Claim Avoidance on Highway Projects

Transcription

1 Claim Avoidance on Highway Projects Joseph R. Hellenbrand, P. E., PSP Capital Project Management, Inc. ASHE National Conference Bismarck, North Dakota June 13, 014 1

2 Joe Hellenbrand P.E.; PSP 0 years of Construction Management/Scheduling Experience on Highway, Heavy Construction, Wastewater Treatment Plants, Hotels, Casinos, Hospitals, and Government Facilities Work with Owners, Designers and Contractors to develop and defend against claims Board Member of ASCE Claim Avoidance and Resolution Committee

3 Construction Claims A construction problem becomes a claim when someone asks for money. 3

4 Before Problems Arise Know the Contract The Contract states how the Owner expects the Project will be executed and the desired results. The Contract should dictate each stakeholder s responsibilities. The Contract states how the Contractor will be compensated. 4

5 Contract Document Pitfalls Ambiguities Conflicting Information Omissions 5

6 Interpretation of Contract Documents Order of precedence as defined in contract Detailed Specifications over Drawings Drawings over Standard Specifications In general more detailed will apply Details over Standard Drawings Calculated Dimensions over Scaled Dimensions Many courts look to equitable considerations rather than technicalities of the contract language 6

7 Contract Schedule Specification What are the Project Milestones Liquidated Damages Early Completion Schedule Requirements Schedule Program Level of Detail Types of Relationships Who owns Project float? No Damages for Delay clause Recovery schedule requirements How to request time extension 7

8 Baseline Schedule This is the Contractor s plan to construct the Project based on the bid documents Realistic logic and durations to meet all Milestones Anticipate reasonable weather impacts Include Non-work periods for seasonal work Long Lead Items Buy-in from subcontractors 8

9 Baseline Schedule (Cont.) Baseline Schedule Critical Path Review near critical paths What if the Baseline is not approved? 9

10 Schedule Updates Status the Project periodically Revise logic and durations to reflect changes in the field and Contractor s plan Update submittals and utility information Track RFIs and Potential Change Items Submit schedules to Owner for approval 10

11 Notice When Problems Arise Follow Contract requirements Miss a notification deadline; a claim can be denied Document the Issue Add an activity for the Issue into the schedule with appropriate durations and logic and assess how it impacts the schedule. 11

12 Construction Claims Changes in Scope (Disputed Changes) Delay Disruption 1

13 Changes in Scope Directed Changes Constructive Changes 13

14 Delay v. Disruption Delay Disputes over time of performance Disruption Disputes over labor productivity 14

15 Categories of Schedule Delay Excusable Delay Delay that excuses late performance. Compensable Contractor reimbursed for time-related costs. Non-compensable Contractor is precluded from reimbursement for timerelated costs. Non-Excusable Delay Delay within the control of the Contractor. 15

16 Concurrent Delay Two or more delays occurring in the same time frame on separate critical paths with both affecting the overall completion of the project. If one of the delays is due to the Owner a concurrent delay is excusable Concurrent delays prevent either party from recovering damages. 16

17 Other Delay Force Majeure Acts of God (Hurricane, Labor Strike, Etc.) Excusable Not Compensable 17

18 Project Example Project: Construction of multi-span highway bridge Value: $5 Million Contract Duration: 16 months Liquidated Damages: $10,000 per day 18

19 As-Planned Schedule Months NTP Shop Dwgs. 3 Temporary Detour Relocate Utility Lines A/E App. Fab & Delv. 1 1 mo. Float Excavate 6 Fnds. Piers Abutments 1 mo. Float 1 mo. Float Erect Bridge Deck P.L. 1 Complete Activity Description Duration in Months Logic Restriction Critical Path 1 month Float

20 Assessing Delay Establish as-planned schedule Reflect planning changes and as-built history Evaluate delays against a schedule reflecting status of the project at the time the delay occurred Analysis must be thoroughly grounded in the project records Loss of Float vs. Critical Path Delay 0

21 Non-Excusable Delay NTP A/E Shop Dwgs. App. Fab & Delv. Temporary Detour NTP 3 Relocate Utility Lines Shop Dwgs mo. Float A/E App. 1 Exc. F & D Fnds. Status Fab & Delv. Stl. Piers 3 3 Abutments mo. Float Erect 1 mo. Float 3 mo. Float Bridge Deck P.L. 1 Complete Months Non-Compensable Months Temporary Detour Detour Delay Exc. Fnds. Piers Struct. Bridge Deck P.L. Complete 3 Relocate Utility Lines 3 ( critical) 4 mo. Float 3 Abutments 1 mo. Float 1 Critical Path Controlling Delay Non-Controlling Delay

22 NTP A/E Shop Dwgs. App. Fab & Delv. Excusable Compensable Delay NTP 3 Temporary Detour Relocate Utility Lines Shop Dwgs. 3 Temporary Detour 3 1 Exc. A/E Dwg. Revisions 3 ( critical) Exc. Fnds. Status A/E App. 1 Fnds. Piers 3 3 Abutments 4 6 Fab & Delv. Piers 1 mo. Float Erect Struct Months Compensable Bridge Deck 3 6 Bridge Deck P.L. 1 Complete P.L. 1 Months Complete Relocate Utility Lines 4 Abutments Critical Path Controlling Delay Non-Controlling Delay

23 NTP CONCURRENT DELAY EXCUSABLE/NON-COMPENSABLE A/E Shop Dwgs. App. Fab & Delv. Temporary Detour NTP 3 Relocate Utility Lines Shop Dwgs. 1 1 mo. Float Exc. A/E Dwg. Revisions Fnds. Status A/E Appr. Piers 3 3 Abutments mo. Float Fab & Delv. Erect Bridge Deck P.L. 1 Complete Months Non-Compensable Months 3 Temporary Detour 3 ( critical) Detour Delay 1 Exc. Fnds. Piers 6 Erect Bridge Deck P.L. Complete 3 3 ( critical) 3 1 Relocate Utility Lines 4 Abutments Critical Path Controlling Delay Non-Controlling Delay

24 CONCURRENT OR COMPENSABLE DELAY? NTP Shop Dwgs. A/E Dwg. Revisions Status A/E App. Fab & Delv. 3 Temporary Detour 3 3 ( critical) Exc. 1 Fnds. Piers 6 mo. Float Struct. Bridge Deck 3 P.L. 1 Complete Relocate Utility Lines 4 Abutments NTP Shop Dwgs. 3 Temporary Detour Relocate Utility Lines A/E Dwg. Revisions Exc. 3 4 A/E App. Fnds. F & D 3 ( critical) 1 3 Contractor Re-Leveling Late Compl. Status 3 Piers Abutments 3 Struct. Bridge Deck P.L. 1 Months Complete Why Hurry Up & Wait? Critical Path Controlling Delay Non-Controlling Delay

25 Acceleration Expediting progress of the work Directed Acceleration Owner directs contractor to accelerate work. Constructive Acceleration Contractor s response to an action by the Owner that can be construed as a demand to overcome the effect of previous excusable delays. Contractor must provide notification Owner will pay for premium time and inefficiencies 5

26 Recovery Schedules Contract may have triggers for Contractor to implement actions to meet contract milestone. Delayed Milestones are due to Contractor performance. Contractor is required to use additional resources, work longer and revise schedule. Not paid by Owner 6

27 Recovery NTP Shop Dwgs. A/E App. F & D Status Fab & Delv. Stl Temporary Detour Detour Delay Exc. Fnds. Piers Struct. Bridge Deck P.L. Complete 3 Relocate Utility Lines 3 ( critical) 4 3 Abutments NTP Shop Dwgs. A/E App. Status Fab & Delv. Stl. Months Months 3 Construct Temporary Detour 3 Relocate Utility Lines 1 Detour Delay 3 Exc. Fnds. 4 Piers Struct. Bridge Deck P.L. Recovery Complete 4 Abutments 3 1 Critical Path Controlling Delay Non-Controlling Delay

28 Disruption Disruption Disputes over labor productivity Results from changes in the method of performance, resources, or planned sequence of work. 8

29 Disruptive Events Numerous changes Slow response to requests for information Tardy drawing reviews/inspections Interference with other contractors Limited site access Material availability problems Lack of planning and management Adverse weather conditions 9

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31 Causes of Labor Productivity Losses Overcrowding Stacking of trades Out of sequence work Extended overtime Changes in crew size Restricted access 31

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33 CONSTRUCTION COST ELEMENTS TOTAL COST NET PROFIT DIRECT COST OVERHEAD LABOR EQUIPMENT MATERIAL DIRECT OVERHEAD INDIRECT OVERHEAD DIRECT LABOR PAYROLL BURDENS GENERAL CONDITIONS HOME OFFICE Craft Labor Fringe Benefits Leased Direct Material On-Site Staff G & A Supervision Insurance & Taxes Owned Sales Tax On-Site Facilities Marketing Permits & Fees EICHLEAY DELAY Escalation Standby Escalation Extended Performance DISRUPTION Lost Productivity ACCELERATION Additional Resources / Inefficiency Expediting

34 Proving Lost Productivity Total cost method Modified total cost method Industry guidelines Comparison to industry standard Comparison to contractor s historical productivity Measured Mile Comparison of impacted period to non-impacted period on project Selected method depends on available records. 34

35 Overhead Costs Overhead Costs Home Office Staff Home Office Expenses Misc. Home Office (Travel, Legal) Depreciation on equipment Eichleay 35

36 Termination Termination for Convenience (T for C) Owner ending contract when it suits its needs but not in bad faith Owner must still pay terminated contractor damages (payment for work completed, demobilization costs, subcontractor close out costs, plus profit on work completed.) Termination for Default (T for D) Nuclear option for Contractor s non-performance Owner bears burden of proof to show contractor was in default--otherwise it is T for C. 36

37 Settlement of Claims Negotiation of Change Orders by all parties Mediation Arbitration Claim Board Courts 37

38 Tips for Approaching a Claim Be truthful Be reasonable about impacts and damages associated with it Know the Contract Be prepared to explain and defend your claim If possible, seek mediation Involve counsel 38

39 Warning against Overstating Claims Federal False Claims Act Knowingly submitted false claims to the U.S. Government Civil penalty plus triple the amount of damages claimed. 39

40 Additional Resources ASCE Claim Avoidance and Resolution American Association of Cost Engineers International

41 Questions 41

42 Contact Information: Joe Hellenbrand, P.E., PSP Capital Project Management, Inc. (67)