Disruption

CONSTRUCTION CLAIMS and DISPUTES – (Part 8)

January 27, 2014 By George T McLaughlin PMP CCM

Scope of Work – Impacts

This McLaughlin and McLaughlin (M&M) Project Professionals post is the eighth in a Subject Series Construction Claims and Disputes.

Recent posts (Parts 6, 7) address scope of work within the overall subject of Construction Claims and Disputes. 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. However, this is not confined to engineering and construction.

Direct compensation for a scope of work change may merely be the proverbial “tip of the iceberg.” What about the rest of the story? Is the contractor missing many other costs or schedule impacts? Often, this is the case. This issue may be broader that an added piece of equipment, redesign to avoid a conflict or similar events.

Scope of work disputes are building blocks to other claim elements in the dispute.

Delay – Changes can add work to the project critical path. If so, this would cause the forecasted project completion date to be extended (potentially later than planned).
Progress – Changed work adds to the overall project work content, thereby changing the progress measurement and reporting (Earned Value).
Disruption / Productivity – Changed work impacts field labor productivity, a major risk to contractors.
Overheads / Indirects – Changed work may add requirements for additional construction support, supervision, insurance and other indirects.
Terms and Conditions – The cost of bonding, insurance, warranties, guarantees, and many others can be impacted by changed work.
Profit / Fee – proper compensation in this area can be challenging.

The majority of the discussion will address entitlement to recovery (rather than pricing or quantum). For pricing (or quantum), please see McLaughlin & McLaughlin’s Project Professionals Construction Claims and Disputes Part 4 and Part 5. [Read more…]

Filed Under: Claims, Featured, General, Productivity, Project Planning, Projects Tagged With: Change Orders, Construction claims and disputes, construction claims damages, Construction Claims Management, Construction Claims Management Plan, construction claims pricing, Construction Claims Quantum, Delay, Disruption, Disruption/Productivity Impacts, Field work orders, George T. McLaughlin PMP, McLaughlin & McLaughlin, Plans and Specifications, Scope of Work Claims, Time Impacts, 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 2)

February 6, 2013 By George T McLaughlin PMP CCM

Construction Claims Management Planning

This post is the second in a Subject Series Construction Claims and Disputes which are (will be) discussions regarding managerial challenges in potential and actual construction claims situations. In this series, we focus on the managerial aspects of construction claims and disputes management. This post addresses the planning, a key managerial requirement in all project work. First plan it, and then do (execute) the work. The notion is consistent with the old adage “An ounce of prevention [in this case management] is worth a pound of cure.” In that regard, litigation on a large and complex project can cost millions USD in expenses to pursue and may have tens of millions USD at issue.

Yes, construction claims and disputes can and should be managed. This is particularly true of large and complex projects.

Prospective Construction Claims Management refers to the managerial approach and planning for managing the risks (and options, opportunities, etc.) during project execution through project close-out related to claims.

Retrospective Construction Claims Management (development, presentation and defending) will be addressed in another post.

Claims Avoidance – There is a myth that construction claims can be avoided. Experience shows that this is just a myth, since it relies on controlling the activities of others. These others may be in an adversarial posture or position. Hence, control cannot be readily achieved. [Read more…]

Filed Under: Claims, Featured, Productivity, Projects Tagged With: Best Practice, Best Practices, Construction claims and disputes, Construction Claims Management, Construction Claims Management Plan, Construction Contract Claims, Construction Project Management, Delay, Disruption, EPC Project Management, Free Issue Equipment, Free Issue Materials, Free Issue Scaffolding, George T. McLaughlin PMP, GSA Construction Claims, McLaughlin & McLaughlin, Project Execution Planning, Project Management, Project Planning, Temporary Power, www.mclaughlinandmclaughlin.com

PRODUCTIVITY SERIES REVIEW

June 22, 2011 By George T McLaughlin PMP CCM

Productivity has become a hot topic and has given rise to much discussion and debate in the project management world. Labor productivity can be a competitive advantage or a managerial disaster. Therefore, we believe that there is high potential benefit in a review of McLaughlin & McLaughlin’s Productivity Series. Below, we have the titles and links to each post followed by a brief summary of the content. We intend to augment these posts with additional writings on the subject.

WORKER PRODUCTIVITY – Watch How the People Work

June 7, 2011 By Richard S Troell

This is the eight posting regarding labor productivity and disruption. This contribution provides some practical suggestions for the manager in the field. The Subject Series can be viewed here.

Isn’t it always the obvious that gets us in trouble? It doesn’t seem to make much difference what area of life you talk about, the aspects that are obvious are most often those that we assume will take care of themselves and we skip over as we develop our plans. Considering the area of worker productivity, everyone knows how the work gets done. Right? Well, it is quite obvious. You just pick up the material and put it in place. After all, how can there be anything different about doing the work? Get the material to the job site, hire craft workers, provide drawings and the project will miraculously get built.

When thinking about various construction sites, even in the US, several differences in the manner in which the exact same work is accomplished in various locations are revealed. In order to properly plan and organize construction activities, the way people work in the specific location under consideration must be understood and incorporated. For example, is it better for productivity for each pipefitter welder to have an assigned stand-alone welding machine? Or possibly, the welder should use a welding machine located in an eight-pack of welders. That question could be strictly a planning matter, or it could be related to the site location and area practice. If one approach is better than the other for the project, area practice may need to be addressed and modified in some way for improved productivity to be realized. [Read more…]

Filed Under: Claims, Featured, General, Productivity, Projects Tagged With: Construction Contract Claims, Construction Contract Planning and Scheduling, Construction Field Labor Productivity, Disruption, Field Labor Productivity, Productivity Loss, Project Execution Plan, Project Execution Planning

Labor Productivity and Disruption – Managerial Considerations

May 2, 2011 By George T McLaughlin PMP CCM

This is the seventh posting regarding labor productivity and disruption. The Subject Series can be viewed here. In large and complex projects, a prime contractor may or may not direct hire the field labor. Often, the field labor is hired by major subcontractors (contractors hired by prime contractor). Examples are civil, structural steel, mechanical, piping, electrical and controls.

For the prime contractor [or similarly for Owner/Employer], subcontractor productivity is seemingly not important or relevant. This is particularly true if the subcontractor in question is on a fixed price or fixed unit price contract. However, events that are created by Owner/Employer or Contractor that impact the subcontractor’s productivity create potential liabilities. Further, once the subcontractor discovers the loss, a claim is likely to emerge.

Consequently, positive action is needed. There is a legitimate need for the Owner/Employer and Contractor to be informed. Managerial overlay, visibility and attention are components in the overall project management challenge. [Read more…]

Filed Under: Productivity, Projects Tagged With: AACE International, Changed Work, Chartered Institute of Building (CIOB), Construction Contract Claims, Construction Industry Institute (CII), Disruption, Field Labor Productivity, Mechanical Contractors Association of America (MCAA), National Electrical Contractors Association (NECA), Project Execution Plan, Project Management Institute (PMI), US Army Corps of Engineers (USACE)

Construction Field Labor Productivity Improvement – Plan the Work Well

April 22, 2011 By Richard S Troell

This is the sixth post regarding productivity in engineering and construction projects. To review an index and links to the entire series, please visit Subject Series page in this blog. This post discusses planning the work and the related impact on construction field labor productivity.

Any discussion of construction field labor (worker) productivity must, of necessity, eventually involve the idea of planning the work. Virtually every major project employs the expertise of several planners and schedulers to work the Primavera® scheduling program or some other comparable software. Great effort is placed on getting just the right schedule assembled and in place – with the right number of activities and leveled manpower, etc. However, all too often the schedule has been constructed in a near vacuum with little or no input or review from those who have to make it work in the field. [Read more…]

Filed Under: Productivity, Projects Tagged With: Change Order Impact, Change Orders, Changed Work, Claim Recognition, Construction Contract Claims, Construction Disputes, Construction Field Labor Productivity, Dispute Resolution, Disruption, Field Labor Productivity, Impact, Labor Disruption, Labor Productivity, Productivity, Productivity Loss

Managing Risk Of Delay – Earned Value Management (Part 5)

April 16, 2011 By George T McLaughlin PMP CCM

This post is the fifth in a series of discussions regarding various aspects of time management. More specifically, we have titled the series MANAGING RISK OF DELAY, since we focus heavily on the managerial aspects of program / project management. This post addresses some ideas regarding preparation and maintenance of time management related to overall bulk progress. Some might refer to this as Earned Value Management.

The challenge associated with managing all (critical and non-critical path) work is common to virtually all 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. Owner/Employer delays can be masked among the myriad of activities that are the responsibility of other (than the Owner/Employer) stakeholders. Even when detected or disclosed, these variances to plan are often dismissed as simply consuming available float. Hence, the Owner/Employer (or other stakeholder) may rationalize these variations as having no impact. Of course, the reality is that these sorts of departures may (or may not) add risk or disruption to the project execution. Further, they may delay forecasted completion. The managerial challenge becomes detection, assessment and quantification (should it be appropriate to compensate the contractor for the impacts). [Read more…]

Filed Under: Projects Tagged With: AACE International, Accepted Programme, As-Planned Schedule, Change Order Impact, Change Orders, Changed Work, Construction Contract Delay, Construction Contract Notice, Construction Contract Planning and Scheduling, Construction Disputes, Contract Change, Delay, Disruption, Field Labor Productivity, Impact, Impact Factors, Large and Complex Projects, Productivity, Project Execution Plan, Project Execution Planning, Time Management, Time Management Strategy

Productivity and Leadership

March 24, 2011 By George T McLaughlin PMP CCM

This post discusses the some leadership concepts and the relationship to field labor (or home office labor) productivity.

Recently, my friend and colleague, Dick Troell authored an excellent post regarding field labor productivity. Dick’s discussion drips with ideas that show his experience and understanding of the men and women that perform construction in the field.

First, I wish to clarify my background and experience. I have many years of experience in the field and on projects throughout the world. However, I have never welded a diameter inch of pipe, placed a cubic centimeter of concrete, erected an ounce of steel, and so forth. I am not a product of the trades; rather, from the managerial ranks.

There is a leadership component of the managerial challenge. Leadership can have several positive influences on the labor component of the job. In exhibiting this leadership, my experience suggests several beneficial effects result. [Read more…]

Filed Under: Projects Tagged With: Change Order Impact, Construction Contract Claims, Disruption, Field Labor Productivity, Productivity

Managing Risk Of Delay (Part 1)

March 8, 2011 By George T McLaughlin PMP CCM

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 Reference 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 here and is excellent.

The outline of this presentation is as follows: [Read more…]

Filed Under: Projects Tagged With: Construction Contract Claims, Construction Contract Delay, Contract Change, Delayed Completion, Disruption, Impact, Productivity, Variance

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