Construction claims management: towards an agent-based approach Z. REN, C. J. ANUMBA & O. O. UGWU Centre for Innovative Construction Engineering, Loughborough University, UK Abstract Disputes are now considered endemic in the construction industry. They often arise from the poor resolution of claims in the course of construction projects. Efforts have been geared towards reducing the incidence of claims. These efforts are of two kinds: those that seek answers from basic principles and legal issues at the pre-construction phase and those that attempt to solve the problems through claims management procedures at the construction phase. This paper reviews the developments in claims management and highlights the de®ciencies in current claims management approaches. It focuses on the need for improvement of the ef®ciency of claims negotiation and suggests the use of multiagent systems as an approach to achieve it. The potential bene®ts of the suggested approach are discussed in the concluding section of the paper. Keywords claim justi®cation, claim negotiation, claim quanti®cation, claims management, multiagent systems, risk management INTRODUCTION Over the past three decades, the construction industry has experienced an increase in claims, liability expo- sures and disputes, along with an increasing dif®culty in reaching reasonable settlements in an effective, economical and timely manner (Barrie & Paulson, 1992). The unique, dynamic and complex nature of the industry inevitably leads to a situation where con¯icts are bound to arise, and claims are inevitable. In fact, claims are now considered as a way of life for the construction industry (Bradley & Langford, 1987), as shown by the following: · Onyango (1993) found that 52% of all UK cons- truction projects ended up with a claim of some type; · Keane (1994) reported that £1.2 billion could be the subject of construction claims or disputes at any one time and that more than 83% of contractors claimed for one or more time extensions during 1992±94 in the UK; · Semple et al. (1994) identi®ed that more than half of claims constituted an additional cost of at least 30% of the original contract value based on their survey of construction projects in Canada. In addition, about a third of claims amounted to at least 60% of the original contract value. In some cases, the claim values were almost as high as the original contract value. The reasons for this problem are very complex, and can be analysed from social, industrial and project perspectives: · Social factors: the construction industry, as a whole, is under increasing pressure from the society to be more competitive in terms of cost, time, quality and environmental issues. As a result, the industry is becoming more risky than ever; · Industrial factors: the wide range of participants, the increasing size of projects, enhanced competitive tendering, increasing technological complexity, uncertainty in construction environments, unbal- anced risk allocation, and complex and confused interdependent relationships brought about by some project procurement systems, also contribute to construction claims; · Project factors: unforeseeable site conditions, unreal- istic planning and speci®cations, changes by the client, acceleration, unful®lled duties by project participants and `force majeure' are the direct causes for claims (Ren, 2000). To seek answers to the problem, numerous research projects, courses and publications on various aspects of claims, such as Wood (1975), Diekmann & Nelson (1985) and Levin (1998), have been undertaken to investigate industrial practices and to explore the principles and procedures of claim settlement and dispute avoidance. Basically, these efforts are of two Engineering, Construction and Architectural Management 2001 8 3, 185±197 185 ã 2001 Blackwell Science Ltd