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{"id":1805,"date":"2014-07-03T12:13:18","date_gmt":"2014-07-03T17:13:18","guid":{"rendered":"http:\/\/projectprofessionals.org\/?p=1805"},"modified":"2014-07-03T12:15:18","modified_gmt":"2014-07-03T17:15:18","slug":"construction-claims-and-disputes-part-9-why-scope-of-work","status":"publish","type":"post","link":"https:\/\/projectprofessionals.org\/2014\/07\/03\/construction-claims-and-disputes-part-9-why-scope-of-work\/","title":{"rendered":"CONSTRUCTION CLAIMS and DISPUTES – (Part 9) Why Scope of Work?"},"content":{"rendered":"

Why Scope of Work?<\/strong><\/p>\n

This McLaughlin and McLaughlin (M&M)<\/b><\/a> post is the ninth in a Subject Series \u00a0Construction Claims and Disputes<\/b><\/a>.<\/p>\n

Scope of Work<\/b> is (or should be) the basis for most claims and disputes.\u00a0 As we previously discussed, claims and disputes regarding scope of work are a widespread problem and represent the most common issue<\/span>.\u00a0 Perhaps 75 to 90% of all engineering and construction claims and disputes involve contract scope of work<\/span><\/b>.\u00a0 But the issue goes further.\u00a0 Scope of work influences and is a foundation for delay, acceleration, disruption, payment and many other types of disputes.\u00a0 Consequently, virtually all claims (should) start with scope of work<\/span><\/b>.<\/p>\n

Scope of work<\/b> is a huge factor in capital investments.\u00a0 In the engineering and construction market, investments total in the hundreds of billions of dollars (USD).\u00a0 These investments are increasing, particularly in areas such as the US Gulf Coast.\u00a0 Typical budgets for changed work are targeted for 10% which makes this market of tens of billions of dollars (USD).\u00a0 However, this is merely the budget, not the reality.<\/p>\n

Most of these investments involve contracting for goods and services.\u00a0 Each of these transactions must consider scope of work (services, facilities, supply) as primary to the transaction.\u00a0 Consequently, each transaction has risk of claims and disputes regarding the related scope of work.\u00a0 Stakeholders include: owners, prime contractors, subcontractors, engineers, architects, lawyers, consultants, investors, lenders, sureties, governments and others.<\/p>\n

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.\u00a0 Largely, this is not legal work.\u00a0 However, it requires expertise.\u00a0 If the project team lacks this expertise, a subject matter expert (SME) is needed.\u00a0 The SME must possess the expertise in recognition, entitlement, pricing, evidence and related impacts to the project\u2019s performance (time, cost, and other considerations).<\/p>\n

<\/p>\n

Project Scope of Work<\/b> is the most fundamental building block for effective and professional project development and execution.\u00a0 Key sources of professional advice agree that project delivery as well as project management have a basis in and must be derived from scope of work.\u00a0 Project Management Institute (PMI) is a prime example.\u00a0 Scope of work can be using many means and methods.\u00a0 Regardless, baselines definitions rely on rely on scope of work.\u00a0 Costs, budgets, schedules, resource requirements all have their origins in scope of work.\u00a0 With scope of work being such a fundamental, management of this parameter must be a primary focus in professional project management.<\/p>\n

Scope of work definition and management is a huge proposition. Planned capital project investments worldwide over the next several years total many, many hundreds of billions of dollars (USD). Several limited examples of public domain (Google sources) forecasts include:<\/p>\n

\u2022 Canadian Oil Sands $200 billion (2013-2022)
\n\u2022 Hydrocarbon Processing $ 60 billion (2013)
\n\u2022 Oil & Gas Infrastructure $ 90 billion (2014)
\n\u2022 Liquefied Natural Gas $500 billion (2014-2020)
\n\u2022 Chemical Makers $ 72 billion (per year)
\n\u2022 And so many others.<\/p>\n

These forecasts of massive investment give insight into the need for legitimate definition of project scope of work. In addition, there is the need to implement scope management. A key aspect of scope management resides in management of change. Changes to scope (sometimes referred to as scope growth) are a reality of project work. Typical planning factors used are changed work of 10% (for well-defined scope). Using this factor, changed work can amount to may tens of billions (20-80+ billion USD) of dollars. Thus, management of change represents a huge managerial challenge in and of itself.
\nHow well developed \/ defined is the project scope of work? This is a fundamental project management question that is central to successful project planning and execution. Lack of adequate development of scope of work is a major reason for project failures.<\/p>\n

There are at least several key sources of advice and expertise.\u00a0 These include:<\/p>\n