come from project and contract
analysis

Outputs

Outgoing claim management:

o Order Handling-Complete Customer Order-Contract Change
Management Process
o Accepting the Risk
o Legal Management Process

2.3.

Incoming claim management:

o Order Handling-Complete Customer Order-Contract Change
Management Process
o Accepting the Risk
o Account receivable process

Description
Upon receiving or identification of a claim by Project Manager the project
related assessments as well as contractual assessments will be prepared
in a claim document for Claim Management Committee.
Claim Management Committee will make a decision to accept, reject or
approve the claim and clarifies the tasks and responsibilities which need
to be taken in this regard based on the situation. It is remarkable that for
decision making by Claim Management Committee analysis of existing
risks is required.
Good project claim management requires good project documentation.
Documentation in this process is an important phase because it is
necessary to record all performed actions during the claim management
process. As soon as all the relevant materials of a claim case are
collected it is needed to file that material together with all the other
project relevant documents. It includes the analysis document, timeline
of negotiation and the most important document which is the result of
claim management process. Moreover, relevant facts that constitute the
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CEO

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evidence should be recorded. The time line that is prepared during the
claim management process consists of the copies of the records and time
schedule of every task. These documents are collected by project
manager and claim manager.

Claim Manger shall ensure that there is an appropriately detailed, regular

file review process. The process for file review shall be documented and
allow for the results to be reviewed with the relevant claim identifier.
File reviews should comprise a review of selected claim files using a
documented range of criteria for evaluating performance in terms of
procedure, accuracy, quality of service and timescales appropriate to the
matter.
In this process time is an efficient index therefore related department
which identifies claim or receives a claim notification from customer,
should inform Sales & Operation department as soon as possible about
the claim. Best practice shows that related department (Project Manager)
should send claim notification along with project analysis documents to
claim manager maximum in 3 days. On the other hand claim manager
should send received documents along with contract analysis to claim
committee in 2 days.

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P&Q

P&Q Sponsor (VP)

CEO

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3. Responsibility Matrix
Sales &
Operations

Claim
Management
Committee

Finance

Related
Department

R/A

Contract Analysis

R/A

Issue claim notification

R/A

Send Claim notification to customer

R/A

Make a Decision to accept the claim

Risks

R/A

Make a decision to financial

compensation

R/A

Make a decision to transfer the Risk to

Subcon

R/A

Make a decision to perform the

necessary actions

R/A

Make decision to negotiate with

Customer

R/A

R/A

Task of outgoing claim management

process
Project Analysis

Documentation
Negotiation with Customer

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Owner

P&Q

P&Q Sponsor (VP)

CEO

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Sales &
Operations

Claim
Management
Committee

Finance

Related
Department

R/A

R/A

Review the incoming claim and relevant

documents and make a decision

R/A

Decision making about accepting & taking

the responsibility of claim

R/A

Decision making about related department

to have the authority to make decision

R/A

Decision making about contract change

R/A

R*

Decision making to accept the Risk

R/A

R*

Make a decision to transfer the risk to

Subcon

R/A

R*

Make a decision to perform the necessary

actions

R/A

R*

R/A

R*

Task of incoming claim management

process
Project Analysis
Contract Analysis

Documentation
Negotiation with Customer

R: Responsible

A: Accountable

S: Support

C: Consultant

I: Informed

*If related department has the authority to make decision

4. Key Performance Indicators:

Weight
Factor

Frequency

Baseline

Target

Average claim processing time

70%

Always

<=3
Weeks

# Non resolved claims

30%

Every 3 months

KPI

Comment

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CEO

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5. Related documents
5.1.

Form/Checklist

In Outgoing Claim Management Process it is Necessary to fill the Claim Register Form
(FO12-03-01)

5.2.

Interfaces

The Incoming Claim Management Process depends on the following processes to be

performed as well:

Change request Process

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Owner

P&Q

P&Q Sponsor (VP)

CEO

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6. Process Flow
Outgoing Claim Management Process

Start

Receive a Claim
notificat ion along
with related
docu men ts (2)

Contrac t
Analysis

Record rel ev ant

docu men ts and
evidenc es

Is NAK
res ponsible?

No

Send Claim
notific ation to
CxO for
approval

Is sue cla im
notific ation

Send Claim
notific ation to
cus tomer

Yes

Sales & Operations

Perform
neces sary
action s

In form claim
ident ifier

En d
Esc alation for
decis ion
making

Order Hand lingComplete Customer

Order-Contrac t
Change Managemen t
Process

Documentation

Respon sive?

No

20 Days
Yes

Acc ept?

No

Customer

Yes

Yes

Contrac t
Change
needed?

Yes

Acc ept?

No

No

Financ ial
Compensation

Perform
neces sary
action s

In form Sales &

Op erations

Claim Management Committee (1)

Reques t to
revis e

No

Approve?

Yes

Negotiate with
Customer

Ask Legal Dep.

for legal actions

Acc ept the Risk

Perform
neces sary
action s

Financ ial
Compensation

Transfer the
Risk t o Su bcon

Legal

Legal
Managemen t
Process

(1) Claim Management Committee: Members include CxO, Claim Manager and a representative from related department.
(2) Related department could be any departments such as Finance, SCM or Project Manager

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Owner

P&Q

P&Q Sponsor (VP)

CEO

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Start

Accept?

Send a Claim
notification to
NAK

Receive a Claim
notification

Yes

No

Inform Sales &

Operations
about received
Claim

Transfer the
Risk to Subcon
Change
request
Process

Change
request
Process

Contract
Analysis

Record relevant
documents and
evidences

Ask customer to
revise the claim

Send a
rejection
notification to
customer

Contract
Change
needed?

No

Perform
necessary
actions

Yes

Order HandlingComplete Customer

Order-Contract
Change Management
Process

Send needed
document to
related Dep.

Claim Management Committee (1)

Inform Sales &

Operations

Accept the Risk

Inform related
department

Documentation

End

Account
receivable
process

Finance

Sales & Operations

Related Department

Customer

Incoming Claim Management Process

Yes

Receive change
request form from
related department

No

review the incoming

claim and relevant
documents and
make a decision

Accept & take

the
responsibility

Yes

Does related
department
have the
authority to
make decision
?

Ask related
department to
perform necessary
actions

Yes

Contract
Change
needed?

No

Inform Sales &

Operations

No

Accept the Risk

Get all related

documents and
evidences from
Sales & Operations

Transfer the
Risk to Subcon

(1) Claim Management Committee: Members include CxO, Claim Manager and a representative from related department.

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Owner

P&Q

P&Q Sponsor (VP)

CEO

End