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CONSTRUCTION CLAIMS and DISPUTES – (Part 5)

April 1, 2013 By

Pricing Construction Claims – (continued)

McLaughlin and McLaughlin’s Project Professional post is the fifth in a Subject Series Construction Claims and Disputes.  This Subject Series contains discussions regarding potential and actual construction claims and disputes situations.  In this series, we focus on the key aspects of construction claims and disputes management (rather than mechanics).  This discussion is a continuation of Part 4 regarding the pricing of claims and disputes.  The compulsion or question is – “How much is a potential claim worth?”  In virtually all disputes, the central issue is the money.  Since it is a win-lose situation, the outcome may be that someone (one party) will pay another party.  Hence, the money is the ultimate issue (sometimes time is at issue, generally presenting itself in money or damages related to the time).

There is an old saying “win the battle, lose the war” which applies to damages in construction claims and disputes.  With facts, logic and analyses on their side, one party (Party A) can prepare and present a very compelling argument regarding the claim (against Party B).  However, winning the argument on the cause (or as it is called, entitlement) is relatively useless without winning the argument on the money related to the effect (or sometimes called damages, quantum, compensation, pricing).

Even more compelling, the decision to proceed with a claim (and potentially spend millions of dollars on expenses such as legal and expert fees) should be heavily driven by the potential recovery (the money).  Consequently, parties must have a reasonable assessment of the true value of the dispute and the ability to successfully demonstrate or prove these damages in the resolution process.  Without the ability to prevail on a suitable and acceptable level of damages, pursuing a construction claim through a costly dispute resolution process could be an unwise managerial decision.

McLaughlin and McLaughlin  has extensive experience and expertise in the strategy and pricing of major construction claims and disputes.  This experience includes work for both owners and contractors.  Further, the experience includes testimony on this topic.

In this discussion, we are guided by another highly useful and well written book.  This reference is Calculating Construction Damages, Second Edition, by William Schwartzkopf and John J. McNamara. [Read more…]

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CONSTRUCTION CLAIMS and DISPUTES – (Part 4)

March 17, 2013 By

Pricing Construction Claims

This post is the fourth in McLaughlin & McLaughlin’s Project Professionals  Subject Series  Construction Claims and Disputes which are (will be) discussions regarding challenges in potential and actual construction claims and disputes situations.  In this series, we focus on the key aspects of construction claims and disputes management.  This discussion addresses the pricing of claims and disputes.  The compulsion or question is – “How much is a potential claim worth?”  In virtually all disputes, the central issue is the money.  Since it is a win-lose situation, the outcome may be that someone (one party) will pay another party.  Hence, the money is the ultimate issue (sometimes time is at issue, generally presenting itself in money or damages related to the time).

There is an old saying “win the battle, lose the war” which applies to damages in construction claims and disputes.  With facts, logic and analyses on their side, one party (Party A) can prepare and present a very compelling argument regarding the claim (against Party B).  However, winning the argument on the cause (or as it is called, entitlement) is relatively useless without winning the argument on the money related to the effect (or sometimes called damages, quantum, compensation).

Even more compelling, the decision to proceed with a claim (and potentially spend millions of dollars on expenses such as legal fees) should be heavily driven by the potential recovery (the money).  Consequently, parties must have a reasonable assessment of the true value of the dispute and the ability to successfully demonstrate or prove these damages in the resolution process.  Without the ability to prevail on a suitable and acceptable level of damages, pursuing a construction claim through a costly dispute resolution process could be an unwise decision.

In this discussion, we are guided by a highly useful and well grounded newly published book.  It is published by the American Bar Association (ABA) and has been recently (2013) been updated.  This publication is Construction Damages and Remedies, second edition, by Forum on the Construction Industry, American Bar Association.  It is edited by W. Alexander Moseley of the law firm Hand Arendall LLC.  There are nine authors. [Read more…]

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CONSTRUCTION CLAIMS and DISPUTES – (Part 3)

March 4, 2013 By

Current Project Professionals Posts

McLaughlin & McLaughlin’s Project Professionals post is the third 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 summary discussion addresses the many posts that have been presented in the past and are at the Subject Series tab of Project Professionals.

In the engineering and construction industry, claims and disputes take many forms and focus on many topics.  For simplicity of discussion, we will use the follow the following categories:

  • Scope of Work, Changed Work or Variations
  • Delay and Acceleration, Time-Related
  • Disruption / Productivity (usually labor/labour)
  • Terms and Conditions (and other subjects).

McLaughlin & McLaughlin’s Project Professionals has posted (or published) greater than 60 posts regarding one or more aspects of Construction Claims and Disputes.

The balance of this post identifies the Subject Series and posts that are at Project Professionals and are relevant to construction claims and disputes. [Read more…]

Filed Under: Claims, Featured, General, Projects Tagged With: , , , , , , , , , , , , , , , , , ,

CONSTRUCTION CLAIMS and DISPUTES – (Part 2)

February 6, 2013 By

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: , , , , , , , , , , , , , , , , , , , ,

PROJECT PLANNING – Managerial Challenges (Part 3)

January 8, 2013 By

PROJECT PLANNING – Managerial Challenges(Part 3)

Project Initiation – Contractor

This post is the third in a series of discussions regarding managerial challenges in project management situations.  In this series, we focus heavily on the managerial aspects of program / project planning and management.  This post addresses the starting point or initiation of the project.  Part 2 discussed Project Initiation in general.  This post [Part 3] addresses considerations that are unique to contractors.

Owners often view contractors as a homogenous group or homogenous within the contractor’s own organization.  This perception is not correct, at least for contractors of any size or diversity.

Why does the same contractor behave differently on one job relative to another?  Why does a contractor bid differently relative to past practices or experiences?  Why is the contractor’s price so high on this bid when it was so low on another bid?  We expected the contractor to be competitive and they are not.  Another scenario, we expected the contractor to not be competitive; but, they have the best proposal and bid.  There are many potential reasons.  The answer may reside in the project initiation process.

[Read more…]

Filed Under: Claims, Featured, General, Projects Tagged With: , , , , , , , , , , , , ,