Construction Claims

CONSTRUCTION CLAIMS and DISPUTES – (Part 9) Why Scope of Work?

July 3, 2014 By George T McLaughlin PMP CCM

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).

PROJECT PROFESSIONALS POSTING RESUMPTION

January 2, 2014 By George T McLaughlin PMP CCM

McLaughlin and McLaughlin [M&M] is pleased to announce that they will resume postings at their blog, Project Professionals. Since mid-2013, M&M has been heavily involved with several large assignments [Construction claims regarding several power plant projects]. Now that workload permits, new blog postings will be offered.

M&M wishes to remind followers (new and ongoing) that there are many offerings at the Project Professional site. They are organized by what we call Subject Series.

These Subject Series are:

M&M will resume with additional posts in the Subject Series Construction Claims and Disputes. This Subject Series focuses on methodologies, process, reference resources, techniques and other practical advice regarding the preparation, evaluating and managing construction claims and disputes.

We hope that you will find these existing and new posts informative and relevant.

We wish you the best of luck in this New Year.

Please note that McLaughlin and McLaughlin [M&M] is not a law firm and is not intending to provide legal advice. M&M is a consulting firm providing (among other services) non-legal expertise in dispute resolution and litigation support. The Resource Center is for the convenience of blog visitors and M&M does not offer this for commercial purposes. For further information on M&M services, please see www.McLaughlinandMcLaughlin.com.

Filed Under: Claims, Featured, General, Productivity, Project Planning, Projects Tagged With: Best Practice, Best Practices, Construction Claims, Construction claims and disputes, Construction Contract Planning and Scheduling, Engineering and Construction Disputes, Forecasting, McLaughlin & McLaughlin, Notice of Recognition, PMBOK, Productivity, Productivity Management, Progress, Progress Assessment, Project Execution Plan, Project Execution Planning, Project Management, Project Management Institute (PMI), Project Management Planning, Recognition, Schedule Specification, Stakeholder Management, Stakeholders, Ways of Working, www.mclaughlinandmclaughlin.com

CONSTRUCTION CLAIMS and DISPUTES – (Part 7)

August 6, 2013 By George T McLaughlin PMP CCM

Scope of Work – Plans and Specifications

This McLaughlin and McLaughlin (M&M) post is the seventh in a Subject Series Construction Claims and Disputes. This Subject Series contains discussions regarding construction claims and disputes.

Recent and subsequent posts (Parts 6, 7 and the next few) (will) address scope of work within the overall subject of Construction Claims and Disputes. Disputes and claims regarding scope of work are a highly pervasive problem and represent the most common type of claim or dispute. Perhaps 75 to 90% of all engineering and construction claims and disputes involve contract scope of work.

Virtually all disputes and claims arise as a result of departures from the baseline. These variances (cost, time or other) create the dispute. Therefore, understanding the baseline is essential. In construction claims and disputes, the baseline is (almost) always the contract. The contract is the “deal” or the agreement between the parties. While it must meet several legal tests, the contract is the baseline that will be the focus of this discussion. You must have, know and understand the contract, or at least all portions and provisions that relate to scope of work.

In this discussion, the plans and specifications are the scope of work baseline. Typically, the plans and specifications are augmented by other contract documents (such as terms and conditions, site services, execution plan documents and others). Using the term “design specifications,” let us view these documents as “…the specific requirements for constructing, testing, inspecting, and the materials provided for the project” (Brams and Lerner).

The majority of the discussion will address entitlement to recovery (rather than pricing or quantum). [Read more…]

Filed Under: Claims, Featured, General, Projects Tagged With: Change Orders, Construction Claims, Construction claims and disputes, construction claims damages, Construction Claims Management, Construction Claims Management Plan, construction claims pricing, Construction Claims Quantum, Construction Contract Claims, Field work orders, George T. McLaughlin PMP, McLaughlin & McLaughlin, Plans and Specifications, Scope of Work Claims, www.mclaughlinandmclaughlin.com

A View from the Field Project Execution / Contracting Strategies Large and Complex Industrial Projects

May 6, 2013 By George T McLaughlin PMP CCM

This article from the Division 1 of the ABA Forum on the Construction Industry Newsletter “The Dispute Resolver” represents George T. McLaughlin’s “View from the Field” formed throughout the course of his 30+ year career in the industrial marketplace.[1] His article is broken into four parts. Part 1, below, describes the evolution of the delivery systems in large and complex industrial projects[2]. The remaining sections, which we will publish in our next three newsletters, will discuss the legal implications (Part 2), impact on claims, disputes, and resolutions (Part 3), and prevention and corrective processes (Part 4).

Part 1 of 4 – Framing the Issue

When the earth’s tectonic plates shift, unless there is a resulting earthquake, it goes unnoticed. The movement is not perceptible. Nevertheless, major changes are occurring. In large and complex projects, with three to five (or longer) year schedules, industry shifts may not be perceptible. Nevertheless, major changes and related impacts may be in progress. Trends and changes in project execution and contracting strategies are similar. These trends, however gradual and unnoticed on a daily or monthly basis, cause major impacts on existing and future projects. While industry experts cite or drive these changes, the impact on the field may be delayed or go unrecognized by many, if not all stakeholders. The business motivations driving the trends discussed below are varied and complex. Perhaps, the central theme is risk tolerance or management. The large worldwide prime contractors (typically Engineer Procure Construct) migrated toward limiting major risks by limiting scope of work, insisting on reimbursable cost (as opposed to fixed price) commercial terms, or both. Owners chose to limit or compartmentalize risks by breaking scope of work into smaller packages and seeking fixed price on these smaller packages. Construction Contractors retained a willingness to work on fixed price commercial terms; but, increased their tendency toward claims and disputes processes in order to manage their risks. Collectively, we see a myriad of fixed price scope of work packages being pieced together to form a complete project. Formerly, this mosaic of work scopes was under one Prime Contract. [Read more…]

Filed Under: Claims, Featured, General, Productivity, Project Planning, Projects, Uncategorized Tagged With: Construction Claims, Construction Contract Claims, Construction Contract Planning and Scheduling, contracting strategies, Disruption, George T. McLaughlin PMP, large and complex industrial projects, Large and Complex Projects, McLaughlin & McLaughlin, megaprojects, Productivity Management, Project Execution Plan, Time Management Strategy

CONSTRUCTION CLAIMS AND DISPUTES – (Part 1)

January 22, 2013 By George T McLaughlin PMP CCM

This McLaughlin & McLaughlin post is an introduction to an ongoing Subject Series regarding Construction Claims and Disputes in engineering, procurement and construction industry.

OVERVIEW

In relation to construction claims and disputes it is important for all readers, contributors, participants and others regarding the general subject of claims and disputes to be equally informed. This discussion is directed toward engineering and construction claims and disputes.

In the engineering and construction industry, contract claims and disputes are common issues. They occur between: owners and contractors (prime), contractors and their subcontractors, contractors and (their) vendors, and at other contractual interfaces. Resolution of the claims and disputes can be a costly, disruptive and aggravating process for all parties.

MANAGING RISK OF DELAY – Progress Assessment (Part 11)

September 24, 2011 By George T McLaughlin PMP CCM

This post is the eleventh in a series of discussions regarding various aspects of time management as it relates to the risk of delay. This post addresses planning for and implementing progress assessment.

Planning for and implementing progress assessment is, perhaps, one of the most important aspects of Time Management and, consequently, Managing Risk of Delay. Timely (early) detection of trends (positive and negative) allows timely managerial action. Timeliness of action is a heavy influence over the effectiveness of Time Management. In project work, it is imperative that one finds problems quickly and fixes these problems rapidly. In order to implement timely action, professional progress assessment is required.

The challenge associated with managing time is intensified in the case of larger and more complex projects as well as fast-track and high technology projects. [Read more…]

Filed Under: Claims, Featured, General, Projects Tagged With: Best Practices, Construction Claims, Construction Contract Planning and Scheduling, Delay, Earned Value Management, George T. McLaughlin PMP, Managing risk of delay, McLaughlin & McLaughlin, Productivity Management, Progress Reporting, Project Execution Plan, Project Execution Planning, Risk of Delay, Schedule Update, Time Management, Time Management Strategy

TROUBLED PROJECTS – Preconceived Notions

June 17, 2011 By d.mclaughlin

As we begin to dig deeper into the troubled project and work breakdown structure has been established, we begin to interview the stakeholders of the project. One of the general questions one asks, is what do you believe are the issues, what went wrong? Human nature as it is, these stakeholders tend to be cautions and careful with their contributions. Rarely do I hear one volunteer or is his or her organization the source for the incongruities. A cautious approach continues as the interview process progresses further. [Read more…]

Filed Under: Claims, Featured, General, Projects Tagged With: analyzing construction disputes, Best Practice, Claim analysis, Construction Claims, Construction Contract Claims, Construction Disputes, McLaughlin & McLaughlin, Problem construction project

MANAGING RISK OF DELAY – Subject Series Summary

June 12, 2011 By George T McLaughlin PMP CCM

The Context and Challenge (Part 1)

This post addresses the general topic of time management and the relationship to managing the risk of delay.

Keith Pickavance is a prominent leader, speaker, expert and author in the construction industry. His authoritative reference book, Delay and Disruption in Construction Contracts, is noted in our Resource Center.

Mr. Pickavance is President of CIOB. Speaking in this capacity, he delivered an excellent talk entitled: ” Managing the risk of delayed completion in the 21^st Century.”

The link to this streaming video is http://www.multichanneltv.com/ciob/cio004/ and is excellent. The discussion by Mr. Pickavance provides an excellent basis for development of this topic. [Read more…]

Filed Under: Claims, Featured, General, Projects Tagged With: Construction Claims, Construction Contract Claims, Construction Contract Planning and Scheduling, Delay, Earned Value Management, Managing risk of delay, Productivity Management, Project Execution Planning, Risk of Delay, Time Management, Time Management Strategy

MANAGING RISK OF DELAY – Earned Value and Schedule Performance Indicators (Part 7)

May 22, 2011 By George T McLaughlin PMP CCM

This post is the seventh in a series of discussions regarding various aspects of time management as it relates to the risk of delay. More specifically, we have titled the series MANAGING RISK OF DELAY [Subject Series], since we focus heavily on the managerial aspects of program / project management. This post addresses some managerial tools relative to the integrated nature of time management using critical path and earned value management.

The challenge associated with managing all (critical and non-critical path) work is common to virtually all projects. This challenge is true for most project management situations. It is intensified in the case of larger and more complex projects. Examples include Lump Sum Turn Key (LSTK), Engineer Procure Construct (EPC) and other similarly executed projects. In addition to the normal issues associated with bulk progress, actions or inactions by the owner can add considerable complexity to this challenge. Over the past seven years, M&M has program/project managed five projects exceeding $100 million (USD) in investment value (total installed cost). Thus, practical/practioner experience is engendered in this discussion/post. [Read more…]

Filed Under: Claims, Featured, General, Projects Tagged With: Construction Claims, Construction Contract Claims, Construction Contract Delay, Construction Contract Planning and Scheduling, Delay, Earned Value Management, Managing risk of delay, Productivity, Productivity Management, Project Execution Plan, Project Execution Planning, Risk of Delay, Time Management, Time Management Strategy

SCHEDULE VALIDATIONS AND AUDITS – Need and Benefit (Part 1)

May 13, 2011 By Earl Glenwright

ABSTRACT

Construction projects represent investments at risk for Owners and Contractors, who invest massive amounts of money and resources.

Although some investors resort to evaluations (e.g., appraisals by mortgage investors), to gain a level of confidence in the outcome, validation processes are not a common practice in construction.

There are many advantages in engaging Owners and Contractors in performing a realistic, rational, and feasible independent Validation of the work plan and planned schedule, as well as periodic Audits of the performance achieved.

Planning and scheduling practices have become more complex as they have matured and can now produce a greater degree of management and control. However they are also vulnerable to incorrect procedures, illogical logic, abuse, misuse, and outright manipulation.

Schedule Validation and Audit can be used to minimize the impact of conflicts by detecting issues and anticipating problems. Reasons for implementing Schedule Validation and Audits, benefits, methodology, deliverables, and steps towards a standard practice and procedure are presented herein. [Read more…]

Filed Under: Featured, General, Projects Tagged With: Audit, Construction, Construction Claims, Construction Contract Planning and Scheduling, Schedule, Validation

Search this Site