Why Scope of Work?
This McLaughlin and McLaughlin (M&M) post is the ninth in a Subject Series Construction Claims and Disputes.
Scope of Work is (or should be) the basis for most claims and disputes. As we previously discussed, claims and disputes regarding scope of work are a widespread problem and represent the most common issue. Perhaps 75 to 90% of all engineering and construction claims and disputes involve contract scope of work. But the issue goes further. Scope of work influences and is a foundation for delay, acceleration, disruption, payment and many other types of disputes. Consequently, virtually all claims (should) start with scope of work.
Scope of work is a huge factor in capital investments. In the engineering and construction market, investments total in the hundreds of billions of dollars (USD). These investments are increasing, particularly in areas such as the US Gulf Coast. Typical budgets for changed work are targeted for 10% which makes this market of tens of billions of dollars (USD). However, this is merely the budget, not the reality.
Most of these investments involve contracting for goods and services. Each of these transactions must consider scope of work (services, facilities, supply) as primary to the transaction. Consequently, each transaction has risk of claims and disputes regarding the related scope of work. Stakeholders include: owners, prime contractors, subcontractors, engineers, architects, lawyers, consultants, investors, lenders, sureties, governments and others.
Recognition, entitlement, pricing and proving (if necessary) claims for additional compensation related to scope of work is a huge challenge with large amounts of money at risk. Largely, this is not legal work. However, it requires expertise. If the project team lacks this expertise, a subject matter expert (SME) is needed. The SME must possess the expertise in recognition, entitlement, pricing, evidence and related impacts to the project’s performance (time, cost, and other considerations).