The managing contract is very important in project management. Contracts set the professional relationship between the buyer and seller thus it is important to ensure that everything stipulated within it is followed. Claims administration is part of contract procurement and administration.
In creating a contract, contested and potential constructive changes often arise. These changes arise when both buyer and seller do not agree that a change has occurred during the creation of the contract. The contested changes are also referred to as disputes, appeals or claims.
In project management, claims are always documented. They are also processed, monitored as well as managed through the life cycle of the contract as long as there are terms of the contract that are in accordance with the terms of the contract. Some claims are processed and resolved but if not, it should be handled through alternative dispute resolution following the procedures stipulated in the contract.
The contract clauses usually involve arbitration and can be invoked before or after the closure of the contract. Claims administration is necessary so that it can facilitate negotiations for the settlement of claims or dispute.
This term is defined in the 5th edition of the PMBOK.