PM'S BEHAVIOR -PROJECT MANAGEMENT HINT

First, abandon the fast food order taking. Agreeing to everything does not work. Instead, ask questions until you unearth the acceptance criteria the executives will use to judge the project when it is done. The project team can not start work without it.

Asking these questions can irritate executives who don't know what they want. But the irritation is far less than what you will see after the project fails.

A savvy project manager responds to the anger at the scope questions with a reasonable statement like "How can I deliver the business result you want if I don't know precisely what it is?" Executives may not like this push back. But it is worth a bit of early executive dissatisfaction if it gives PM the opportunity to define a measured business result.

Executives think they know the project finish date. Don't start the project with executives finish date before knowing the availability of resources, estimated hours of work, how many people are needed. Then PM can give executives a planned completion date.      

MODERN TRENDS

As 2012 approaches, Microdesk, a leading provider of business and technology consulting services to help firms successfully plan, design, build and operate land and buildings, has announced its list of Architecture, Engineering, Construction & Operations (AECO) industry predictions and a resolution for the upcoming year at Autodesk University. 

Calling on their experience working closely with some of the nation's largest architecture, engineering and construction companies, Microdesk has compiled the following list of predictions that reflect the current technological innovations taking place in the AECO industry, highlighting trends that firms can stay ahead of in order to succeed in an increasingly competitive and tech-savvy market. The top five trends for 2012 that AECO companies should prepare for now include:

• Let's Go Virtual: Firms will look to pushing the envelope of what's possible in the cloud. 

Cloud computing and the utilization of virtualization technologies are allowing AECO firms to engage in new ways. This trend will continue to unfold in 2012, further pushing the boundaries of communication and collaboration among remote teams and virtual work environments. 

• Proliferation of Building Information Modeling (BIM): BIM is here to stay – and expect more companies to embrace this technology that is transforming an entire industry. 

As expected, we've seen growing adoption of Building Information Modeling (BIM) throughout the design and construction sectors. In 2012, BIM will continue to transform the industry, with more architectural firms and building owners recognizing the same opportunities, benefits and values. 

• Beyond the Desktop: Mobile will take AECO whenever and wherever, moving past desktop limitations. 

Mobile adoption throughout the AECO industry will rise as work traditionally limited to the desktop migrates to a mobile environment. More devices will be used to streamline workflows, share ideas and access data from anywhere. 

• Stronger Reliance on New Technologies: Firms will speed up to keep pace with innovation. 

The AECO industry will adopt technology faster in order to streamline processes, reduce costs and improve ROI. This will enable a more sustainable, manageable approach to the planning, design, building and operation of buildings and infrastructure. 

• A Holistic Approach: It's time for a collaboration the industry has never seen before. 

As the industry continues to educate itself on advanced technologies such as BIM, firms will see the need to increase collaboration amongst all project participants. More companies will focus on forging new relationships in order to operate under a holistic approach that serves the bottom line. 

Microdesk speaks from a unique position as a committed partner to many AECO firms. With a team that includes architects, engineers, surveyors, GIS analysts, facilities and asset managers, IT experts and software developers, Microdesk is able to gather valuable insight into the entire lifecycle of the building process. 

SCOPE CONTROL

Hope you had a great weekend. Watch this video on how to control project scope.

http://www.youtube.com/watch?v=DuthRT6j6i4

PLANNING ESTIMATE-PROJECT MANAGEMENT HINT

Last week I got angry with one of my customers who wanted me to give him an estimate for the office building in a concept design phase. Using the skills I have developed during my project management education I did this estimate with the accuracy adequate to the information available and also give the range in which the cost could be. And surprisingly the customer was not happy to hear this statement. I needed some time to explain him some basic approaches used for making these kind of estimates.

When you want to do a quick estimate of project cost, you wan to use some type of high level, top-down approach. Depending on characteristics of the project and the type of information you have available, these approaches can actually be very accurate. Worst case, they should at least give you a decent ballpark estimate. From an expectation standpoint, this type of high level estimate should be -25% to +75% accurate. That is, if you estimate the cost of the project to be $100 000, you would expect the actual cost to be  in the range of $75 000 to $175 000. If your management or customer would like more accuracy than that, they need to give you more time to allow you to uncover more details, or lay the work out at a lower level.

What's your experience in such situations?     

CUMULATIVE IMPACT CLAIMS (LOSS OF PRODUCTIVITY)-PART3

The Mechanical Contractors Association of America (MCAA) publishes an estimating manual that has several appendices dealing with productivity losses. Appendix A of the manual deals with overtime and the effects of working overtime on productivity and cost. Appendix B, titled "Factors affecting productivity", lists 16 factors that can affect productivity, and provides a range for the percentage of loss that can occur for minor, average, and severe applications. The causes and the range of percentages (to be applied against labor costs) set forth in Appendix B are listed below:

                                                 minor             average        severe

1.Stacking of trades                    10%               20%            30%

2.Morale and attitude                    5%               15%            30%

3.Reassignment of manpower        5%               10%            15%

4.Crew size inefficiency               10%               20%            30%

5.Concurrent operations                5%               15%            25%

6.Dilution of supervision               10%               15%            25%

7.Learning curve                            5%               15%            30%

8.Errors and omissions                   1%                 3%              6%

9.Beneficial occupancy                  15%              25%            40%

10.Joint occupancy                         5%               12%            20%

11.Site access                                 5%               12%            30%

12.Logistics                                   10%               25%            50%

13.Fatigue                                       8%               10%            12%

14.Ripple                                       10%               15%            20%

15.Overtime                                   10%               15%            20%

16.Season and weather change       10%               20%            30%      

In reference to the factors listed in Appendix B, the MCAA manual states:

"These factors listed are intended to serve as reference only. Individual cases could prove to be too high or too low. The factors should be tested by your own experience and modified accordingly in your own use of them, since percentages of increased cost due to the factors listed may vary from contractor to contractor, crew to crew, and job to job."

The MCAA factors were developed by MCAA's management methods committee, but are not based on any empirical study determining the specific factors or the percentages of loss associated with the individual factors. Appendix B does not address how to apply these factors in the case where multiple factors occur. If simple arithmetic totals are used, extremely high lost-productivity factors could result even when multiple minor applications occur. The manual does not address whether the factors are to be applied to the entire project, to portions of the project, only to changed work, or only to specific areas. The factors presented appear to be  precisely what the manual states -for "reference only"-and should be used as a starting rather than an ending point for performing productivity analysis and predictions of productivity losses.

But the courts and Boards of contract appeals recognize the MCAA factors as a proper basis upon which to calculate lost labor productivity!

        

BRASINGTON'S LAWS

Hope you"ll like it!

http://herdingcats.typepad.com/my_weblog/2010/08/brasingtons-laws-from-the-mouth-of-bil-brasington.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+typepad/HerdingCats+%28Herding+Cats%29

CUMULATIVE IMPACT CLAIMS (LOSS OF PRODUCTIVITY)-PART 2

C. Measured mile approach

In comparison, the measured mile approach is an accepted form of impact cost analysis, that examines retrospectively what the project should have cost. This method involves a comparison of the productivity achieved by the contractor in an undisrupted  area of work with the contractor's productivity on a similar task during a disrupted work period. In most cases, the contractor will select an unimpacted area on the same project, but also may select an unimpacted area of work from a different project involving the same or similar type of work. This approach can provide an excellent basis for calculating the extent of damages if a suitable benchmark can be selected. The greatest obstacle lies in identifying an unimpacted period in which the work being performed was sufficiently similar to that work performed in the impacted period. 

D.Jury verdict method

Boards and courts primarily apply the jury verdict method after they have determined that causation has been established but the amount of damages cannot be ascertained with certainty. This approach amounts to nothing more than an educated guess based on information available to the trier-of-fact. Given the uncertainty of the state of cumulative impact claims, it would be unwise for a contractor to base its case on the jury verdict approach until it was confident that causation had been established. Further, in light of the fact of that proof of quantum often implicates causation, both a measure mile analysis and the modified total cost method provide better measure for calculating inefficiency than the jury verdict method.

Causation is the most difficult element to prove. Without proof of a casual link between the owner directed changes and the ensuing loss of efficiency, there is no entitlement to recovery . The contractor seeking recovery must submit  evidence that the number, timing and effect of the changes that were issued impacted its ability to plan and perform its work. Making this connection is not easy. One point is clear from the case law: the existence of substantial number of changes in itself is insufficient evidence of causation.

Much like the difficulties of demonstrating resultant injury, the biggest problem with proving causation, involves separating internally (contractor) caused inefficiencies from externally (owner) caused inefficiency. So, a contractor seeking to recover for cumulative impacts, must carefully develop it claim by combining expert testimony with lay witnesses who experienced first-hand the effects of numerous owner-directed changes. The credibility of the contractor's lay and expert witnesses appears in many cases to be the most essential element of a successful claim. The foundation for any credible expert is reliance on, and an understanding of the contract and contemporaneous project documents. Further, if an expert uses exhibits that summarize or use representative examples of the effects of numerous changes, the contractor should be sure to present into evidence the documentation that backs up the exhibit and be able to demonstrate that the evidence is in fact representative. 

Boards also have included "foreseeability" of the changed working conditions as an additional factor in determining whether a claim is compensable. If the contractor could foresee that unchanged work would or even could be impacted by a change request, then the contractor is expected to negotiate the cost of that impact in a change order that should follow the impact immediately. The corollary to this rule is that the contractor must prove that the impact was either unforseeable or simply not known when parties agreed to the price of the change order closest in time to the impact. An impact is foreseeable, and therefore direct and compensable, if it can be related in time to a specific change.

The initial obstacle to recovering for a  cumulative impact claim is avoiding release or waiver of the claim before the contractor is even aware that such disruption has occurred. The trend in the law appears to require contractors to expressly reserve the right to request an equitable adjustment for the cumulative disruption even before any impact becomes known. Where a contractor has included express reservations of right in the change orders the cases consistently hold that express reservations of right preserve the contractor's right to make a claim in the future. In contrast, where a change order or particular contract provision contains language releasing the owner for liability for delays and disruption stemming from the change, the owner may raise waiver as defense. In the most recent federal case to touch on this issue, the US Court of appeals affirmed the finding of fact that the contractor reserved its right to seek additional time and compensation in the future for impact

The Courts and various boards of contract appeals have recognized a general entitlement to an equitable adjustment for the cumulative disruptive impact of multiple owner directed changes, whose effect on productivity and cost exceed the direct costs of the changed work associated with each underlying change order. No matter how claim is characterized, the contractor still must prove the essential elements of liability, causation and resultant injury. A contractor seeking to recover must demonstrate that the impact was not foreseeable, and that when the disruptive effect became known, the contractor documented its occurrence ant requested reimbursement. In order to establish the elements, the contractor must rely on mutually supportive combination of expert and lay testimony, based on first-hand proper experience and on a detailed  review of contemporaneous project documentation. 

CUMULATIVE IMPACT CLAIMS (LOSS OF PRODUCTIVITY)-PART 1

Many courts of claims and the various boards of contract appeals have recognized a general right to recover for the cumulative effect of multitude of owner-directed changes that, when taken collectively, can be greater than the sum of the effects of the individual change orders. Although a change order may directly add, subtract, or change the type of work being performed in one particular area of a construction project, it also may affect others area of work that are not addressed by the change order. In one theory for recovery the issuance of unreasonable number of change orders creates a synergistic disruptive impact such that the total disruption caused by the changes exceeds the sum of the disruptive impacts caused by the the individual change orders when looked independently. Cumulative impact claims are exceedingly difficult to prove.

Cumulative impacts  cannot be captured in a forward-priced change order because one cannot foresee the impact of an  unreasonable number of changes yet to occur. Following this dichotomy to its logical conclusion, a contractor is able to price its cumulative impacts only in backward-priced change orders.

Synergistic effect is at the core of the definition of "cumulative impacts". Synergism is defined as the simultaneous action of separate agencies, which together have greater total effect than the sum of their individual      effects. Contractors claim that it is that compounding effect that should allow them to recover for the effects of numerous changes.

The allure of the cumulative impact claim lies in the simple idea that the effect of two or more changes to a project may be more severe than the effect of one change but it is difficult to determine how a contractor should establish that the size, number, or quality of contract changes caused the resultant injury. Courts and boards want to ensure that the owner and not the contractor was in fact the source of any inefficiency. Consequently, a contractor seeking to recover should attempt (as close a s feasible under the circumstances) to quantify the size of the disruption and connect the impact to its owner-related sources.

The essential elements of a cumulative impact claim are the same as those that courts and boards require for most other cost overrun  cases. The contractor must prove:

-liability;

-causation;

-and resultant injury.

Liability can be established with proof that the owner breached its contractual obligation by initiating a substantial number of contract changes, modifications, or design clarifications.

Resultant injury is the claimed loss of productivity. Contractors often seek to relate loss of efficiency to cost overruns and unanticipated schedule delays. Contractors must offer clear proof of damages suffered as the result of the breaching disruption. They can do so through a number of common methods:

A. Total cost method

The total cost method is the most basic approach to calculating damages for loss of productivity. Under this method, the estimated labor costs for the project are subtracted from the costs as actually incurred, including  profit to arrive at the amount of the equitable adjustment. Contractors generally rely on this method only when no documentation in either the project or field files exists to prove damages with greater certainty. Although courts and boards are reluctant to allow contractors to rely on the total cost method, on occasion they have allowed the method in the disruption cases on the theory that the very factors that produce loss of productivity can also serve to preclude the accurate and precise record keeping. The total cost method is not favored and often is not accepted by courts and boards because it does not eliminate the casual factors for which the owner was not responsible. A simple comparison of the estimated  cost and the actual cost to complete the project does not differentiate among problems caused by the owner and the contractor. The total cost method is a method of last resort and could be used only if the contractor showed:

-the impracticality of proving actual losses directly;

-the reasonableness of its bid (or estimate for the project);

-the reasonableness of its actual costs, and;

-lack of responsibility for the added costs.

B. Modified total cost method

As is evident from the discussion above, the two most significant shortcomings of the total cost method are

that it fails to consider problems caused by the contractor and it assumes the contractor's underlying bid is correct. The modified total cost method eliminates the dependence on the original estimate and accounts for non-owner-related performance factors by requiring the contractor account for performance factors for which the owner is not responsible. In order to calculate the inefficiency cost, the contractor must begin with actual cost of performing the project and subtract out (1) costs incurred due to contractor error and (2) the bid price for the project.

SCOPE, COST, TIME, RISKS

These days I have been involved in a tender for construction of 20,000 m2 office building. My team hold several meetings with the prospective contractors and we tried hard to make clear that the scope, cost, time and risks are well defined by the contractors. Today I came across an article by Jason Westland which although is for client-project manager "scope, cost, time, risk" meeting I think is suitable for the client-contractor meeting:

Define the |Work Techniques

Establish the Triple Constraint when the Project Charter is Approved

At the end of the Definition and Planning process you should have an agreement with your sponsor on the work that will be completed and the cost (time) and duration that are needed to complete the work. These three items form a concept called the “triple constraint”. The key aspect of the triple constraint is that if one of the three items change, at least one, if not both, of the other items need to change as well. (The triple constraint is actually written a couple similar ways. The cost item can also be referred to as effort, which makes more sense if the labor costs are all internal and if there are no non-labor costs. Sometimes, the scope item is referred to as quality, which then focuses on delivering a certain quality level for a certain cost and duration. This is a more narrow aspect of the triple constraint, but the general concepts still hold true.)

Try to Understand Your Client’s Expressed Needs and Their Real Needs

The Project Charter describes the project at a high level. The Project Charter specifically describes the needs of the client, as well as the project team’s estimate of the effort, duration and cost to fulfill those needs. The details of the client’s need are then defined in more detail through the gathering of business requirements.

It is important for the project manager and project team to understand that the true needs of the client may or may not be the same as the needs that are expressed to you and that are the foundation of the Project Charter and the business requirements. In many cases, the client does not understand his true needs when the project starts. The true needs can sometimes evolve over the course of the project. Likewise, the client may have a clear vision of his needs, but he may have a hard time expressing the needs to the project team. To a certain extent, this is the purpose of scope change management – to allow the client to change the requirements of the project while it is in-progress.

The project team can document the expressed needs of the client and use the expressed needs as the basis for the approval of the Project Charter and the Business Requirements. However, the project team should do as good a job as possible uncovering the true needs of the client. This involves techniques such as asking good questions, asking targeted follow-up questions, gathering input from all key stakeholders, asking more questions when requirements don’t seem to make sense, etc. Obviously, the project team should do whatever it can to try to uncover the true needs of the client. The closer the true needs of the client are to his expressed needs, the closer you will be to getting the project right the first time. 

HOME OFFICE OVERHEAD

The costs of delays involve many elements. Naturally, the direct costs are affected, but a contractor's efficiency, construction schedule, available favorable weather, impact costs, and even home office overhead may be affected. If the owner causes a compensable delay that forces the contract into a longer time frame, the contractor may be entitled to unabsorbed or extended home office overhead. There are several methods for calculation of the value of extended home office. For detailed information see the link below.

http://www.icoste.org/ZACK.pdf

FIELD PROCEDURE MANUAL (FPM)

The FPM is the seminal document for organizing and controlling the field operations to meet the project goals. The main value of the FPM in the early stages is an indoctrination tool for new people coming onto the project, so it must be issued early to be of value. Typically, a FPM is modeled on a previous version used on a similar project. The easiest way is to use the prior similar FPM and mark it up for present project conditions. That way a preliminary issue can be made rather quickly and then polished up as new project information becomes available. "Holds" can be put on those areas that are not yet firm in the preliminary issue. 

The main goals of the FPM are to set the project ground rules and to reduce about 90 percent of the field administrative activities to routine tasks. That allows for about a 10 percent demand of routine activities on the construction manager's time. The other 90 percent can be devoted to the nonroutine activities that normally beset a construction manager during a project. Construction manager need to remember that concept when developing the FPM, in order to force the decision-making process down to the lowest possible level on the project.

The FPM should be completed and issued in final form within the first 30 to 60 days of the project start. The FPM is always subject to revision as the project progresses, and changes to the procedures may become necessary. The contracting format has a considerable effect on the FPM content and structure.

This is a proposal for a supervision manual content:

1.    INTRODUCTION

1.1 Abbreviations

1.2 Authorities Responsible for Implementation of the Project

1.3 Definitions

2.    CONTRACTUAL BASIS FOR SUPERVISION

2.1. General

2.2 The Technical Assistance Service Contract

2.3 The Works Contract

2.4 Parties in the Contracts and main responsibilities

3. PROJECT ORGANIZATION

3.1 Organization of the Supervision Team

3.2 General Supervision Set-up

3.3 Job descriptions, Tasks and Responsibilities

3.4 The Engineer

3.5 The Resident Engineer

3.6 Document Registration System

4. SITE SUPERVISION PROCEDURES

4.1 Resident Engineer’s General Responsibilities

4.2 Review of the Contractor’s Documents

4.3 Reporting of Supervision Activities

4.4 Site Diary (Daily Report)

4.5 Inspections

4.6 Testing

4.7 Weekly Inspection Reports

4.8 Supervision Reports

4.9 Records of Site Photographs

4.10 Correspondence under the Contract

4.11 General

4.12 Notices

4.13 Instructions by the Engineer

4.14 Determinations

4.15 Site Meetings

4.16 Contractual Issues related to Site Meetings

4.17 Purpose of Site Meetings and Issues to be covered

4.18 Site Meeting Agenda

4.19 Site Meeting Procedures and Good Practice

4.20 Progress Reporting

5. CLAIMS, DISPUTES AND ARBITRATION

5.1 Employer’s Claims

5.2 Contractor’s Claims

6. VARIATIONS

6.1 Contractual Basis for Variations

6.2 Instructions of Variation

6.3 Variations related to Provisional Sums

6.4 Works Executed on Daywork Basis

6.5 Variation Order Procedure

6.6 Contractor’s Value Engineering

6.7 Contractor’s Request for Variation Order

7. PAYMENTS

7.1 Payments to the Contractor

7.2 Contractors Payment Applications

7.3 Engineer’s Payment Certificates

7.4 Time for Payment

7.5 Payments after Termination

7.6 Summary Time Limits for Certificates and Payment

7.7 Measurement and Quantity Control 

8. COMPLETION AND POST-CONSTRUCTION ACTIVITIES

8.1 Time for Completion

8.2 Tests on Completion

8.3 Employer’s Taking-Over

8.4 The Defects Notification Period(s)

8.5 Performance Certificate

9. AS BUILT DRAWINGS

9.1 Records as Work Proceeds

9.2 As-built Drawings to be provided by the Contractor

9.3 Submission to the Employer/Beneficiary

10. CONSTRUCTION MATERIALS

10.1 Materials Schedule

10.2 Acceptance Procedure

10.3 Acceptance on Site

11. HEALTH, SAFETY AND ENVIRONMENT

11.1 Hazards and Risks

11.2 Personal Protection Equipment

11.3 Environmental Management Plan

11.4 Regulations for Health, Safety and Environmental Protection

12. STANDARDS

13. FORMS

13.1 Document Checklist

13.2 Activity Review

13.3 Commencement of Works

13.4 Location and Benchmarks

13.5 Minutes for verifying the setting out

13.6 Minutes of hidden works

13.7 Minutes of checking the soil at foundation level

13.8 Protocol of foundation soil type verification

13.9 Protocol of acceptance of excavation level

13.10 Taking over protocol

13.11 Final taking over form

13.12 Protocol of handing over documentation

13.13 Nonconformity Report

13.14 Request for Inspection

13.15 Taking over Certificate

13.16 List of Defects

13.17 Defect Liability Certificate

13.18 Interim Payment Certificate

13.19 Final Payment Certificate

13.20 Performance Certificate

RECORDS, ACCOUNTS AND CLAIMS

Max Abrahamson in his book Engineering law and the ICE contract wrote:

A party to a dispute, particularly if there is an arbitration will learn three lessons (often too late) the importance of records, the importance of records, the importance of records. This quotation came to mind last week when I dealt with a claim raised by the contractor on my DSK rehab project. I found a case Attorney General for the Falkland islands v Gordon Forbes construction (Falklands) limited  similar to mine and want to share the judgement with you. A contract was let for the construction of the infrastructure of the East Stanley Housing development in the Falkland islands using the FIDIC 4th editions conditions.

Contract requirement

These conditions, like most standard forms, require the contractor to follow a procedure in the event of him submitting a claim. Clause 53.1 states that the contractor if he intends to claim any additional payment he must give a written notice of his intention to the Engineer within 28 days after the event giving rise to the claim has first arisen. In addition the contractor is obliged by clause 53.2 to keep such contemporary records necessary to support the claim. The contract goes further in requiring the contractor in clause 53.2 to send to the Engineer within 28 days of the written notice a detailed account of the claim. If the contractor fails to send in a written notice and detailed account there is a fall back position in clause 53.4 which states that in the event of the contractor failing to comply with what after all are very simple obligations his entitlement to payment will not exceed the amount the Engineer or an arbitrator could consider verified by contemporary records.

     

  Contractor's mistake would seem that contractor considering that he was entitled to additional payment made his first mistake in failing to send a written notice and detailed account as required by clauses 53.1 and 53.3. As to whether there was sufficient contemporary records to satisfy the requirements of the fall back position became the subject of a dispute which was referred to a arbitration and subsequently to the court. It would seem that the contemporary records were somewhat lacking and didn't prove sufficiently to convincing as far as the Engineer was concerned to merit payment. The contractor felt this approach unjust as he considered he was able to fill in the gaps where the contemporary records were lacking with verbal testimony from those within his organization able to provide the necessary information. It was the Engineer's view that this type of verbal evidence did not amount to contemporary records.

This proved somehow critical as both parties were agreed that if the contractor failed to comply with these conditions his right to payment was lost and therefore everything hung on the matter of contemporary records.

Intention of the clause in the contract 

The judge considered that the contract set out a clear and ordered way of dealing with any claim for an additional payment. Claims have to be notified at the time they arise, contemporary records have to be kept and regular accounts rendered.  The whole contractual system is aimed at the early resolution of any queries at the time claim arises.

He then had to decide what was meant by the word contemporary  and felt there was little difference between contemporary and the word contemporaneous i.e occurring  the same time.  Examples were given by the judge to illustrate the point. If there was a dispute as to whether labor was employed on the site during a particular date it would be acceptable to produce time sheets showing the hours worked or even a statement by the contractor stating that this was what had taken place. The judge posed something of a conundrum. What would the position be if the contractor wished to claim for labor cost for a four week period? He had times sheet for weeks 1, 2 and 4 but the records for week 3 were missing.  Could the court accept the verbal evidence concerning week 3, the judge felt that such verbal evidence would not be acceptable.

Verdict of claim

The judge found in favor of authority in deciding that to constitute contemporary records they must be prepared at or about the time the events occurred which give rise to the claim. Where there is no contemporary record the claim will fail. Where there are contemporary records to support part of the claim the claim may succeed on that part of the claim which is supported by the contemporaneous records but not otherwise. If the contemporaneous records are ambiguous or unclear as to their meaning then verbal evidence will be accepted to provide clarification.  The contractor probably unaware of Max Abrahamson's words of wisdom found out when it was too late the importance of keeping proper records.

Moral

The lessons to be learned from this decision is that where a contract provides a procedure to be followed if the contractor or for that matter subcontractor intends to claim additional payment, a failure to comply will result in a loss of entitlement. Where records are to be contemporaneous or submitted within a specified time scale it is crucial for them to be properly made at the time the event giving rise to the claim occurs.      

My case

In my case, although several times mentioned, the contractor's claim was not successful because of lack of written notice and detailed account submitted at the time the event giving rise to the claim occurred. 

      

QUALITY ASSURANCE&QUALITY CONTROL

Last week I have been surprised by several problems with quality of works on one of the sites I am working now and that's why I want to review two terms (quality control and quality assurance) you have heard before but do you really know the difference between quality control and quality assurance?

Quality control (QC) refers to the activities associated with the validating quality of the deliverables. Quality control is also called "inspection" since it means that the quality is validated in a deliverable that already exists. QC is used to verify that deliverables are of acceptable quality and that they meet completeness and correctness criteria established in the quality planning process. Quality control is conducted continually throughout a project and is the responsibility of team members and the project manager.

Quality assurance (QA) does not refer directly to the specific deliverables themselves. It refers to the process used to create the deliverables. Quality assurance is also refered to as "prevention". Quality assurance activities are focused on the processes used to manage and deliver the solution and can be performed by the manager, the client or third-party reviewer. For instance, an independent project reviewer might not be able to tell if the content of a specific deliverable is acceptable. However, he should be able to tell if the deliverable seems acceptable based on the process used to create it. He can determine, for instance, whether reviews were performed, whether it was tested adequately, whether the client approved the work, etc.

Quality assurance is performed at a higher level than quality control. For example, you might inspect 100 % of the product you are manufacturing. This physical inspections is an example of quality control. During your inspection you discover that 3% of your products are faulty and need to be destroyed. You consider this an acceptable expense and continue this way-always happy to catch the 3% of the product that contains defects and throwing away.

If you use quality assurance techniques however, you would determine what is causing this 3% defect rate. Once you uncovered the cause for the errors, you would change your manufacturing process to try to eliminate the errors. This work on your processes is quality assurance. Changes made to your process (quality assurance) results in fewer defects found during the inspection process (quality control).          

How do you manage quality control and quality assurance issues on your projects?   

DELAY ANALYSIS TECHNIQUES-TIME IMPACT METHOD

The fourth method of delay analysis is called time impact analysis. This method attempts to determine the impact of delay events on the contractor's intentions for the remaining works, taking into account the actual progress at the time the delay event occurred. 

The first step is to verify the contractor's planned programme and correct any errors. The second step is to identify the delay events and periods. Next, the actual progress of the works at the start of the first delay event is input into the contractor's programme to check whether the completion would have been delayed by the contractor's rate of progress. Activities representing the delay are then added to the programme, which is then re-analysed, and any further delay is recorded. It is then argued that the further delay is the contractor's entitlement to an extension of time at the time the delay event occurred. The process is then repeated for each delay event.

Time impact analysis requires a suitable  planned programme that truly reflects the contractor's intentions for executing the work. This method also requires reliable and consistent progress data at small enough intervals to make the analysis meaningful.

When undertaken properly, this method of analysis addresses the complex issue of concurrent delays, acceleration and resequencing of activities. It is often used by expert witnesses when giving opinions in arbitration or litigation. It is also the method recommended by the Society of Construction Law's Delay and Disruption Protocol.

Due to its complexity, time impact analysis has two significant disadvantages: it can be slow and so expensive to carry out; and can be difficult to communicate the approach and results.

I think that there's no single method of delay analysis that will suit all situations. The choice of method of analysis depends upon the requirements of contract, nature of delay events, quality of planned programme, records to hand, time available, value of dispute and target audience.

If there were a single method of delay analysis that yielded one result from a given set of facts then there would be little doubt as to the party responsible for the delay. Until such a method is found, however, delay analysis will continue to be a subject of much debate.  

DELAY ANALYSIS TECHNIQUES-AS BUILT BUT-FOR AND TIME -IMPACT METHOD

The third method I am going to describe is called as-build but- for and time-impact analysis. This is a more sophisticated method. In brief, as built but- for involves removing the effects of delay events from the as built programme in order to assess how the work would have progressed in absence of the delays.

First a dynamic as built programme is produced using planning software to create a model of the timing and sequence of actual events. The model must precisely replicate how the works were executed using as built start dates, finish dates and activity durations with appropriate activity logic links between activities. 

The second stage involves identifying the delay events in the as built progrsmme and apportioning them to the the party responsible for them.  The delay events are shown in the as built programme either as activities or constraints. Their impact is modeled by creating logic events between the delay events and subsequent activities.

The third stage involves removing the delays from the as built  programme to produce an as built- but programme to show how the works would have been constructed but for the delays. When used in claims for extension of time, only delays for which the contractor is not responsible are removed. It can be argued then that the extension of time due is the difference between respective completion dates of the as built programme and as built-but for the programme. In practice several iterations are needed to ensure that the model represents what would have happened but for the delays. This involves adjusting the level of detail, logic and durations of activities. 

As this method relies upon having an accurate as built programme, good as built records are essential. It is vital that the construction team is consulted in order to gain an  understanding of  the methods of construction, relationships between  activities and practical impact of delays.

This approach has a number of advantages. It is fact based and less theoretical than other methods. The basic principle is easily understood and it can be easily presented and explained. It does, however, come with a warning:care is needed to ensure that the model addresses the concurrent culpable delays, re-sequencing, redistribution of resources and acceleration. If such matters are not accounted for then the final results will be misleading. 

DELAY ANALYSIS TECHNIQUES- "IMPACTED AS-PLANNED" METHOD

Another method for assessing delays is called "impacted as-planned". This technique is the one most commonly used by contractors in claims for extensions of time. It involves inserting activities and / or constraints to represent periods of excusable delay into the contractor's planned programme. The periods of delay are logically linked to the activities in the programme to determine the impact on progress and completion. This is a prospective form of analysis as it predicts the likely impact. The argument used with this technique is that the entitlement to extension of time is the difference between the as-planned programme and the impacted as-planned programme.

The impacted as -planned technique relies upon having a good baseline programme that reflects accurately the intended method of construction. It does not require as built records but where possible it is good practice to cross check the results against as built milestones. It is the contractors' preferred method as it is relatively quick and simple to undertake, easily understood and gives results more in the contractor's favor. For very simple claims for extension of times, this approach might suffice. Where, however, the circumstances are more complex, such as where there are multiple causes of delay with a wide range of impact, this technique may fail. This is because it takes no account of the progress of the works, contractor's own delay, adjustment of resources and changes to programme logic.

This technique and the one I described in the previous article are easiest and most commonly used in claims for extensions of time. In the next article I will describe two more sophisticated methods that address many of the defects of  the "a-planned vs. as-built" and "impacted as-planned" approaches.  

   

DELAY ANALYSIS TECHNIQUES

Delay analysis is widely debated construction law subject due to number of projects not completed on time, the financial complications of late completion and often the quite different conclusions that can result depending upon the method of analysis used.

There are several methods for delay analysis which have advantages and disadvantages. Delay analysis is a technique used to identify the causes of delay and impact they have on progress and completion of a project. Without it the contractor will fail to demonstrate any entitlement to extension of time ( EOT ). 

It is crucial to any claim that the most appropriate method of delay analysis is adopted. If you choose a method that fails to deal with issues such as culpable delays, concurrent delays and changes in logic than the claim might be easily rebutted. Whereas, using a sophisticated method for a simple issue can be waste of time and money. A number of factors can influence the selection of approach-requirements of the contract, quality of contractor's planned programme, quality and extent of records and the complexity of the issue.

Methods fall into two categories: prospective or retrospective. Prospective techniques are those that predict the likely impact on the progress of the works. Retrospective techniques are those that seek to demonstrate the actual impact on the works. The latter can be used after the works have been completed or after the impact of the delay event has ceased. Prospective analysis can be used both before or after the delay effect has taken place.  

The first method is called "as planned vs. as build". This is retrospective method that involves a simple comparison of contractor's planned programme as to how it intended to execute the works with the actual events. This is done by drawing bars or lines on the planned programme that shows when the activities actually started and finished. The argument put forward when this technique is used is that the difference between the two programmes is the entitlement to extension of time.

This technique requires the contractor;s planned programme and good as built records of when the works has been undertaken. Since it is a simple graphical comparison, there's no need to have a properly logic linked programme or to use planning software. Its other advantages is that it is quick and simple to prepare and is easily understood.

The method has a number of drawbacks. It does not identify who is at fault, it does not demonstrate cause and effect, it does not take into account the contractor's culpable delays and it can only be used retrospectively. As a result, claims for extension of time based solely on this method might be not successful. Nevertheless, it is often the first step in analyzing delays as it can quickly highlight those activities that did not proceed as planned. 

In the next article I will describe  the other retrospective method called "impacted as-planned".

NEW ENGINEERING CONTRACT AND ACTIVITY SCHEDULE

NEC calls schedule of values an activity schedule. How NEC interprets activity schedule in Option A:Priced contract with activity schedule.

Activity schedule is prepared and priced by tenderers. It is not part of the works information and must not be used to describe the works.

The prices entered by the tenderers for each activity are lump sums, not unit rates as in the bill of quantities. The tenderer decides how to break up his work into activities, enters them on the schedule and prices each one. If the employer wants to specify particular activities which the contractor is to identify in the activity schedule he may do so, stating his requirements in the instructions to tenderers.

Use of Option A of the NEC does not require a bill of quantities to be issued to tenderers or to be used subsequently. Consequently, tenderers have to calculate quantities from the works information where they need to know a quantity in order to estimate the cost of the work. For many contracts (including process plant, building construction etc) this is a significant task.

In order to reduce the cost and time involved during the bid preparation period, employers may wish to calculate quantities before inviting tenders and then issue a copy of the quantities list to all tenderers. When this is done, it must be made clear that the tenderer will have used the quantities and relied upon them entirely at his own risk of their inaccuracy or incompleteness. No amendment to the contract or addition to the contract is necessary to achieve this as the contract is clear that the contractor's obligation is to carry out the work described in the works information. There's no mechanism for this obligation to be qualified or modified by the issue of quantities to tenderers.  

The total of the prices of the items in the activity schedule is the tenderer's offer for providing the works. The cost of any items the tenderer may have omitted is deemed to be included in the prices for the other items.

RE:SHEDULES OF VALUES

Dear Cadgas,

I'm impressed how many project managers make mistakes when dealing with schedules of values. Sub-Clause 14.1 (d) The Contract Price  (Red book-FIDIC 1999 edition) says:

Unless otherwise stated in the Particular Conditions:

(d) the Contractor shall submit to the Engineer, within 28 days after the Commencement Date, a proposed breakdown of each lump sum price in the Schedules. The Engineer may take account of the breakdown when preparing Payment Certificate, but shall not be bound by it.

Indeed, if lump sum, there's no need for method of measurements or BoQs. And indeed if you want to include them do it only for evaluation of interim payments. It means that you can use BoQs but only for the purposes stated in the schedules and may be inapplicable for other purposes.To have a transparent tender and tenderers will know from the beginning what they are to expect explain carefully what these BoQs mean. 

I prefer not using BoQs because they mislead the contractors. I usually instruct the contractors to send me a proposed breakdown of each lump sum price in the schedules within some period after the commencement date.

But be careful because no matter how correct is your design, there will be inevitable changes. It means you should specify in advance how you will manage the evaluation of the changes.

Hope this answer your question.

Best regards

Rado

SHEDULES OF VALUES

Dear Rado,

We are the PMC of a multi-use development project. The Client intends to go into a lump sum contract with FIDIC Red Book 99 form. The design will be 100% complete before going into tender. The Designer has prepared a BOQ and Method of Measurement along with Specs and Drawings.

I think that:

a)The tender documents should only include a Schedule of Prices, together with Specs, Drawings.. etc. (No BOQS and Method of Measurement).
b) I dont actually suggest any BOQ to be incorporated whatsoever. Nevertheless, if insisted, I may not object the Contractor (after the tender is awarded) is given the BOQ prepared by us (with or without quantities) to provide breakdowns for his lumpsum price. This BOQ will be non-contractual and for only valuation of variations.. etc.

Not so-experienced PM thinks that:

a) The BOQ and MOM will be submitted during tender phase, but it will be stated that the contract is Lump Sum. Payments will be made as per BOQ items.

I strongly believe that using a BOQ instead of a Schedule of Prices has no use, especially considering that the design will be 100% complete, i.e. changes are not likely to occur. A Schedule of Prices itself is very useful for Cash Flow Calculations, Scheduling etc. as well.


I am also of the opinion that, submission of BOQ's during tender phase gives Tenderers the impression that (even clearly its purpose is stated) the BOQ is contractual, and it is hard to explain people that, they are supposed to do everything written in their contract as "lump sum" but get paid on BOQ items basis. It has, and it will, mislead people to think that their responsibilities are bound with what is stated in the BOQ.
I think that, in lump sum contracts the payments / remuneration shall ne through a "Schedule of Prices". If still a BOQ is desired for valuations, etc., it might be requested after the Tender is awarded, i.e. from the Contractor, not the Tenderers. I seriously hesitate on using  "Lump Sum Contract with Bill of Quantities" even though it's widely used, especially in the Gulf region.

What do you suggest on this one? Is a Schedule of Payments alone the best solution, or can both (BOQ & SOP) be used? Can you give further recommendations as it will be a FIDIC Red Book 99 type of Contract?
I'd appreciate your prompt answer,

Kind Regards, 

Cadgas