неделя, 18 септември 2011 г.

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. 
      

четвъртък, 15 септември 2011 г.

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?   

сряда, 7 септември 2011 г.

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.  

вторник, 6 септември 2011 г.

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. 


неделя, 4 септември 2011 г.

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.  

   

петък, 2 септември 2011 г.

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".