You are here: Home / Archives for Scope of Work Claims

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

July 3, 2014 By

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).

[Read more…]

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

CONSTRUCTION CLAIMS and DISPUTES – (Part 8)

January 27, 2014 By

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

CONSTRUCTION CLAIMS and DISPUTES – (Part 7)

August 6, 2013 By

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

CONSTRUCTION CLAIMS and DISPUTES – (Part 6)

June 25, 2013 By

Scope of Work – Baseline

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

In the realm of construction claims and disputes, claims regarding scope of work are the largest or highest single category.  The George Washington University publication Construction Contracting states that “Not surprisingly, specifications and plans are the focal point of most construction contract performance disputes and requests for price adjustments.”  While this source pertains to US Federal government contracting, the same pattern can be seen in the private sector on a worldwide basis.  Even more general, scope of work disputes extend beyond construction contracting, into engineering and procurement in the Engineering, Procurement and Construction (EPC) industry.

This series of posts will address scope of work within the overall subject of Construction Claims and Disputes.  Since disputes and claims regarding scope of work are such a pervasive problem, some degree of detail will be presented.  Further, the majority of the discussion will address entitlement to recovery (rather than pricing or quantum).

The source of all disputes and claims is 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.

Success in this area of claims and disputes depends almost exclusively on how well you know the contract.  More specifically, how well you know and understand the scope of work.

Later in this post, the formulation of a Claims Management Plan (CMP) is discussed and related to contract scope of work. [Read more…]

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