Why Scope of Work?<\/strong><\/p>\n This McLaughlin and McLaughlin (M&M)<\/b><\/a> post is the ninth in a Subject Series \u00a0Construction Claims and Disputes<\/b><\/a>.<\/p>\n Scope of Work<\/b> is (or should be) the basis for most claims and disputes.\u00a0 As we previously discussed, claims and disputes regarding scope of work are a widespread problem and represent the most common issue<\/span>.\u00a0 Perhaps 75 to 90% of all engineering and construction claims and disputes involve contract scope of work<\/span><\/b>.\u00a0 But the issue goes further.\u00a0 Scope of work influences and is a foundation for delay, acceleration, disruption, payment and many other types of disputes.\u00a0 Consequently, virtually all claims (should) start with scope of work<\/span><\/b>.<\/p>\n Scope of work<\/b> is a huge factor in capital investments.\u00a0 In the engineering and construction market, investments total in the hundreds of billions of dollars (USD).\u00a0 These investments are increasing, particularly in areas such as the US Gulf Coast.\u00a0 Typical budgets for changed work are targeted for 10% which makes this market of tens of billions of dollars (USD).\u00a0 However, this is merely the budget, not the reality.<\/p>\n Most of these investments involve contracting for goods and services.\u00a0 Each of these transactions must consider scope of work (services, facilities, supply) as primary to the transaction.\u00a0 Consequently, each transaction has risk of claims and disputes regarding the related scope of work.\u00a0 Stakeholders include: owners, prime contractors, subcontractors, engineers, architects, lawyers, consultants, investors, lenders, sureties, governments and others.<\/p>\n 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.\u00a0 Largely, this is not legal work.\u00a0 However, it requires expertise.\u00a0 If the project team lacks this expertise, a subject matter expert (SME) is needed.\u00a0 The SME must possess the expertise in recognition, entitlement, pricing, evidence and related impacts to the project\u2019s performance (time, cost, and other considerations).<\/p>\n <\/p>\n Project Scope of Work<\/b> is the most fundamental building block for effective and professional project development and execution.\u00a0 Key sources of professional advice agree that project delivery as well as project management have a basis in and must be derived from scope of work.\u00a0 Project Management Institute (PMI) is a prime example.\u00a0 Scope of work can be using many means and methods.\u00a0 Regardless, baselines definitions rely on rely on scope of work.\u00a0 Costs, budgets, schedules, resource requirements all have their origins in scope of work.\u00a0 With scope of work being such a fundamental, management of this parameter must be a primary focus in professional project management.<\/p>\n Scope of work definition and management is a huge proposition. Planned capital project investments worldwide over the next several years total many, many hundreds of billions of dollars (USD). Several limited examples of public domain (Google sources) forecasts include:<\/p>\n \u2022 Canadian Oil Sands $200 billion (2013-2022) These forecasts of massive investment give insight into the need for legitimate definition of project scope of work. In addition, there is the need to implement scope management. A key aspect of scope management resides in management of change. Changes to scope (sometimes referred to as scope growth) are a reality of project work. Typical planning factors used are changed work of 10% (for well-defined scope). Using this factor, changed work can amount to may tens of billions (20-80+ billion USD) of dollars. Thus, management of change represents a huge managerial challenge in and of itself. There are at least several key sources of advice and expertise.\u00a0 These include:<\/p>\n Project Management Institute (PMI) is the world\u2019s largest and most prominent professional organization that specializes in project management.\u00a0 PMI\u2019s A Guide to the Project Management Body of Knowledge (PMBOK<\/i>\u00ae<\/sup> Guide)<\/i><\/a>\u00a0 presents the managerial process widely recognized as the standard for the industry.\u00a0 In this process, once the project is initiated and Project Integration Management is established, Project Scope Management is the beginning of this project management process.\u00a0 PMI\u2019s process steps include:<\/p>\n Scope of Work<\/b> can be defined or established in many ways, manners, means, methods, techniques or otherwise.<\/p>\n Most of the discussion above relates to project scope of work<\/b>.\u00a0 Implicit in this is the notion that the perspective is that of the owner, not the contractor, vendor, supplier or other such stakeholders.\u00a0 Most of these project or investments involve contracting for goods and services.\u00a0 Each of these transactions must consider scope of work (services, facilities, supply) as primary to the transaction.\u00a0 Consequently, each transaction has risk of claims and disputes regarding the related scope of work<\/b>.<\/p>\n All parties to contracts have a strong interest in the definition of the scope of work.\u00a0 While all parties want the scope of work definition to be accurate, the perspectives can be different.\u00a0 The owner wants all scope of work fully covered without gaps or omissions.\u00a0 The prime contractor wants to supply only the narrowest definition of the contract scope.<\/p>\n From the contractor\u2019s perspective, gaps in scope coverage are optimally the owner\u2019s responsibility.\u00a0 Subcontractor perspective is to narrowly define the scope of work, leaving gaps for the prime contractor\u2019s account.\u00a0 Likely, the prime contractor would adopt the opposing position.<\/p>\n Scope of work<\/strong> portions of the contract (imperative that you have all of the documents, not excerpts, lists or opinions by others) include:<\/p>\n In this area, seek advice from competent and experienced advisor.\u00a0 Types of advisors include: contract administrator, contract manager, contract attorney, project controls manager, technical manager, business manager, commercial project manager and any other subject matter expert that is comfortable with the form of contract in question.\u00a0 The focus is on understanding the contract baseline scope of work<\/span><\/b>.<\/p>\n Look for scope of work<\/span><\/b>, scope of facilities<\/span><\/b>, scope of services<\/span><\/b>, scope of<\/b> supply<\/b> and other allocations of required efforts to complete the project.\u00a0 Consider what party will provide design, equipment, materials, construction support, site infrastructure, completion and other aspects of a completed project.<\/p>\n M&M<\/b><\/a> recommends the preparation and use of a Claims Management Plan (CMP).\u00a0 In formulating the CMP, prepare a matrix of contract scope of work items compared to (verse) parties to the contract and stakeholders.\u00a0 Use this effort to identify gaps and interfaces.\u00a0 The gaps and interfaces should be used to prepare and focus the strategy and plan for the scope of work portion of the CMP.<\/p>\n M&M<\/b><\/a> has previously posted many writings regarding Scope of Work<\/b>.\u00a0 These posts are contained in Subject Series that include:<\/p>\n We wish you good luck in your construction claims and disputes regarding scope of work<\/span><\/b>.<\/p>\n It is important to note that McLaughlin and McLaughlin [M&M]<\/b><\/a> is not a law firm and is not intending to provide legal advice.\u00a0 M&M<\/strong> <\/a>is a consulting firm providing (among other services) non-legal expertise in construction claims, dispute resolution and litigation support.\u00a0 The Resource Center is for the convenience of blog visitors and M&M<\/b><\/a> does not offer this for commercial purposes.\u00a0 For further information on M&M<\/b><\/a> services, please see<\/i> <\/i>www.McLaughlinandMcLaughlin.com<\/a><\/i><\/b>.<\/i><\/p>\n Why Scope of Work? This McLaughlin and McLaughlin (M&M) post is the ninth in a Subject Series \u00a0Construction Claims and Disputes. Scope of Work is (or should be) the basis for most claims and disputes.\u00a0 As we previously discussed, claims and disputes regarding scope of work are a widespread problem and represent the most common […]<\/p>\n","protected":false},"author":2,"featured_media":1806,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_s2mail":"yes"},"categories":[9,49,16,57,8],"tags":[6,19,208,230,218,219,228,232,239,127,126,238,248,237,181],"jetpack_featured_media_url":"http:\/\/projectprofessionals.org\/wp-content\/uploads\/2014\/07\/MP900302940.jpg","_links":{"self":[{"href":"http:\/\/projectprofessionals.org\/wp-json\/wp\/v2\/posts\/1805"}],"collection":[{"href":"http:\/\/projectprofessionals.org\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/projectprofessionals.org\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/projectprofessionals.org\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"http:\/\/projectprofessionals.org\/wp-json\/wp\/v2\/comments?post=1805"}],"version-history":[{"count":5,"href":"http:\/\/projectprofessionals.org\/wp-json\/wp\/v2\/posts\/1805\/revisions"}],"predecessor-version":[{"id":1913,"href":"http:\/\/projectprofessionals.org\/wp-json\/wp\/v2\/posts\/1805\/revisions\/1913"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/projectprofessionals.org\/wp-json\/wp\/v2\/media\/1806"}],"wp:attachment":[{"href":"http:\/\/projectprofessionals.org\/wp-json\/wp\/v2\/media?parent=1805"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/projectprofessionals.org\/wp-json\/wp\/v2\/categories?post=1805"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/projectprofessionals.org\/wp-json\/wp\/v2\/tags?post=1805"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\n\u2022 Hydrocarbon Processing $ 60 billion (2013)
\n\u2022 Oil & Gas Infrastructure $ 90 billion (2014)
\n\u2022 Liquefied Natural Gas $500 billion (2014-2020)
\n\u2022 Chemical Makers $ 72 billion (per year)
\n\u2022 And so many others.<\/p>\n
\nHow well developed \/ defined is the project scope of work? This is a fundamental project management question that is central to successful project planning and execution. Lack of adequate development of scope of work is a major reason for project failures.<\/p>\n\n
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