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CAPITAL PROJECTS COST CONTROL

January 19, 2017 By George T McLaughlin PMP CCM

In light of the 2017-2018 Construction Forecasts, Capital Projects Cost Control is paramount and one to take a more acute focus.

In Project Execution, Field Labor Shortages Represent The Highest Risk To Achievement Of Time & Cost Objectives Large And Complex Projects.

Major Shortages in Construction Field Labor Will Influence (Negatively) US Construction Costs.

In Execution (After Stage Gate Three), A Major Risk to Project Cost Management Resides in Labor Cost (overruns),

The Highest Risk to Achieving Project Cost Management Occurs In Execution – After Stage Gate Three/Full Funding.

Driven By A Long History of Cost and Schedule Overruns, Managerial Thinking Now Prioritizes Cost Certainty.

On Complex Capital Projects, Cost Certainty Has Become a Compelling Objective.

McLaughlin & McLaughlin has assisted numerous Major Capital Projects successfully over the years by providing cost effective business solutions and recovery plans.

What makes McLaughlin & McLaughlin unique from the others is that we not only perform project management services but dispute resolution as practitioners.

It is important to note that McLaughlin and McLaughlin Project and Dispute Consulting LLC [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 construction claims, dispute resolution and litigation support. For further information on M&M services, please see www.McLaughlinandMcLaughlin.com.

Filed Under: Featured, General, Productivity, Project Planning, Projects Tagged With: Best Practice, Capital Projects, claims and disputes practitioners, Construction claims and disputes, Construction Field Labor Productivity, Cost and Schedule Certainty, Craft labor Shortages, Dispute Resolution, Field Labor Productivity, George T. McLaughlin PMP, large and complex industrial projects, PMI, Project Execution Plan, Project Management Institute (PMI), Time Management Strategy, Troubled Projects, www.mclaughlinandmclaughlin.com

Labor Productivity

December 27, 2016 By George T McLaughlin PMP CCM

Project Professionals a blog by McLaughlin & McLaughlin Project and Dispute Consulting LLC will be offering a few project tips regarding Project Management and Labor Productivity over the next few weeks.

Labor Productivity – Productivity Factor (PF) according to #AACEI equals Actual Productivity divided by Baseline or Planned Productivity.

Labor Productivity – Performance Factor (PF), according to Schwartzkoff equals Estimated Unit Rate divided by Actual Rate.

Labor Productivity – A simple KPI is the ratio of Planned Man-Hours divided by Actual man-hours – “Earned over Burned.”

Labor Productivity – There are several KPI’s that can be used for project/construction management.

Labor Productivity – Use of labor productivity KPI facilitates proactive project management.

Labor Productivity – As a leading Indicator, Labor Productivity represents an excellent management tool.

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Filed Under: Featured, General, Productivity, Project Planning, Projects Tagged With: AACE International, Best Practice, George T. McLaughlin PMP, KPI, McLaughlin & McLaughlin, Productivity, Productivity Management, Project Management Institute (PMI), www.mclaughlinandmclaughlin.com

CONSTRUCTION CLAIMS and DISPUTES – Subject Series Summary – Update 11-Nov-2014

November 11, 2014 By George T McLaughlin PMP CCM

Just as the businesses and economies have cycles, capital projects (particularly engineering and construction) have recurring cycles. The pendulum swings back and forth within the bounds of the capital project cycle. In capital projects, the cycle can be three to five years, depending on the economy, size and complexity of the projects and other factors.

At this time, the market seems to be transitioning from project planning and early execution into middle to later-stage execution with emergence of disputes. As the claims and disputes marketplace intensifies over the next several years, Construction Claims and Disputes will become an increasingly commonplace and a relevant topic for capital project management professionals.

Construction Claims and Disputes continues to be the most popular subject on Project Professionals. Further, it is the most requested line of services provided by McLaughlin & McLaughlin. M&M are project management practitioners (in the field) and, yes, we practice what we preach. Further, our choice of topics for Project Professionals posts is driven by and reflective of practical and current issues. This is not esoteric, academic or hypothetical “stuff”.

This summary update provides readers with an overview of prior posts and provides a baseline for future posts that will follow on a timely basis. Initially, this Subject Series, Construction Claims and Disputes, was posted during January 2011 through July 2014. During the past several years, greater than 25% of views by visitors have been to this Subject Series.

Ideally this Subject Series provides a starting point to investigate best practice on many planning and execution features of construction claims and disputes. [Read more…]

Filed Under: Claims, Featured, General, Productivity, Projects, Uncategorized Tagged With: Best Practice, claims and disputes, Construction Claims Management, Construction Contract Claims, George T. McLaughlin PMP, McLaughlin & McLaughlin, Notice of Recognition, PMBOK, Productivity Management, Progress, Progress Assessment, Project Management, Project Management Institute (PMI), Project Management Plan, Recognition, Schedule Specification, Scope of Work, Scope of Work Management, www.mclaughlinandmclaughlin.com

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).

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

CONSTRUCTION CLAIMS and DISPUTES – Subject Series Summary

January 8, 2014 By George T McLaughlin PMP CCM

Construction Claims and Disputes is the most popular subject on Project Professionals and has been for several years. Further, it is the most requested line of services provided by McLaughlin & McLaughlin. M&M are project management practitioners (in the field) and, yes, we practice what we preach. Further, our choice of topics for Project Professionals posts is driven by and reflective of practical and current issues. This is not esoteric, academic or hypothetical “stuff”.

This summary update provides readers with an overview of prior posts and provides a baseline for future posts that will follow on a timely basis. Initially, this Subject Series, Construction Claims and Disputes, was posted during January 2011 through August 2013. During the past several years, greater than 25% of views by visitors have been to this Subject Series.

Ideally this Subject Series provides a starting point to investigate best practice on many planning and execution features of construction claims and disputes.

Construction Claims and Disputes (Part 0) – This introduction formats the discussion with definitions, claim categories and key industry references. This post is consistent with M&M experience in many years of professional services.

The Overview (Part 1) –Part 1 updates Part 0, the introduction.

Construction Claims Management Planning (Part 2) – This is the most popular post in this (most popular) Subject Series. Construction claims (or the risk of claims) can and should be professionally managed. View this process as a piece of project (execution) planning [link]. This post outlines elements of a Construction Claims Management Plan. Further, it addresses elements of defining a Claim Strategy. Stakeholders include Owners, Prime Contractors and Subcontractors. Do not miss this post.

Current Project Professionals Posts (Part 3) – Claims are organized into four general categories. These categories are consistent with the frequency of occurrence, methods of management and other key managerial considerations. The categories are

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

Pricing Construction Claims (Part 4) – This post addresses the… Think you know how to price your (or other’s) claims? Andrew (Andy) Ness, 2012-13 Chair, ABA Forum on the Construction Industry probably disagrees with your answer. Read this post and consider Andy’s position as well as other considerations regarding claim pricing/damages. The content of the recent ABA book on the subject is covered.

Pricing Construction Claims (continued) (Part 5) – Are construction claims and disputes “all about the money?” Some believe this to be the case. This post (Part 5) expands on Part 4 by addressing pricing and citing additional references.

Scope of Work – Baseline (Part 6) – It is widely believed and accepted that Scope of Work and/or Changed Work is the single largest source of claims and disputes in engineering and construction (as well as many other contracted services). In order to establish departures from the baseline scope of work, you must be able to define the applicable baseline. This post cites various sources for baseline definition,

Scope of Work – Plans and Specifications (Part 7) – Several industry sources (publications) are used to elaborate on execution and contracting strategies that rely on plans and specifications as a major component of scope or work definition. This discussion includes typical contract documents and contract provisions wherein scope of work, services, supply and / or facilities is / are defined. Suggestions for configuration and change management in the field are included.

Other Subject Series that are both relevant and popular include:

Going forward, we will post other features of CONSTRUCTION CLAIMS and DISPUTES.

My we wish you the best of luck and let us all attempt to confront and deal with these and other project management challenges. It is crucial that recognition and anticipation of these issues occur during initiation and planning. However, the recognition and management should continue through execution, controlling and closeout.

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, Projects, Uncategorized Tagged With: Best Practice, Best Practices, Construction Contract Claims, George T. McLaughlin PMP, Notice of Recognition, PMBOK, PMI, Productivity Management, Progress, Progress Assessment, Project Management, Project Management Plan, Recognition, Schedule Specification, Scope of Work Management, Stakeholder Managment, www.mclaughlinandmclaughlin.com

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

MANAGING RISK OF DELAY – Managing Contractor Schedules (Part 13)

September 28, 2013 By George T McLaughlin PMP CCM

This McLaughlin & McLaughlin post is the thirteenth (13^th) in a series of discussions regarding various aspects of time management as it relates to the risk of delay. This post addresses managerial considerations for dealing with schedules prepared by contractors and submitted to owners or their agents (construction managers, managing contractors, advisors, etc.).

Recently, Mr. Chris Carson authored an excellent article titled “Dealing with Contractors Schedules That Cannot be Approved.” This fine article was published in COST Engineering(September/October 2013).

This article contains excellent advice for project teams regarding schedule management.

Mr. Carson’s article is, in reality two articles in one. While Mr. Carson’s article presents a methodology for problematic situations (which he calls DSAB), the preamble and initial discussion for this article is highly useful and applicable to project management teams as they address the frontend of project planning and execution. This post summarizes the sage advice provided by Mr. Carson regarding frontend project management challenges as they relate to scheduling and time management. [Read more…]

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

CONSTRUCTION CLAIMS and DISPUTES – (Part 6)

June 25, 2013 By George T McLaughlin PMP CCM

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: Claims Management Plan, Construction claims and disputes, construction claims damages, Construction Claims Management, Construction Claims Management Plan, construction claims pricing, Construction Claims Quantum, George T. McLaughlin PMP, McLaughlin & McLaughlin, Scope of Work Claims, www.mclaughlinandmclaughlin.com

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