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Construction/Engineering Management: A Comparison

American Society of Civil Engineers
Issues in Engineering – October 1980
By Steven Pinnell

INTRODUCTION

Engineering management is in many ways different from construction management, yet both should use the same project management concepts and techniques. Many organizations and individuals do manage both design and construction of the same project.

This paper reviews the definitions and practice of construction management and engineering management in order to examine their similarities and differences. It then briefly considers project management concepts and techniques that are applicable to each and concludes with some suggestions for better project management.

OVERVIEW

Definitions.—These include:

1. Construction Management—The management of construction projects and construction organizations by contractors. For clarity this is referred to as the management of construction.

2. Construction Management (CM)—A professional service to manage the design and construction of a project. This is referred to as CM.

3. Engineering Management—The management of design projects and engineering organizations.

4. Project Management (Project Management Services)—A professional service to assist the Owner and his architect/engineer in managing the design and construction of a project. This is designated as Project Management Services.

5. Project Management—The concepts and techniques of managing projects, whether it be a design project, a construction project, or a design and construction project. This is referred to as project management.

6. Design/Build—A method of project delivery that provides both final design and construction based on scope documents and other criteria. It combines professional design services with construction in one contract.

7. Turnkey—This is the same as design/build except that the designer builder provides financing until the key is turned over to the owner.

Management of Construction Projects.—This is the management of individual projects. It is usually accomplished by an isolated project team with a project manager, project superintendent, and project engineer at a site separate from the rest of the organization. The project manager generally has a great deal of authority and must be a good general manager. The project manager often operates with limited supervision or assistance, much as an independent company. Construction project management is a very different environment from CM or engineering management. A project manager must have an intimate knowledge of labor law and be skilled at dealing with union leaders and supervisory personnel. Also required is a great deal of experience in construction methods, equipment maintenance, building materials, and cost control, in addition to skill in project management techniques.

Although many construction project managers are graduate engineers, few are registered engineers. They also have different attitudes and philosophies than their contemporaries in engineering management.

CM Services.—CM is a professional service and a project delivery method that is quite different from the traditional design-bid-construct method. A construction manager, as an agent of the owner, manages the overall process. CM often, but not always, includes: (1) Fast tracking or phased design/construction; (2) multiple prime contracts; (3) special contract provisions such as guaranteed maximum price; and (4) modem project management techniques such as CPM/PERT scheduling, cost and scope management, cash flow forecasting, value engineering, etc.

CM is usually practiced with one of three basic approaches, which include:

1. General Contractor or GSA CM—A general contractor provides a guaranteed maximum price (after the basic design is established), provides input to the design process, and subcontracts most (or all) the construction work for the owner. The General Contractor CM often does a portion of the work with his own forces.

2. Designer CM—An architect/engineer manages the process and sometimes does the design. Characteristically, they place a heavier emphasis on design input and less on construction supervision. Sometimes the construction is done with one general contractor instead of multiple prime contracts.

3. Business Manager CM—A specialist in some business management area, like computerized data processing or scheduling, provides the same services but emphasizes cost/time tracking or some other management tool. Management of CM projects is an integrated effort of four teams: owner, architect/engineer, contractor(s), and construction manager. Each team manages their own part of the project and the construction manager integrates their efforts. The CM project manager must have a great deal of skill at negotiation and interpersonal relations. Other needs include expertise in the project management process and a good general knowledge of the design process, the construction process, construction methods, and the actual design for the particular project. CM project management is different from engineering management or the management of construction. The CM project manager usually has no direct control over the people doing the work but must rely on others to carry out the plan they have jointly developed.

The popularity of CM has encouraged a few unprepared or unqualified firms to offer CM services. Some problems, owner dissatisfaction, and some dissatisfaction in the CM concept have been the result. Hopefully, owners are becoming more sophisticated in identifying their needs and in the selection of qualified firms to do the job.

There are also some problems with the CM concept itself. Everyone should be aware of these problems and try to avoid them. The first problem is the name itself: “Construction Management.” It really should be “design and construction management.” Some people mistakenly believe that they have to have a contractor to do CM. There are many fine contractor CMs and, in fact, many of the largest and best CM firms are general contractors. However, a good general contractor is not necessarily a good CM. Many do not use CPM scheduling, value engineering, or project monitoring and reporting techniques. Some also have trouble working closely with designers and in providing a true professional service since their contracting work so often puts them in an adversary role.

Incidently, a designer CM also may not really have expertise in CPM scheduling, value engineering, cost management, etc. Just as there is a tendency for the contractor CM to be very skilled at the construction phase but less skilled in the design phase of CM, there is similarly a tendency for the designer CM to be less skilled in the construction phase. The business management CM also has an area of strength (usually CPM scheduling, cost management, computerized monitoring and reporting, etc.) and a possible area of weakness (design and construction methods).

The second problem with CM involves the difficulty of the task itself. The design of a major project, the construction, and the management of either are very challenging responsibilities. The integration of all and the management of the overall process is therefore complex. It requires an intimate knowledge of the design, of the construction, of CPM/PERT scheduling, cost estimating, value engineering, electronic data processing, human relations, and numerous other skills. Few individuals have a good grasp of the overall process and few organizations have the breadth of skills and experience.

Although it has a few problems, CM is an excellent professional service and project delivery system that more and more owners will be using in the future.

Management of Engineering Projects.—This is the management of an engineering design or planning project. It can be accomplished within a functional organization where a project manager is not designated. It can also be accomplished with project management.

Project management of an individual project can work in an otherwise functional organization. This may cause some problems but sometimes works very well to accomplish a high priority project within project objectives (usually expressed in terms of cost, time and scope/quality).

Project management of engineering projects can also be accomplished in a matrix organization. This is an organizational structure and certain management practices that combine functional departments with project teams in a matrix of responsibility. Properly administered, a matrix management approach is ideal for the management of engineering projects.

Today, most engineering tasks are managed as projects and are often done within a matrix organization. Besides the obvious need for a strong technical base in the primary discipline of the project, a project manager must also have a good grasp of the other design disciplines involved and considerable knowledge of the design process itself.

Usually the design project team is a part of a larger organization which provides most of the support needed. Unlike the manager of a construction project who must be a good general manager, the design project manager must have a high level of interpersonal/organizational skill as well as the ability to get support and resources from throughout the organization. Informal communication and implementing skills are essential.

Project Management Services.—Project Management Services is one of the latest “buzz words” in the industry. Some owners still prefer the traditional approach to project delivery, i.e., design-bid-construct but recognize that they and their architect/engineer might not have sufficient in-house capability to manage a major new project. They sometimes retain a project management. specialist to assist them in managing the project. Owners often see this as preferable to CM with its many unknowns. Project Management Services is especially desirable when an owner is going design/build or turnkey and does not have a staff with the available capacity to deal with a large, sophisticated, design/build contractor.

Project Management Services can vary from simply assisting with the initial scheduling of design and construction to complete services, comparable to CM. The Project Management Services project manager is usually limited to the management of the process rather than being closely involved in the design or construction. He often has only a monitoring and reporting role with major responsibilities revolving around computer processing, CPM scheduling, cost estimating, and project monitoring and reporting techniques. Usually the project manager acts as an independent consultant and a resource person advising the owner or architect/engineer.

Project Management Services works very well, in most instances. Occasionally, however, an owner is not willing to pay for sufficient effort to allow the project management firm to do more than passive cost/time tracking. Often this is heavy on computer usage and business management techniques but short on authority to take effective action to correct problems.

As more owners become aware of the advantages of outside Project Management Services, there will be a considerable demand for this service.

Design/Build and Turnkey.—These two concepts both involve management of design and construction. Both are usually negotiated and involve a high degree of service, repeat work through referrals, and a need for a good reputation in order to get new business.

The design/build or turnkey project manager must manage the entire process just as the CM project manager. In addition, however, he usually directly manages the construction and oversees the design.

Comparison.—The three types of project managers are: (I) Design; (2) construction; and (3) design/construction (CM, project management, design/build, and turnkey). The first two must have an intimate knowledge of methods (design practice and construction methods). They also must be skilled in the management of the process (design or construction) and need to use good project management techniques. In addition, the design project manager must have a grasp of the construction process in order to fulfill his obligation during construction.

The design/construction project manager must have a good grasp of design practice, the design process, construction methods, and the construction process. In addition, he or she must be expert at managing the overall process of project conceptualization, planning, design, construction, move-in, and startup. Needless to say, this requires a high level of expertise in project management concepts and techniques.

PROJECT MANAGEMENT CONCEPTS AND TECHNIQUES

Good project management concepts and techniques are needed on all projects – design, construction, design/construction, or even administrative projects.

This section first looks at the functions and concepts of project management and then at some of the techniques.

Basic Concept of Project Management.—Project management is really a philosophy and an approach to managing a “project.” Projects can be managed without a project management approach, but they merely become a series of related tasks performed by semi-independent departments without clear-cut responsibility and authority to achieve project objectives.

Definitions for Project Management.—These include the following:

1. Project—A series of related tasks (usually called activities) that lead to some specific objective or endpoint within a period of time.

2. Activity—A discrete task with a definable beginning and end that must be accomplished, along with other tasks, in order to complete a project.

3. Program—A group of individual projects undertaken by an organization. Often, the projects are related in that they are directed towards some long-range general organizational goal. Programs are broader in scope than projects and may be open-ended.

4. Function—An ongoing series of similar (but not directly related) tasks that are repeated indefinitely to fulfill the responsibilities assigned to an individual or organization.

5. Program Management—The task of overseeing the project management of many projects and integrating their accomplishment in the achievement of some organizational goal.

6. Project Management—The art and science of effectively and efficiently managing projects.

7. Project Manager—An individual with authority (hopefully) and responsibility for accomplishment of project objectives. Sometimes called project coordinator, project engineer, team leader, or project expeditor, but if so, usually with less than full, i.e., sufficient, authority.

Functions of Project Management.—The functions of project management are those of general management: planning, organizing, staffing, directing, controlling, and decision-making. They can be summarized as shown in Fig. 1.

A well-conceived plan to achieve project objectives should be made before taking action. The action should follow the plan. Feedback should describe the results of the action. A revised plan should be prepared based on the feedback of prior action and new action taken.

Project Management Objectives.—Objectives are essential to the concept of project management. They are also a key part of the techniques of managing projects.

Project objectives are usually expressed in terms of cost, time, and scope (quantity and quality). First, a scope should be established to fulfill a need. Then a cost estimate should be made from the scope and a contingency added to form a budget. Normally this budget is approved by some authorized group or individual before the project proceeds. Also, a schedule (or at least a completion date) should be developed from the scope and cost.

Often the project scope is described in what is termed a “scope definition” or “architectural program.” Normally, all three (scope definition, budget, and schedule) are combined into one document called the scope document. This document is prepared during the planning phase. Its approval initiates the design phase.

Properly managed, the scope document becomes the standard against which to measure the design as it develops, and against which the completed project is compared in some final analysis and report. If the scope is modified, the modifications must be identified, their cost and time impact estimated, an approval given, and the scope document changed. Success in managing a project should be measured in terms of accomplishment of project objectives as described in the scope document.

Delegation and Verification.—To make project management work, the program manager has to delegate both responsibility and authority to the project manager. This responsibility should include clearly identified objectives, preferably in writing. The program manager does not transfer this responsibility but creates new responsibility so that both the program manager and the project manager are now responsible.

Verification is the corollary to delegation. If the program manager is to delegate responsibility, he must have some assurance that the delegated responsibility is properly discharged. The project manager should, therefore, be required to monitor and report progress so that the program manager can verify performance and take corrective action when required, before it is too late.

Evaluation of Results.—Performance must be monitored periodically for corrective action to be taken before it is too late. When necessary, assistance must be given to help subordinates meet assigned objectives. A project manager’s performance should be largely measured by his or her success in meeting project objectives with proper documentation of the reasons for variation. Evaluations should also consider interpersonal relations and other less measurable factors.

Planning.—Good project management requires prior planning. This should include the following steps:

1. Identify, evaluate, and select the project objectives. This is sometimes the most difficult task in a project. Unfortunately, it is sometimes slighted and some projects end up accomplishing the wrong objectives.

2. Establish a basic strategy and identify the major tasks needed to achieve the project objective(s).

3. Estimate the resources and cost needed to accomplish the major tasks. If given previously, compare the budget with the estimate and reconcile any differences.

4. Develop a detailed plan and schedule. This is usually done with CPM/PERT techniques.

5. Forecast the cost and resource needs over time and reschedule or obtain more resources if required.

6. Organize the project team. This normally includes determining the number, type, and responsibilities of staff in addition to obtaining that staff and other resources. It also includes establishing communication channels and project monitoring and reporting systems.

7. Set the project policies, procedures, and standards. These need to be in conformance with organizational policies and procedures and must lead to the accomplishment of the project objectives.

Scheduling Techniques.—Critical path scheduling (CPM/PERT) is an extremely powerful, adaptable, but simple technique for project planning and controlling. Unfortunately, most project managers in design or construction do not use it. Much of this may be due to an overemphasis on computer scheduling and a lack of understanding of what is really a very simple technique.

The process of CPM/PERT network diagramming is the key to the project manager gaining a grasp over project. It should not be delegated to a scheduling technician and a computer; it should be done by or under the close supervision of the project manager. It can then be expanded, computerized, and maintained by others.

One of the most successful and simplest scheduling techniques is timescale arrow diagramming, which takes a little more effort initially than other network diagramming techniques but is vastly superior for communicating and understanding. It is similar to the bar chart yet shows relationships. If updated with status lines rather than redrafted, it is easy to maintain for monitoring, reporting, and controlling progress. It can also be used to prepare cash flow forecasts and manpower projections.

Cost and Scope Management Techniques.—Scope management first requires that the project scope be defined. Then the project manager must ensure that the design as it develops conforms to the scope. This includes careful review of preliminary and final design documents and construction change orders to identify scope changes. The cost and time impact of any proposed changes must be estimated, and all must be reviewed by the appropriate authority. Upon approval, the scope document (scope definition, budget, and schedule) must be revised. Upon project completion, the final project report should compare the authorized scope, cost, and schedule with the actual report.

Cost management is closely related to scope management as it requires that a scope definition be prepared and monitored throughout the project. If the budget is not prepared from the scope definition, then the budget must be reconciled with an estimate made from the scope definition. Periodically during the project, the budget must be compared with the current estimate. If the budget is exceeded, the project must not proceed until the design is changed so that the estimate is within the budget or until a budget increase is authorized.

To be effective, the comparison between the budget and the current estimate must be on a line item basis with increasing level of detail as the design progresses.

Monitoring and Reporting Techniques.—There are many excellent techniques for project monitoring and reporting. To be effective, however, they generally are: (1) Based on communication needs; (2) combined into a “system,” (3) targeted on the “right” information; and (4) leading to a decision or action when required.

The “system” must provide the project manager with the feedback needed to verify that his actions are leading to the desired result. It must also allow the program manager: (I) To verify the progress of all projects; (2) to manage the overall program, i.e., all projects, so that resources (manpower, equipment, and money) are available when needed; and (3) to evaluate the project manager performance. Later, the “system” must provide data for estimating new projects, budgeting next year’s work, and determining future manpower requirements.

A computerized Project Management Information System is often proposed as the solution to project monitoring and reporting needs. Unfortunately, a focus on computers without an understanding of fundamental communication needs can obscure more than it clarifies. Detailed costing and scheduling data is necessary but does not achieve communication. What is needed is a focus on the essential information in a manner that will lead to effective action. This should include:

1. A summary of project status.

2. Work accomplished this period (including the effort expended compared with the budget and the actual progress versus planned).

3. Work planned next period (including resource needs).

4. Problems and opportunities (with alternative solutions and their impacts).

5. Action needed, by whom, and when.

This type of report works as well to control a county’s design effort of a $50,000 street improvement project as it does for total CM services on a $25,000,000 fast-tracked, CM-managed advanced wastewater treatment plant. The difference is detail. One is filled out by hand on a single page having the previous five headings reproduced on the page. The other is a 20-page typed report.

Other Project Management Techniques.—There are a number of other valuable techniques (such as value engineering) that are either unique to project management or common to any type of management. These should all be considered and used as appropriate. One should be aware, however, that an overemphasis on techniques and a failure to focus on essentials can result in a very efficient but ineffective effort.

APPLICATIONS

Common Definitions and Understanding.—A common set of definitions of the different project delivery systems and project management terms should help everyone. In addition, it will help project owners know what they need and how to obtain it from the right party.

Knowledge of What Others Do.—Each type of project management (design, construction, and design/construction) and each type of project (municipality, manufacturing, construction, etc.) has a different set of problems and solutions. All will benefit if individuals in those fields analyze their work. In addition, those seeking a career can better determine if that is really what they want to do.

Development of Project Management Systems.—Although the previously mentioned material is addressed to the project manager, it is also applicable to anyone with the authority to change or create a new project management system. In doing so, one should be aware of the basic concepts of project management, how they fit together, what techniques can be used, and how the different types of project managers use these techniques.

Use of Concepts and Techniques.—The basic concepts and techniques mentioned can be applied to any type of project within almost any type of existing project management “system.” Many existing systems will not support the concepts with the needed data, but the project manager can make some improvements, e.g., all project managers can use CPM/PERT scheduling even without computers. They can also develop scope documents and manage the scope and budget. In addition, they can include the five recommended topics in their reports.

CONCLUSIONS

Management of engineering projects is quite different from management of construction projects, yet both use the same basic project management techniques. A better understanding of the different project delivery systems and project management concepts and techniques will benefit all project managers, improve the management of individual projects, and lead to better project management systems.

There is need for a clear and definitive expansion of the ideas expressed here and the communication of this basic information to all project managers. This is even more important than using more sophisticated techniques and systems.

By |January 20th, 2015|Steve Pinnell|

Software Can Aid Public-Works Management

American City & County Magazine – July 1988
By Steven Pinnell

Managing a capital improvement program is one of the most difficult tasks facing a public-works director or city or county engineer. Funds often are inadequate, staffs are too small, priorities change without notice, costs overrun and schedules slip. Yet, most accounting and reporting systems do not provide timely, useable feedback to facilitate solutions to problems. Better management procedures and software can reduce these problems.

Five elements to successful program management exist. The first step is to develop a five-year plan. Define and prioritize programs and individual projects, based on general goals and specific objectives.

The second step involves establishing an annual budget. Fund and schedule project milestones based on the five-year plan, historical costs and available resources, such as staff and equipment. Develop a program work plan, adjust schedules for staff availability, and prepare a schedule for each project.

Third, estimate the required resources, such as staff, for each activity based on previous standards, with adjustments for levels of difficulty and staff productivity. Forecast resources requirements over time and adjust project schedules to fit available staff.

Fourth, delegate responsibility. Assign each project a project engineer or manager; who must commit to a budget, schedule and staff assignments.

Finally, monitor and report on each aspect of the project monthly. Report progress on three levels: project engineer/ manager, program manager (engineering or public-works manager), and elected officials. Analyze the actual implementations vs. the planned implementations, and the impact of those changes. Then, reprioritize, reschedule and rebudget the projects as needed. Document actual cost, resource productivity and scheduling data for future planning and budgeting efforts.

The reality is actual operations never work that easily. Accounting, fiscal management, and most existing public-works software packages cannot generate a program work plan and, do not provide all the information needed for program control.

Although project-management techniques generally are understood and several good project management software packages are available, good management procedures are not always followed. Program management (the management of individual projects within a program and the overall management of the program itself) often is misunderstood, and few software packages have the required flexibility and capacity.

The first task is to document existing project- and program management procedures, and correct any discrepancies. The second task is to select the best software to plan and control the program.

For managing an individual public-works project, almost any project management software will suffice, providing it is easy to use. A capacity of only 100 activities per project is sufficient, and a hand-drawn bar chart probably will meet most engineering needs. However, a manual or simple computerized system will not work for overall program management because it does not permit tracking of total resource, requirements, cannot handle a large number of projects, and lacks the flexibility to meet the different requirements of most public-works agencies.

The third task is to prepare a project manager’s procedures manual integrating the new procedures and the software. This requires an in-house or outside consultant, with the expertise and time to do the job.

The fourth and most important task is staff training. All managers, project engineers and key support staff should attend a two- or three-day seminar on management techniques, and the newly implemented project/program-management procedures and software. This assures everyone speaks the same language and understands the process.

Another important task is to assign responsibility and authority for each project to an individual project engineer or manager. Finally, implement and verify the new system is being used and then improve it.

Before selecting the software, the degree of central control of the program database (the project data files) should be determined. Also, whether to operate a single-user PC or a multi-user environment (LAN network, UNIX microcomputer or mainframe) should be considered. PC-based software is: easiest to use with a few of the more powerful packages ported to UNIX. Program- management software is available on mainframe but is expensive and not available on many computers.

Initially, central control of the software is needed on data entry, processing and reports even with project responsibility distributed to individual project engineers and managers. Training one person to use a new system is easier with others gaining familiarity and access over time. Also, less incorrect data entry or loss of data will occur if only a few people use the software directly. Software that cannot be upgraded to multi-user operation should be avoided because changing software is difficult and expensive.

Almost any size public-works programs can be handled with a 386 microcomputer with a fast, hard disk. RAM-based software can only handle the data requirements of a small agency.

The project engineer or manager can access data directly after the database is established, everyone is trained in the new procedures and adequate safeguards are installed. But management-imposed requirements, such as budgets and milestone dates, and the manager’s original commitments must be maintained. This requires considerable experience and sophisticated software, and should not be attempted during the first year.

The software must be able to batch edit and copy standard networks into the program database. to avoid tedious input and reduce errors.

The standard networks should be simple, from as few as 10 to as many as 30 activities for medium-sized projects, and a maximum of 100 for large projects. One of the most frequent and serious mistakes is to track too much detail too soon. The system will bog down and be dropped. Adding detail later is better, after the system has been in operation for a year.

However, the initial network and activity coding must be designed for easy expansion, with a hierarchical structure for consistent coding between small and large projects. Eventually, network activity codes can be integrated with cost accounting.

A frequent comment by public-works managers is “but our needs are different.” In some respects, his is true. Although project-management procedures are similar across all industries, technology and reporting requirements are different from one public-works agency to another.

Menus and screenforms should be customized, if more than a few people see them. But sorts, selective prints, and report formats must be customized without program modifications. The software must be able to import and export data from accounting systems, and with word-processing and database management software.

Monthly reporting is recommended, coinciding with payroll reporting so effort expended can be compared to effort planned and work accomplished.

Both tabular and graphic reports are needed, with detailed tabular reports for analysis and project level control, graphic output also is needed for project level control, as it can show what otherwise would take hours of study and years of experience to grasp. Color graphics are best for public-works managers and elected officials.

Three levels of reports are needed details For project engineers and managers, summaries for the engineering and public-works managers and highlights for elected officials. Although the focus usually is on managing design, a good software package also will track the contractor’s schedule, forecast survey and testing staff requirements, and even create progress payment reports.

One example of a successful public works program-management system is King County. Wash. In addition to well-considered requirements and reasonable expectations by department managers and their consultants, a key element in the system’s success was a seminar and workshop for 30 people in engineering services, plus the publics-works director, manager of engineering services and key managers from other sections.

During the training, work plans were developed; along with resource estimates and schedules for many of the current ongoing projects. Subsequently, four or five standard networks were developed covering the majority of projects.

Six months after the system’s implementation, a management audit by the county auditor found substantial improvements in project planning and monitoring. There were substantial increase in communication among staff, and coordination with other divisions. Peak staffing requirements were minimized by permitting adjustment of project schedules.

Construction administration and inspection staff needs were reduced, and less, expensive, temporary summer employees were used more frequently, allowing a smaller permanent staff during winter. Temporarily transferring engineers between design teams meets short-term workload peaks. Improved reporting to top managers enables them to monitor performance more closely and respond more quickly to essential delays or acceleration. Finally, projects advertised on schedule increased from between 37 percent to 54 percent for the previous three years, to 82 percent for the first year with the new system.

The county also switched from mainframe contract payment software, which cost more than $10,00 per year, to the progress-payment module of the project-management software for a onetime cost of $2,500. In addition to saving money, the system requires less staff time, is more flexible and faster.

Engineering services sanctions and public-works departments can benefit from better project and program management procedures and software. But a significant commitment in time and money is required to make it work.

By |January 20th, 2015|Steve Pinnell|

Project Management in a Multi-Project Environment

The Military Engineer
Volume 82, Number 536 – July 1990
By Steven Pinnell and Capt. Kevin Stubblebine

Project management is a demanding task that requires considerable skill and experience. When performed in a multi-project environment as part of a complete design and construction program, it can be nearly impossible. And, managing the program itself to achieve the program goals is equally difficult.

Problems with project management in a multi-project environment usually include:

Inadequate planning, with a loose definition of objectives, and no list of the tasks that are needed to meet them, let alone an identification of the critical path to achieve the objectives in the shortest possible time.

Unreliable, incomplete, and untimely project status reporting.

Limited feedback on the actual progress so that corrective actions can be taken. Also, there is no recording of historical data for planning future projects of defending against contractor claims.

No reliable estimates of the in-house labor (resources) that are required for a project, with no forecast over time of the staff needed to maintain schedules.

Poor use of manpower. This is made obvious by insufficient staffing, the attendant project delays, rescheduling, confusion, and inefficiencies.

Inaccurate or untimely reporting of the actual labor used. Also there is no comparison of actual labor planned to date, nor a forecast of the resources required to complete the project. There is no analysis of earned value, cost performance index, or other performance factors.

Inefficient and ineffective management of the overall program, with cost overruns, delays, failure to achieve major objectives, and the waste of limited resources.

The Engineering and Planning Division of the Charleston District, Corps of Engineers, has been able to resolve most of these difficulties and to reduce the impact of the rest of them to manageable levels. This required a concerted effort, including:

Selecting the right project management software that is not only powerful and flexible, but can also be configured or modified to meet Corps’ requirements. PMS80 (a project management software package from Pinnell Engineering in Portland, OR) provided unique features such as a time-scaled arrow diagram, extensive import/export capabilities, and an online help and glossary.

Establishing an interface between the Corps’ mainframe accounting database and the project management software. This entailed:

  • Creating extraction programs to capture historic and real-time data from the Corps Division and District mainframes to perform limited processing (accumulation) and to dump the result as an ASCII file to a PC.
  • Making several minor changes to the PMS80 program. These resulted in our being able to make better use of the data available from the mainframe. For example, we were then able to generate lists of all work-codes in the design and construction program based on the individual project files. We were also able to modify the existing resource estimates and other accounting reports.
  • Using the PMS80’s user definable menus and macros to create a high-level, customized interface that automatically executes a number of existing low-level functions. These generate the list of work-codes used by the mainframe extraction programs; import the accounting data from the ASCII files made by the extraction programs; and print reports on progress, planned versus actual resource use, earned value, and other performance indicators.

Producing the actual project database, using PMS80’s split/merge feature to copy a standard network “template” from a library of typical projects and batch edit it for the unique tasks of individual projects. This was done for all 75 projects in the Engineering and Planning Division’s program.

Training the Engineering and Planning Division’s project engineers so they will know what information is required to maintain the database and which reports and other features are available to help them manage their projects.

Ensuring that the database is updated monthly with progress and changes, so that deficiencies can be corrected.

The process that the Charleston District went through to create their program management “system,” the lessons learned in creating it, and the availability of the system to other Districts are of immediate interest to many others.

By |January 20th, 2015|Steve Pinnell|

How Do You Measure the Quality of Your Project Management

Project Management Institute
PM Network Magazine – May 1993
By Steven S. Pinnell and Jeff S. Busch

Does the title question seem a tough one? To many project managers, it is not. “I don’t need project management, I just need a good golf course” (a golf course developer). “If the CNC machine I am developing turns out in line with the specifications, this project will be okay” (a product development manager). “We are looking at the bottom line – a functional water treatment plant” (a municipality program manager). All of these responses have one thing in common – they believe that quality of project management performance should focus exclusively on the project’s end product (golf course, CNC machine, water treatment plant).

Traditionally, American Project Management (PM) practices have concentrated on the fact of “producing” the project’s end product. After, the fact, they may identify product defects and try to correct those for future purposes. While this approach has been decently effective in preventing most unsatisfactory end products from reaching the customers, it did little to change the internal PM processes that created the defects. Changing these processes requires a thorough understanding of the PM mission.

The PM mission is to provide for project success. Project success refers to the degree to which:

  • The projects contribute to the customer’s organizational objectives;
  • Working with project customers has been satisfactory;
  • The project has been within budget and on schedule;
  • The project’s end product conforms to the requirements.

We believe that a majority of the organizations undertaking the management of projects only measure the end product, which may be just one facet of the project success.

Project success is closely related to the quality of PM. The higher the quality of project management, the more likely the project success. In our opinion, success should be measured for every project on a regular basis, during the course of its life cycle, and after its completion. By measuring success of an ongoing project, we are able to measure quality of PM. Hence, the answer to the above question, “How do you measure the quality of your PM?” is: By measuring the project success.

Here Comes The Rising Sun

The practice of focusing on the end product worked well until global competition entered the American marketplace. This competition has given birth to the Total Quality Management and Partnering wave in the U.S. With the advent of these concepts, project organizations and customers will discover that being “end product-oriented” may be very ineffective. Have you heard of the companies that developed perfect products, but their costs of development were so high that they generated no return on investment? Focusing improvement efforts on the PM process is the most effective means for achieving a wide range of project success.

How Do You Spell “PM”?

Focusing on the PM process calls for an in-depth understanding of PM, and many project managers lack this basic understanding: e.g. “Project goals? I have no time to think about that, I have to work on my project.” “PM means that I have a CPM schedule on the job. Right?” But there are also project managers who have a good understanding of the PM ballgame, e.g., “It is really easy to deliver one extraordinary project. Get the best people, pour money in, give ’em top priority and management support, and they will deliver. But it is very tough to deliver a bunch of extraordinary projects because no organization has such abundant resources to ‘get the best people, pour money in…’ To deliver a bunch of extraordinary projects, it takes extraordinary PM.”

To build such PM, the organization must first set the stage. This includes basic PM training, which should be beyond the miraculous learn-everything-about-PM-in-one-day seminars that are currently available. Setting the stage means goal setting, barrier reduction, and leadership. Management should have a clear vision of what it wants to achieve and how it will get there. The support systems to help focus on the PM process must be in place. For example, just having the PM software does not make the organization capable of performing PM. Unless the users have a clear understanding of PM concepts and principles, the true power of PM software is underutilized, or worse yet, misused.

Once the stage has been set, the organization should define its PM process as clearly and thoroughly as possible. The purpose is to determine how PM is currently performed and identify its measures of performance (e.g., scheduling performance index). All key project participants should be involved in this task. Otherwise, once the process has been defined, those not involved may comment, “It doesn’t work this way. You guys should’ve asked us.” Working together, project participants precisely define the purpose of each step of the PM process and its outcome.

The definition of the PM process becomes the PM standard for the organization. By standardizing its process, the organization will establish the best current way to perform its PM process, measure its performance, and increase its projects’ success in other terms as well as in basic time, quality and cost. Project people need to be trained to the PM standards, which facilitate and enforce its use. These standards should be continually improved in order to enhance every facet of the PM process.

In a nutshell, the PM standards that organizations must strive for should be SMARTSimple,Measurable, Adaptable, Realistic, and Timely.

Focusing on the PM process is not the only solution to an internal organizational goal. Rather, it is the only avenue leading to the ultimate goal of PM – deliver the project that exceeds customers’ expectations, with world-class PM standards.

Organization Profile

Pinnell Busch, Inc., founded in 1975, provides project and program management expertise to construction manufacturing firms, owners of major facilities projects, and government agencies involved in project and program management. The firm’s services include:

  • Project program and construction management;
  • Management auditing, training, partnering, team building and development of standards and procedures;
  • Project planning, scheduling and control;
  • Claims prevention and dispute resolution;
  • Design and implementation of TQM systems;
  • Public Works organization and management;
  • Design and implementation of computer- based project management systems.

The firm has provided services for more than one billion dollars of construction throughout the United States, Europe and Asia. The firm’s clients include: high technology manufacturing firms, agencies of the federal and several state governments, numerous cities and counties and over 200 construction contractors.

From its beginning, Pinnell Busch has been an innovator in several areas of project management: computerized management systems, claims prevention and resolution, alternative contracting strategies, quality management techniques and procedures.

By |January 20th, 2015|Steve Pinnell|

Investing Time, Money, in Prevention Helps Smooth Potential Project Woes

Daily Journal of Commerce
Design & Construction – June 15, 1994
By Steven Pinnell and Jeff Davidson

An ounce of prevention is worth a pound of cure. The same is true in construction contracting.Sound project management policies, established and understood by all parties, can be the best preventative medicine for disputes. The breakdown of parties’ scope of responsibilities may be avoided by the following:

  • Owners. Planning, decision-making and oversight – so that projects are not delayed until the last minute nor started with ambiguous objectives or incomplete criteria, but are planned and managed effectively and efficiently.
  • Designers. Pre-design to ensure the project scope, cost, and budget are clearly defined; design management to eliminate errors, ambiguities, and incomplete documents; and contract administration to facilitate rather than hinder construction activities. This may require slightly higher design fees, but it will pay enormous dividends.
  • Contractors. Jobsite management so that work is carefully planned, diligently pursued, correctly constructed, and safely managed.

Direct your construction projects through “total quality project management.” Old-fashioned models for project management are outdated and there is new technology to replace them.

Your project managers and supervisors need the latest tools and techniques, and the training to integrate them into your ongoing operations.

Do you have multiple projects that share people and equipment? Then you’ should identify ‘which projects share which resources, coordinate schedules accordingly and integrate these schedules with each other and with your day-to-day operations.

Good project management is relatively inexpensive and pays dividends far beyond the cost of implementation. It requires documented procedures and an investment in training.

These procedures should be simple, but cover all essential functions. They also need to be flexible to allow for differing size, complexity of projects, for the project owner’s needs and for the style of each project superintendent.

INTERPERSONAL SKILLS: One other area where additional training will pay big dividends is in the area of interpersonal and communication skills. Far too often, the source of a dispute stems from a simple and avoidable misunderstanding between two personalities or miscommunication between two parties.

One approach to improving your team’s interpersonal skills is a multiple-step training program offering:

  • Training in recognizing behavior styles based on some reasonably easy-to-understand models.
  • Guiding each individual through a self-administered test to determine his or her own behavioral style.
  • Explaining how each individual’s style affects success in dealing with others.
  • Teaching how to recognize the behavior styles of others and techniques for dealing more cooperatively with a wide range of personality types.

The typical training session for this approach encompasses a two-day seminar. These courses can be crucial to your field supervisors and to your entire project management team.

Other areas where additional training should be considered include communication skills, negotiating techniques, team building, and collaborative problem solving.

Taking the time and the money to invest in a little preventative training and preparation can turn out to be one of the key ingredients to more’ profitable projects.

By |January 20th, 2015|Steve Pinnell|

Program Management To Avoid Cost Over-Runs and Schedule Delays

Program management is the management of a very large project ($100+ million), or a group of related projects that are managed both independently by project managers and as a group by the program manager (e.g. a county public works road program or sewer program).

If you’re a program director (or project manager) with a poorly defined or unrealistic scope of work, an inadequate budget, or an overly optimistic schedule for the scope and available resources – what do you do?

One option is to find another job. If that’s not possible, we suggest the following steps:

1. Clearly Define The Scope
Write up your understanding of the scope. Include the physical elements and capacity, plus your understanding of why the project is needed, what it will accomplish, and how success will be measured. Take it to your boss and get agreement from all decision- makers with, if possible, written confirmation. Then, distribute the scope document to everyone who will be involved to ensure that they all understand and support the program goals and strategy.

2. Prepare an Independent Cost Estimate
Regardless of the official budget, prepare your own independent estimate – based on the defined scope of work. If necessary, hire an independent cost estimator or a contractor to prepare a more accurate forecast of construction costs. Also verify the budget for personnel, professional services, and other ‘soft’ costs.

Program directors should require their project managers to develop, track, and take responsibility for their current estimates. If widely different from the official budget, either change the scope or the budget – now, not later. Track and control costs at the line item level, not the bottom line.

3. Prepare a Project Schedule
Prepare a critical path schedule, or at least a bar chart, with your best forecast of the tasks required and the time to accomplish them. Include planning activities, design, permits, construction, commissioning, and occupancy. Verify that you have sufficient resources and identify other potential problems and how to avoid them.

4. Prepare a Detailed Work Plan
You need a work plan of non-construction efforts for each project with the tasks to be performed, the personnel needed for each task, and the overall program resource needs and costs. Multiply the projected use of each resource (mainly personnel) times their unit cost to get the budget for personnel and expenses.

The key problem facing multi-project programs, like those for a public works department, is the limited number of in-house personnel available to complete all of the projects as scheduled. Although each individual project could be accomplished with the assigned personnel, when adding up the labor needed for all projects for each timeframe, you may find that the total demand exceeds the available resources.

5. Track Progress, Compare Actual Progress with Plan, and Take Corrective Action if Needed
Once you have a plan in place – scope, cost, and schedule (plus needed resources) – implement it. Track progress and compare with the plan. If encountering significant variations, re-plan and take corrective action.

During design, monitor for ‘scope creep’ and obtain a Scope Change Authorization before allowing any changes that affect the budget. Don’t use the contingency for scope changes. Also ensure that you are achieving the program objectives and contract deliverables.

During construction, manage change proactively and notify the governing body if your current estimate significantly exceeds the budget. Negotiate and settle changes and claims promptly to avoid unnecessary conflict and impact.

6. Conduct a Performance Audit
Audit the program management plan and procedures with a risk assessment before embarking on a new program that is significantly larger or riskier than normal. And,conduct a performance audit midway through to confirm you’re on track,or at the end to satisfy the governing body. A project final report can help disseminate lessons learned and improve overall organizational performance.

By |January 20th, 2015|Steve Pinnell|

Partnering Can Help Avoid Most Contract Disputes

Daily Journal of Commerce
Design & Construction – July 6, 1994
By Steven Pinnell and Jeff Davidson

Construction contract disputes, and the added costs and delays they create, can erode contractor profits faster than any other single occurrence.In the modern contractor’s arsenal of dispute avoidance techniques, one of the most effective weapons is partnering.Partnering has received a great deal of attention in the past few years, and it can easily fall prey to the “fad of the moment” label too often given new management techniques. Though a formal partnering process is relatively new to the construction industry, the principles of partnering are very traditional. They are based on the common belief that every construction project should be a cooperative endeavor between owners, designers, contractors, sub-contractors, suppliers, and the public, and that each party has an equal stake and responsibility in seeing that the project is a success.

Partnering is simply a change in attitude, from an adversarial relationship to a partnership in which there is mutual trust and respect. It requires a change in the “culture” of the project team.

Changing attitudes and cultures in construction is not easy and it is best to adopt some formal procedures with considerable follow-up efforts.

STEPS TO PARTNERING: Partnering usually includes these steps, which may vary depending on the size of the project and the participants’ past experience with partnering:

  • Include a partnering clause in all contracts.
  • Secure top management commitment. If management is unfamiliar with partnering, an introduction to the basics of partnering is in order.
  • Identify a strong partnering “champion” on the project team.
  • Conduct a partnering workshop prior to project start-up. This workshop is essential in ensuring that the partnering process will be embraced by all “stakeholders” in the project and will set ground rules for dealing with issues during the course of the project. Workshops should be conducted by a trained, experienced, outside facilitator.

Workshops should be preceded by planning and analysis which will allow the facilitator to understand the basic elements of the project, critical dates and tasks, personalities and past histories of key participants, and the basic expectations and concerns of each stakeholder. The workshop should be held at a neutral site.

  • Develop a project mission statement signed by all stakeholders. It should include all common goals and measurable objectives (quality of product, safety, time schedule, budget, profit for all involved, etc.)
  • Schedule a follow-up workshop after arrival of additional subcontractors or after one or two months into the project to review progress.
  • Conduct random site visits or phone conferences to ensure partnering efforts remain ongoing.
  • Document achievements with photos, framed missing statements and project banners.
  • Use symbols and team identification such as a joint/project logos, and include project items such as coffee cups or caps. This may seem naive, but it does build team spirit and a sense of unity for all participants.
  • Celebrate success when achieving major project milestones, accomplishing the objectives in the charter/mission statement or completing the project.

These last three items may seem excessive and too “cheerleaderish” for many. But past experience shows that these simple steps can work. Professional teams take great care in steps like this (think of the Portland Trail Blazers) and the logos, symbols, and celebrations all help build a sense of teamwork.

BENEFITS ARE IMMENSE: The success of partnering is measurable and can translate directly to your bottom line. One industrial contractor reported a 16% savings on the 18 projects they have partnered.

A government agency we’ve worked with has experienced better cost control, reduced paperwork, attainment of value engineering objectives and no litigation on the projects they have partnered.

Partnering should not be considered merely a fad or an added cost. Though one-day fees for a professional facilitator can range from $1,800 to $7,000 or more depending on the preparation requirements, the investment can result in a multiple return to your bottom line.

Learn more about team building and add to your existing knowledge of what works. Partnering works.

By |January 20th, 2015|Steve Pinnell|

Partnering and the Management of Construction Disputes

American Arbitration Association
Dispute Resolution Journal – February 1999
By Steven Pinnell

Too many construction disputes end up in the courts, says Steve Pinnell. He recommends integrating partnering with a comprehensive dispute management program that will resolve disputes “far more effectively than an adversarial approach.” This article is a step-by-step guide to what is needed to make a dispute management program achieve the ultimate goal of avoiding litigation and maintaining a healthy business relationship.

Too often conflicts between owners and contractors escalate into litigation, or contractors absorb cost overruns to avoid protracted disputes and damaged business relations while owners pay too much for extra work. Construction disputes should never escalate into litigation. The need for a rational, non-adversarial, and cost-effective approach to resolving construction disputes is evident.

To help avoid disputes, partnering is rapidly being adopted in the U.S. construction industry. Partnering is a formal process for building teamwork among the owner, contractor, designer, subcontractors, and others. In many ways, partnering is a return to how business relationships used to be.

Partnering improves attitudes, reduces conflict, and facilitates settlement. It starts with securing a commitment from all parties and brings everyone together in a pre-construction workshop. The project team: defines a mission statement with common goals, implements improved communication, establishes conflict resolution procedures, and then works together to complete a successful project.

Partnering helps avoid disputes but isn’t always well-implemented; contractors sometimes feel reluctant to press for legitimate change orders which could threaten long-term business relationships, while owners sometimes overpay for changes in order to maintain the partnering process. In addition, contractors’ records are frequently inadequate for determining the facts and quantifying costs, and the owners’ records lack sufficient detail to verify contractor claims. If claims are pursued, contractors, owners, and their attorneys are often forced to rely on claim consultants, who frequently have difficulty substantiating their professional opinions. The result is excessive financial and emotional costs, ill will, and discord.

Dispute Management Program
What’s needed is a combination of partnering and a comprehensive approach to construction disputes. This comprehensive approach, which we call a dispute management program, is the subject of this article. It is equally applicable to contractors, owners, and designers of capital projects. It can also be adapted by any industry (manufacturing, software, consulting, etc.) that delivers a product or service under contract. A dispute management program will prevent most contract problems, limit conflict when it occurs, and resolve those disputes that do develop-far more effectively than an adversarial approach.

A dispute management program provides a framework and specific techniques that support a partnering approach. Everyone benefits. Contractors get paid and project owners pay no more than a fair price for extra work and legitimate construction impacts. Project designers, construction managers or contract administrators, and owner representatives are able to focus on building the project while avoiding haggling and potential liability for alleged errors. The project delivery process becomes less contentious, more efficient, and personally satisfying.

How to Achieve Improved Project Results
How do you achieve this comprehensive approach to avoiding and resolving disputes?

Establish Partnering as the Basis of Your Working Relationships
The first step is to realize that a partnering approach to business relationships will be more successful than an adversarial or win/lose approach. This is true even if the other party does not initially subscribe to partnering, as long as you preserve your contract rights. Both parties must continue to perform their contract obligations when partnering. Most parties who do not initially buy into a partnering approach will quickly see its advantages. A dispute management program will protect you from those who don’t.

Many contractors are reluctant to pursue legitimate construction claims for fear of damaging working relationships and their reputation in the industry. By using a partnering approach to changes, they can collect these costs while maintaining their reputation. Owners can use partnering to avoid inflated claims and to minimize costs or delays. Everyone benefits.

Implement a Dispute Management Program
The second step is to implement a dispute management program, which integrates partnering with a comprehensive set of techniques for avoiding and resolving disputes. These techniques transition from pro-active to re-active, as described in Figure 1.

Dispute management programs for a contractor and project owner will have a common philosophy and techniques, but each will have slightly different goals. For example, a contractor’s dispute management program:

  • Identifies and limits contractual risks from onerous contracts
  • Ensures that estimating and cost-accounting systems track extra work and impacts costs
  • Provides procedures and systems for better communication, record-keeping, and dispute resolution
  • Trains personnel to identify extra work, give timely notice, and track extra costs
  • Develops in-house expertise in preparing change-order requests and claims
  • Is compatible with partnering, while ensuring fair and prompt payment for extra work

The Techniques of a Dispute Management Program
The techniques of a dispute management program are applied sequentially as needed, with the final step being binding arbitration instead of litigation. They include:

1. Total Quality Project Management policies, procedures, skills, and teamwork ensure projects are better managed, with fewer errors, changes, or other sources of conflict. Many, if not the majority, of construction problems (and the resulting disputes) occur because of poor project management practices.

Project owners sometimes don’t plan ahead and end up rushing projects – with poorly defined scope, too-short schedules, and inadequate budgets. Designers face similar problems with poor project management leading to design errors, poor drawing coordination, or running out of time and money before the work is done. Contractors also have problems with poor project management. Bid errors, inadequate scheduling, and poor cost controls all lead to delay, cost overruns, and then claims.

Better project management is an important step towards avoiding claims. It includes setting a clearly defined scope of work, developing budgets and schedules based on that scope and the resources available, following the plan, tracking progress, and taking corrective action when actual results differ from the plan.

At Pinnell Busch, Inc., we have found that short training sessions in scheduling, contract administration, or project management are invaluable for improving the quality of project management. In addition, they can double as informal needs assessments that identify an organization’s strengths and needs. This requires an interactive learning process that teaches immediately applicable skills while explaining basic concepts and obtaining feedback on current problems. Even though many personnel are familiar with the basic tools, e.g., critical path scheduling, few are expert and all need to fully understand the tools and speak the same language. Well-designed training leads to further beneficial changes – including documentation and improvement of project management procedures and ultimately more successful projects.

2. Improved People Skills by all project team members lead to improved communication, more productive interpersonal dynamics, less tension, and fewer conflicts. Some construction disputes are caused solely by personal conflict and poor communication; many disputes are exacerbated by poor people skills. Training project personnel in better people skills will go far in minimizing these problems and in helping partnering succeed.

3. Partnering is both the overall philosophy for dispute management and one of the tools for avoiding disputes. Partnering promotes a more successful project environment where all parties work together and claims are avoided or readily resolved. Lack of partnering often leads to adversarial relationships when conflicts occur. Partnering should be implemented on all projects and should include subcontractors and key vendors in addition to the project owner and designer. Regulatory agencies and neighborhood associations may also need to be included.

Partnering is essential for both dispute avoidance and collaborative problem solving. The environment of trust generated by the partnering process is also needed for win/win negotiation, a more successful change-order management program, and for the most effective use of a neutral expert or dispute review board. It can also help in mediation, if that becomes necessary.

Partnering is not always successful, but succeeds more often when the facilitator has:

  • Enough experience in construction to relate to and understand the problems of contractors and owners’ field personnel
  • Time for regular follow-up, in order to identify problems before they get out of hand
  • Construction expertise and the ability to craft solutions to the problems that do occur and claims experience to aid in describing the consequences of not resolving disputes

As an example of the benefits of partnering for contractors and owners, 30% of our firm’s work used to be helping contractors resolve disputes with the Portland District of the U.S. Army Corps of Engineers. Since partnering was implemented by the district, that workload has fallen to zero. Other organizations have achieved similar results. They still have change orders, but the change requests don’t escalate into disputes, resolution is directly between the parties without the need for outside help, and the settlements are more reasonable.

4. Dispute Avoidance and Collaborative Problem Solving techniques help the parties avoid disputes and jointly solve problems – even problems that impact only one party. Working together to solve problems builds a sense of teamwork. It also leads to faster, more economical, and better qualityprojects as the project team finds improvements to existing plans and procedures. Collaborative problem solving often results in creative value engineering proposals that reduce costs while maintaining or enhancing the function being performed.

5. Win/Win Negotiation includes looking for mutual benefits and seeking increased value in order that both parties can better their position. The parties look at basic interests instead of positions on an issue and try to craft a solution that meets each party’s interests.

6. Change-Order Management Programs help contractors and project owners identify, track, document, and negotiate settlement of extra work and impacts without adversely affecting partnering. This includes being prepared with a plan in place and having personnel trained. It also includes recognition that some change-order requests will be rejected and claims may be necessary. They need not lead to adversarial relationships.

Claims are similar to change-order requests, with the primary differences being the greater level of detail and the focus on proving entitlement for a claim. A claim is just a continuation of a change-order request that hasn’t yet been accepted. Both should be fact-based, non-adversarial but firm requests for an equitable adjustment. They must be of professional quality but need not be prepared by a consultant. With proper training and support, a contractor’s employees can prepare more successful change-order requests and claims that do not damage the partnering process. These change-order requests and claims will be easier for the owner’s employees to evaluate and negotiate an equitable adjustment.

Unfortunately, there has been a history of poorly supported and inflated claims. In today’s partnering environment, all change order requests and claims need to be handled professionally. Thorough documentation, timely notice of change, careful preparation and prompt submittal of change order requests (and claims) contribute to successful partnering and a successful project.

Rational, fact-based analysis techniques are essential to a successful change-order request or claim, especially when working in a partnering environment. Contractors need to understand and use these techniques to avoid inflated or unsupported claims. The techniques can be as simple (and powerful) as:

  • Identifying and prioritizing the issues in dispute as part of a preliminary analysis
  • Organizing documents chronologically with the oldest on top so that the reviewer understands the project as it progressed
  • Tabbing important documents by issue (or copying for an issue file) and highlighting the relevant content for easier retrieval and review
  • Recording pertinent facts as summary notes with the date of the event or document, a reference to the source document for later retrieval, and a code for the issue covered
  • Sorting the summary notes chronologically and selectively printing by issue for review. A chronological review of the summary notes (or issue file) for only a single issue is infinitely easier than trying to understand the issue when reviewing the entire project file

The techniques can also be as sophisticated (but easy to use) as the detailed as-built schedule. The detailed as-built schedule is used to create an as-built schedule when the contractor’s schedule wasn’t updated during construction, or when more detailed information is needed to determine the cause of delays. It is an integrated, multisource document reconstructing the project on a day-by-day basis. It synthesizes numerous sources, each by itself insufficient for determining the events that happened, into a coherent, single document that describes what happened and why. It can be prepared by a contractor to develop a scheduling claim or by an owner to defend against one.

Detailed as-built schedules are usually built from the contractor’s daily reports, the inspector’s daily logs, personal diaries, minutes of meetings, and correspondence by all parties. They also use the contractor’s weekly labor reports or timesheets, test reports, delivery tickets, weather records, etc. In addition to the as-planned schedule and reconstructed as-built activities, they can include rainfall histograms, tabular daily crew sizes for each trade, comments on major events, and any other data to aid in analysis.

The detailed as-built schedule is an accurate, complete, and detailed record of what happens on a project and why. Its advantages over other techniques are:

  • It is easier to understand. A claim preparer, reviewer, or fact finder can (with careful review) understand the flow of activities, their relationships, and how they were affected by events.
  • It eliminates unsupported opinion, sloppy analysis, or unjustified assertions. Each daily event constituting an as-built activity is described and referenced to a source document for verification.
  • It can prove or refute alleged concurrent delay and identifies or explains apparent contractor errors.
  • It identifies additional issues that had been overlooked but become apparent when all of the pertinent facts are organized and presented graphically.
  • It establishes credibility when negotiating or testifying, provides a foundation for your conclusions, and intimidates opposing parties who wish to contest the facts with bluster or unsupported opinions.
  • It provides all pertinent as-built information on a single drawing, allowing quick responses to unanticipated questions during negotiations or cross-examination that can be substantiated with the referenced source documents.
  • It isn’t that difficult to prepare, with the proper training and software templates and macros.

7. Standing Neutrals, either a neutral expert or a dispute review board (DRB), are experienced construction experts who monitor progress in order to understand and help resolve problems as they develop.

A dispute review board is retained jointly by both the contractor and owner (with subcontractors and the designer sometimes participating). The board normally starts at the beginning of a project, but can start midway through. It meets regularly, reviews progress, hears disputes, and recommends settlements. Dispute review boards on smaller projects may consist of a single individual if the parties have a high degree of confidence in the individual.

The parties need not accept all findings and recommendations, but almost always do so. Dispute review board recommendations are admissible in litigation. That seldom occurs as the courts and arbitration panels are reluctant to disagree with the findings of mutually selected industry experts who were involved in the project and familiar with the dispute.

A neutral expert functions similarly to a dispute review board, but takes a more proactive role and uses his or her technical expertise to aid the parties in determining the facts and crafting solutions. Neutral experts can also assist a dispute review board with research on technical issues or assist mediators when the parties can’t reach resolution due to uncertainty about the facts. The advantages of using a neutral expert, which can be an individual or team, over each side having their own expert include:

  • A higher level of confidence in the results.
  • Fewer exaggerated claims and unfounded counter-claims.
  • Reduced resolution costs (only one expert needs to be paid).
  • More accurate data due to the expert having access to all parties’ records.
  • Compatibility with partnering.

Neutral experts are normally involved from the beginning of a project, but can be brought on later. On one recent project, we were retained as the neutral expert by a partnering facilitator midway through a long-overdue project. The partnering facilitator first won the confidence of the parties and then helped them build trust among themselves. The resulting spirit of cooperation and our access to all parties’ records enabled us to develop detailed recommendations for the allocation of $1.6 million in current and projected cost overruns. The dispute was settled 45 days after the parties agreed to the process. In addition, the pace of construction increased, and potentially serious construction deficiencies were resolved by the parties working with the masonry and concrete subconsultants on our neutral expert team.

The recommendations of neutral experts can be non-admissible in arbitration or litigation (if the parties agree), although few disputes brought before them fail to settle. Their recommendations are usually admissible before a dispute review board.

8. Mediation involves a neutral third party who facilitates resolution of disputes while allowing the parties freedom of decision-making. Mediation can also benefit from the rational, fact-based analysis techniques described above. One of the major reasons for unsuccessful mediation is lack of sufficient, reliable information available to one or both of the parties.

One example of successful mediation is a recent case between an engineering company and their client on a $200 million food processing facility in the Midwest. Relations had deteriorated to the point that another firm was brought in to finish the drawings and coordinate construction. The owner refused to pay our client’s bill and counterclaimed $1 million-plus when our client filed for arbitration. After an investigation of the facts, we assisted legal counsel in mediation that resulted in payment of most of the contested bill, some reimbursement from our clients insurance company, and a new contract to redesign portions of the plant. Not only did they receive most of their money, they were able to resurrect an important business relationship.

9. Arbitration instead of litigation is recommended if the parties find that they are unable to resolve an issue.

Conclusion
Contractors and owners and their attorneys need to re-evaluate their approach to dispute resolution and adopt a partnering philosophy and a comprehensive approach to managing disputes. Disputes will occur in construction. It is inherent in the process and a natural part of human interaction. The goal is to deal with conflict and disputes in a professional and non-adversarial manner through a dispute management program that leads to fair and prompt settlements.

By |January 20th, 2015|Steve Pinnell|

CFMA Building Profits

CFMA Building Profits Magazine
May/June 1999
By Steven Pinnell
Construction changes and the increased costs that come with extra work, delay, and impact are a common feature of daily life in our industry. These hitches, normally resolved during the course of construction by the contractor’s project team and the owner’s representative, usually result in underpayment, especially for delay and impact costs. Many contractors will absorb cost overruns to avoid protracted disputes that might gain them a reputation for making claims, plus damage the partnering process and their long-term business relations. Not only can this unpaid extra work affect profitability, but it can actually push an otherwise healthy business into bankruptcy.Many contractors seek help from an attorney or claims consultant when a change order request for equitable adjustment is denied and a claim needs to be prepared. This is especially common when the project team and the home office staff are busy, the claim is large and complex, or when special skills are required (e.g., advanced critical path scheduling or inefficiency analysis).

Unfortunately, you may find it difficult to retain a good claims consultant, encounter large fees, or be dissatisfied with the results. In this article, I’ll discuss the value of teaching your home office and project staff how to prepare more successful change order requests, how to retain a claims consultant for large and complex claims, and how to manage their work to ensure better results. Plus, I’ll describe several techniques to help you prevent most disputes, resolve those that do occur, or win at arbitration or litigation, should these options become necessary.

Partnering and the Dispute Management Program

Partnering is a team-building process engaging all parties involved in a construction project (the owner, designer, contractor, subcontractors, etc.) that helps prevent disputes and provides tools to help resolve those that do arise.

The Ideal: The partnering process starts with a commitment from the management of each party to cooperate and then bring the project team members together for a pre-construction workshop. During its time together, the joint project team prepares a common mission statement and implements improved procedures for communication and conflict resolution, all of which provides a strong foundation for successfully completing the project.

The Reality: Partnering isn’t always well implemented and sometimes fails to limit conflicts. Many contractors, relying too much on the partnering approach, fail to protect their contract rights or maintain adequate records to ensure payment for changes. In addition, some contractors are reluctant to press for change orders when partnering or working on negotiated projects.

While most contractors are well aware of the benefits of partnering, few are familiar with the new techniques that make partnering more successful, or with “intervention partnering” that makes it possible to salvage a project gone sour. Even fewer know how to implement a comprehensive approach to dispute management to enhance the effectiveness of partnering, while ensuring fair payment.

To ensure success, partnering needs to be accompanied by a Dispute Management Program. This comprehensive approach is summarized in Figure 1 and briefly explained below.

Better Partnering Practices

Here are the six steps that are essential for better partnering:

1. Your top management team has to be totally committed to partnering, then to training and motivating all managers and supervisors.
2. You must retain the best qualified partnering facilitator – someone who knows construction, has excellent communication and people skills, is truly neutral, and dedicated to a successful project.
3. Both you and the facilitator must convince the owner’s management that partnering will benefit the project and their organization, then persuade them to commit their project team to partnering.
4. The partnering facilitator must focus on specific, real issues affecting the project, while addressing and resolving all issues identified in the pre-workshop interviews with top management.
5. All key subcontractors must become fully involved and committed to working in a partnering mode.
6. The partnering facilitator should consult with all parties on a regular basis, convening a mini-workshop, if necessary, to ensure that the partnering process is successful.

Dispute Management Programs

A Dispute Management Program is a set of companywide policies and procedures that, combined with staff training and additional changes, leads to better dispute management. It is based on a partnering approach and includes a broad spectrum of techniques and solutions to avoid and resolve disputes (or to win in arbitration or litigation, if necessary). When properly implemented, a Dispute Management Program practically guarantees recovery of the cost and time for extra work, delays, and impact. It does this by:

  • Identifying and eliminating, or limiting, contractual risks from onerous contract clauses.
  • Verifying that estimating and cost accounting procedures track extra work and impact costs.
  • Providing procedures and systems for good communication, recordkeeping, and dispute resolution.
  • Training project personnel to identify extra work, give timely notice, and track extra costs and delays.
  • Maintaining compatibility with partnering, while ensuring fair payment for all work.

Prepare and Negotiate Change Order Requests

A Dispute Management Program should have detailed, standardized procedures for preparing and negotiating change order requests. This helps preparers (usually project team members) avoid missing critical information and results in a better document. Efforts should be characterized as “change order preparation” instead of “claim preparation” to minimize adverse reactions and allow the possibility of recovering the preparation costs.

Select Claims Preparers and Train In-House Experts

The most important step in developing a successful claim is selecting the best-qualified expert to prepare it. If a Dispute Management Program is in place and the right person is selected, all else will follow.

First, decide to develop in-house expertise for claims preparation. Even a small contractor should have at least one person reasonably skilled at preparing claims. This will often be the owner, but also may be an estimator, project manager, or engineer. This in-house expert will prepare most claims and assist a consulting expert on large, complex claims to save costs and gain valuable experience. After identifying the in-house expert(s), send them to training, have them do outside reading, and give them experience (under a more experienced claim preparer if possible).

You may still need a consulting expert, especially when the dispute is large and complex, requires special skills, or if your staff is simply too busy. When selecting an expert, look for these qualifications:

  • Broad construction experience and knowledge of construction management practices. Hopefully, this expert will have some knowledge of the specific type of construction in dispute, but a highly skilled claims preparer without specific experience will do a far better job than a less qualified claims preparer with experience in that type of work.
  • Critical path scheduling expertise. This qualification is important if there are significant delay or acceleration issues.
  • Expertise in estimating changes, including crew size/productivity estimates in lieu of unit pricing, Eichleay Formula calculations, and the measured mile and learning curve adjustments for inefficiency cost analysis.
  • Contracts and claims experience with knowledge of contract law and generally accepted procedures for preparing and presenting claims. If testifying, the expert should have arbitration and litigation experience.
  • A good memory, since the expert must review and absorb large quantities of information while quickly grasping essential elements.
  • A personality that excels at research and painstaking analysis, while being a convincing witness or negotiator. (It may be difficult to find all these characteristics in one person, so a team approach may work best.)
  • Good writing skills to prepare a claim document that is clear, concise, and convincing.
  • Good people skills with a practical understanding of human behavior and motivation.

Hire the expert as soon as possible, preferably before putting your attorney to work. An expert will cost far less per hour than an attorney and will do a better job on non-legal issues. A good expert will determine the facts, gather supporting documentation, and identify legal issues so that your attorney can focus on what’s important. If you already have an attorney on board, by all means hire the expert before starting discovery.

There are many sources of information on experts, including your bonding company, local construction attorneys, and other contractors. After identifying two or three experts, ask for their credentials, experience, and references. Check out their references. Meet briefly with each one to discuss the case in general terms, plus one or two significant points. Getting input at this point will help you evaluate their ability to contribute to the effort.

Do not turn a claim over to an expert, either in-house or consultant, and then walk away. You’ll need to brief your expert on the project and the dispute, then provide key documents including the change order request and preliminary claim documents. If possible, have the project team prepare a briefing paper. Ask the expert to prepare a work plan, budget, and schedule for completing the analysis in phases, with specific milestones. You’ll want to receive progress reports at each milestone, so you can provide redirection if the facts don’t turn out as expected or if the expert gets off track.

Prepare a Preliminary Analysis before Proceeding with a Claim

A phased approach, with an opportunity to check progress against the plan and to revise as necessary, is far better than initiating a full-fledged effort. In a phased approach, the claim preparer verifies the significant issues; develops preliminary findings, including recovery theories and the probable recovery amount; and establishes a work plan, budget, and schedule to complete the claim.

Avoiding an open-ended effort helps control costs and time, while eliminating dead-end efforts. In addition, it may be possible to negotiate a settlement using the preliminary analysis, thus saving the time and cost of preparing a complete claim. Most importantly, you won’t waste time and money on a weak claim or walk away from a strong one.

Start your preliminary analysis with an initial briefing or kick-off meeting, during which the project is described and other critical information is presented. This information should include the chronology of key events and activities; the issues in dispute (quantifying cost and time if known); the project participants and their roles; the wording of key documents; the current strategy; and your expectations of the time, cost, support required, work product, and anticipated results. During this meeting, you should prioritize the issues for analysis, provide the most important documents, and identify those individuals who will constitute the claim support team.

I strongly recommend that the claim preparer make a written report, called a narrative text, for:

  • Reporting all administrative information, including work accomplished, work planned, and action needed for review by the decision maker and claim support team.
  • Recording facts, as they are determined from the documents and interviews.
  • Organizing facts by issue, then chronologically, for review.
  • Analyzing each issue with references to source documents or interviews for all statements of facts.
  • Eventually converting the narrative text into a claim document by deleting extraneous information, rewriting for clarity, and adding an Executive Summary.

Narrative Text

Narrative text improves communication between the claim preparer, the claim support team, the attorney (if one is involved), and the decision maker. It enables the claim preparer to record and organize factual information, analysis, and conclusions. In addition, it stores and provides easy access to key facts, names, telephone numbers, etc. If claim preparation is delayed or considerable time elapses between preparing the claim and negotiating or testifying, the narrative text is crucial for quickly refreshing memories. The only downside is the possibility of discovery if in litigation, but this can be dealt with, in most cases, without significant risk.

Narrative text normally has the following organizational structure:

1. Administrative: Work planned, work accomplished, problems, questions, etc.
2. Preliminary Findings and Conclusions: Completed as you perform the analysis.
3. Issue Analysis: A separate section dedicated to each issue with a description of the issue, the chronological summary notes for that issue, the analysis, and conclusion.
4. Summary Notes: Both chronological (e.g., of dated documents) and non-dated (e.g., a summary of key specifications and contract clauses).

Organize Documents for Chronological Review

Organize the documents chronologically with the oldest on top. This allows you to approach the project in the same order that the work occurred; but, you now have the added advantage of seeing it from all viewpoints, including all the documents from all the parties involved.

Determine the Facts and Analyze Entitlement

While reviewing the files, you’ll want to create chronological summary notes for each significant reference to an issue. Enter the date in the left margin, then indent the summary, source reference code, and issue code. These summary notes, organized chronologically by issue in the narrative text, allow you to review only the notes regarding a specific issue. This, of course, eliminates vast quantities of irrelevant detail, highlights the essential facts, and simplifies understanding.

You may also wish to create a “Detailed As-Built” schedule (similar to that in Figure 2 on page 18) from the daily reports, correspondence, and other relevant documents. This displays all pertinent information on a single drawing and can be used, along with the chronological summary notes, to prepare your analysis of entitlement and causation.

Other schedule analysis tools include the Banded Bar Chart Comparison schedule and the ELIPSE schedules that combine a comparison schedule with labor hours worked, impacts, productivity, and weather or other environmental effects.

Compute Damages

Make preliminary damage estimates before analyzing entitlement, so you can prioritize your efforts. Final computations generally follow proof of entitlement and causation. Damages include the direct costs of added work, impact costs, acceleration or delay costs, other costs such as additional overhead, and markup for overhead and profit. You should also include between-the-line costs such as unpaid retainage and contract balances due, interest, attorney fees, and claim preparation costs, minus credit for non-conforming or unsatisfactory work.

Impact and inefficiency costs are the most difficult to estimate and often require special expertise. I recommend a Rational Approach methodology that uses modified total cost claims for some items, expert opinions when necessary, industry studies and formulas when available, measured mile analysis when productivity of impacted work can be compared with non-impacted work, and scientific analysis. This scientific method uses time and motion studies, learning curve effects, and other work improvement techniques to analyze and reconstruct the basic components of work.

Present the Claim and Negotiate an Equitable Adjustment

Effective negotiation starts long before the claim is prepared by involving the owner in the process so that both of you can work toward a win/win solution. Early in the process, you can often obtain vital information about the owner’s position and even factual data not otherwise available, except through discovery. Keep in mind, however, that your primary goal is to maintain a partnering approach.

To negotiate:
1. Be prepared. Understand the reviewers’ positions, and verify that they are willing to be fair and empowered to commit the owner.
2. Meet and present the claim. Discuss the change order request or claim at a joint presentation and review meeting. Establish a positive atmosphere, obtaining a commitment for a fair review, clarifying ambiguities, avoiding misunderstandings, and establishing a procedure and schedule for resolution. Do not argue the issues – for now, at least, but listen carefully to legitimate concerns.
3. Follow through. Answer questions and provide supplemental information, as required. Keep advancing your case using partnering strategies.
4. Negotiate. Use win/win techniques to reach a mutually acceptable solution.

Summary

Partnering and a comprehensive program to avoid and resolve disputes will go a long way in improving profitability and reducing the possibility of catastrophic loss. This requires more than good intentions and limited resources, however. It takes a continuing, highly focused commitment to develop, implement, and sustain a Dispute Management Program.

By |January 20th, 2015|Steve Pinnell|

Construction Scheduling Disputes: Proving Entitlement

American Bar Association
The Construction Lawyer – January 1992
By Steven Pinnell

Introduction

The objectives of a construction project are normally defined in terms of time, cost, and scope — scope being the quantity and quality of the finished product. All are interrelated, such that failure to achieve one objective (e.g., late completion) often results in problems with others (such as costs or reduced quality). All are dependent upon the resources (people) available to accomplish the work and the management and leadership skills of those directing them.

Schedules are a basic element of any project. An understanding of scheduling concepts, and familiarity with techniques of analyzing and explaining construction scheduling problems and their cost impact can be helpful in any type of schedule dispute.

This article provides an overview of current construction scheduling practices and critical path scheduling techniques. It then describes how to analyze a scheduling claim, with specific recommendations on selecting experts and dealing with inadequate data. The next two sections cover preparation and presentation of exhibits, and defense techniques. The final section is a summary. The article also describes a relatively new scheduling technique, “timescale arrow diagramming,” that is more powerful and easier to understand than conventional techniques. It makes an ideal exhibit for scheduling disputes. And it can be used to create an as-built schedule of large, complex projects when the available historical data is inadequate for conventional methods of analysis.

The goal is to explain scheduling concepts and techniques for the litigator and how to manage an expert or the client’s staff in preparing and presenting a scheduling claim. It is as applicable to mediation and negotiation as it is to litigation and arbitration.

Background

Construction Scheduling Practice and Problems

Contract Scheduling Requirements and Enforcement

In construction, as in most industries, “time is of the essence” and a completion date is normally part of the contract. Most contracts do, and all should, require the contractor to submit a schedule of progress and to periodically update it. This helps ensure the project will be completed on time and serves as the basis for resolving any time-related disputes. More specific contract requirements and insistence on compliance are needed, however, to avoid many of the problems currently being experienced. This will also provide better information for conflict resolution or litigation. Attorneys should urge their owner clients to periodically perform a legal and technical review of their standard contract clauses and contract administration procedures.

A Trend Towards More Scheduling Disputes

Historically, the majority of scheduling claims have been by general contractors against the owners of publicly bid projects. However, most construction work is done by subcontractors, 80 percent being common in building construction. Although mediation, partnering and other alternative dispute resolution procedures are tending to reduce construction litigation, the trend is for more scheduling disputes and more disputes between the general contractor and the subcontractors, sub-subcontractors, or material suppliers. This trend is also evident on privately owned, negotiated contracts. All parties are more aware of the cost of delay and impact, are more sophisticated in their scheduling techniques, have tighter budgets that don’t allow for delay or impact, and are more contentious.

How To Avoid Scheduling Problems

The construction industry is rife with poor practices that lead to delays and cost disputes. Owners want to reduce construction time but the designers don’t really know how much time to allow for construction. General contractors seldom prepare a detailed schedule when bidding a project. Subcontractors commit to a fixed price without knowing the time that will be allotted for their work, let alone the working conditions, such as conflicts with other crafts, congestion, or winter weather that can materially affect their cost. Often schedules are prepared without input or commitment from the subcontractors. Or the subcontractor agrees without understanding the schedule or having a comprehensive grasp of the total crew requirements for all of their contracts. And some subcontractors bid more work than they can staff.

During construction, mistakes are found in the plans, unexpected site conditions are encountered, or changes ate made by the owner that delay or impact the work. Failure to promptly order anyone of several thousand different material items can also cause delay. Earlier tasks don’t proceed as quickly as planned, and the work gets pushed into winter weather. Schedules are disrupted and commitments on other projects supersede. Rain and cold cause working conditions to deteriorate; then, in an attempt to finish on time, crew sizes are increased past an efficient level. Prices escalate, efficiency plunges, costs spiral out of control, and you have a schedule-related construction dispute.

At this point, you discover that the original schedule either wasn’t prepared or is incomplete, inaccurate, and has insufficient detail. It may be a bar chart instead of a critical path schedule. Often the owner never approved it. Updates, if prepared, may be sporadic instead of monthly, and usually include only the percent complete as of the report date. If provided, actual start and completion dates are often inaccurate, and no note is made of intermittent progress, insufficient staffing, or the reason for delays.

Most contractors are aware of the above problems, but often need firm guidance from their legal counsel before acting. The recommended course of action is to document good claims management procedures and to train their field personnel in the procedures and basic legal issues.’ This should be a joint effort by legal counsel working with client staff or an experienced construction consultant.

Scheduling Techniques

Bar/Gantt Chart

The most common scheduling technique is the bar chart (also called a Gantt Chart after its developer). Bar charts are easy to prepare and understand, but often lack sufficient detail. More seriously, they fail to show the relationship between tasks (which determines the impact of a delay), and they do not show the critical path (which tells whether a delay to a task will delay completion of the entire project). Nevertheless, they are a good tool for project planning and control, and for demonstrative evidence.

Critical Path Scheduling Methods

Critical path scheduling is a more recent method, having been developed in the late 1950s and normally accomplished with computers. It consists of two steps:

Planning, which identifies each task required to complete the project, the duration of each task, and the relationship between tasks. The technique for planning and the result of this effort is the network diagram. It can be generated on a computer or on paper.

Scheduling, which computes the early start and finish dates of each task based on the project start date. It also computes the late start and finish dates of each task, which are the latest dates the task can start and finish without delaying project completion. The difference between the early start and the late start (or the early finish and the late finish) is the float. Tasks with zero float cannot be delayed without delaying the project, and are said to be “critical”-they are on the critical path. Scheduling is normally done by computer. It can, however, be done manually or graphically on paper.

The two primary methods of critical path scheduling are called CPM (critical path method) and PERT, the latter now seldom used except for the term “PERT Chart” to designate the network diagram. The CPM method itself has two types of diagrams for planning the project:

Arrow Diagrams represent each task as an arrow, with the arrows linked to show relationships between tasks. Arrow diagrams often have numbers in circles at the beginning and end of each activity which identify the activity. The beginning number of each activity is called the “i-node” and the ending number is the “j-node.” The diagram is then called an i-j diagram.

Precedence Diagrams (often called activity-on-node) has the tasks enclosed in boxes with lines between the boxes to show relationships. Each activity is identified by a number. The boxes may also list other information, such as the early start date and duration. The CPM method also has two methods of scheduling (computing start and finish dates and the float):

i-j Scheduling uses the i-j numbers to identify relationships- activities with the same i-node number as another activity’s j-node numbers are successors to that activity.

Precedence Scheduling lists the priors (or successors) of each activity to identify relationships. It also allows overlap (lead) and delay (lag) between the end of one activity and the start of its successor. In addition to the standard finish-to-start relationship between tasks, it allows start-to-finish and finish-to-finish relationships. It is more powerful and easier than i-j scheduling, and will eventually supplant that technique.

Critical path scheduling is a complex subject requiring training and years of experience to master. The essential elements, however, can be explained to a judge or jury in a fraction of an hour by the right expert. This can be crucial to their understanding and to your success.

Timescale Arrow Diagrams

In the early 1970s, this writer developed a method of critical path scheduling called “timescale arrow diagramming.” It combines the timescale of the bar chart with the relationships of a network diagram (Figure I). An arrow diagram is used, because the arrows can be timescaled. The i-j nodes are deleted because computerization is not required and if computerized, the precedence scheduling method is preferred over i-j scheduling. The arrow diagram works well with precedence scheduling.

The result is a flexible, powerful, interactive tool for scheduling and control. It allows the scheduler to “see” the entire project on a single drawing, while simultaneously adding or changing tasks and considering resource constraints, work conflicts, overcrowding, weather impacts, etc. Although somewhat more difficult and time consuming to initially prepare than a conventional non-timescale network diagram, it is a far better product. It doesn’t have to be computerized to determine dates and the critical path, nor be revised in order to level resource demand, resolve work conflicts, reduce overcrowding, or avoid scheduling weather-sensitive work in the winter.

The end product is more usable than a conventional network diagram. Instead of reading two separate diagrams such as some scheduling programs offer (i.e., a bar chart and a non-timescale arrow or precedence diagram) plus a tabular list of dates, you have a single document that displays everything. It is easier to understand because you can glance at a network and identify the critical path (which can be highlighted with color or a heavier line). You can also see that a chain of non-critical activities has only a few days float or several weeks float instead of a specific number.

Although it can be prepared with a computer, the timescale arrow diagram need not be computerized, because you “graphically compute” the start and finish dates of each task and the float is graphically displayed as horizontal relationship lines. It is normally prepared on grid paper to aid in laying out the diagram. Other suggestions to aid in preparation of a timescale arrow diagram are described in various professional and trade journals.

Some computer scheduling programs can generate “connected bar charts” that have many of the features of a timescale arrow diagram. Few programs can condense a major project on a single sheet that is as readable and useful for exhibits as Figure I. This identifies the major project phases with large text adjacent to each subnetwork and with summary activities (hammocks) at the top of the drawing. The critical path is clearly identified by the heavier line and the float shows as horizontal dashed lines.

Computer Scheduling

There is excessive reliance on computers for scheduling. Too many contractors believe all they need to schedule a project is to buy a project management (scheduling) program. They fail to understand important scheduling concepts or to provide adequate management input and control. The result is an inaccurate schedule, having insufficient detail, which isn’t really used to manage the project. Often, it merely fulfills the contract scheduling requirements and the superintendent plans the job on short-interval bar charts that bear little relationship to the approved schedule.

The courts also have a tendency to place too much credence on computer analysis because they sometimes fail to weigh the accuracy and completeness of the underlying data. Computer analysis is therefore mandatory in order to ensure the credibility of your analysis. Critical path scheduling computations involve simple addition and subtraction. There is nothing the computer does that a skilled individual cannot do better-except for processing the great quantities of data that must be searched, sorted, and summarized.

The “Art” of Scheduling

Often overlooked is the fact that schedules are but “estimates” of what can and will be done. They can vary widely in accuracy depending upon the skill and project knowledge of the individual preparing them, the complexity and determinability of the project, and the level of scheduling effort expended. More importantly, they are subject to the degree of commitment made by the individuals or groups that will accomplish each task and to the persistence and efforts by the individual assigned to manage the project.

A “good” schedule is one that can be accomplished with the resources available within the allotted time and at reasonable cost. There are numerous variations that would also suffice.

Legal Issues

For information on legal issues, consult current case law as published or presented at construction law seminars. The article by Wickwire, Hurlbut, and Lerman, ”The Use of Critical Path Method Techniques in Contract Claims: Issues and Developments, 1974-1988″ is a good starting point.

Analysis

Selecting An Expert Witness

Decisions on demonstrative evidence are very much secondary to your selection of experts. Not only does the quality of experts vary widely but also their approach and preferred type of exhibit will differ. An “old hand” with years of experience may be comfortable only with bar charts. Most construction claims consultants, however, use computerized scheduling techniques. The courts favor critical path methods in determining the impact of delays or acceleration. In fact, it is very difficult to “prove” schedule impact without a critical path schedule. If using bar charts for demonstrative evidence, a computerized critical path schedule should be prepared to validate the bar chart.

Experts in schedule disputes must be experts in the industry. Don’t use a theorist or a computer consultant to analyze construction, although computer skills are almost mandatory. The expert must know construction methods, construction industry practice, the fundamentals of contract law and current case law related to construction, and even engineering/architectural design practices and standards. Experience as an arbitrator is helpful. The expert should have extensive field experience to better appreciate the impact of winter weather, overcrowding, constant change, acceleration, and other factors affecting morale and productivity.

The personality of the expert is also important. Some are good at research and painstaking analysis, but don’t come across very well under cross-examination. Others are very convincing as a witness and do well on broader issues, but are not well enough organized or efficient to turn loose on major investigations. Sometimes, a team approach using two individuals with complimentary skills and personalities works best. In any case, you need to establish a clear-cut scope of work, with budgets and schedules for each phase.

In some cases, the client has expertise in critical path scheduling and you will need an expert only for an independent verification of their work. Your client may know credible experts in construction methods and scheduling. If not, ask the Associated General Contractors, Associated Builders and Contractors, or other attorneys.

If your expert (or opposing party’s expert) has published any papers, read them. When selecting an expert you should verify their experience, including litigation or arbitration, and obtain references on past testimony and the results. If dispute resolution is possible, it is best if your expert is known and respected by the other party and has a reputation for fairness.

Data Collection and Review

Early Involvement of Your Expert

It is important for your expert to be involved in discovery and depositions. Not infrequently, important documents are missed or misinterpreted and pertinent areas of inquiry are left unexplored because of insufficient construction expertise at this phase.

You should not rely solely upon your client’s advice; it is this writer’s experience that nearly every construction claim as presented by a client misses major issues (such as concurrent delay) that vitally affect the dispute. In some cases, the initial thrust of the claim has been discarded and other issues of more important and greater cost impact substituted. Clients (either contractors, designers or owners) seldom have the breadth of experience in claims analysis and scheduling or the familiarity with construction law needed to identify all those items that are important. Their involvement in the project often makes them blind to their company’s shortcomings.

If construction is still underway, the expert can gather additional information, or even help mitigate damages. You should ensure that notice provisions and other legal issues have been addressed. Your expert can check recordkeeping and job management procedures. If scheduling is done by onsite personnel, an independent review is recommended. The expert’s fees for rescheduling required by a delay can be compensable as part of the change order.

For suggestions on retaining and managing experts, see Marted and Poretti’s article in The Construction Lawyer.

Organization of the Client’s Data for Review

When organizing data for expert review, have your client organize its files, put correspondence in chronological order, and otherwise make it easier to review all the documents and to ensure they are complete. Too frequently, individuals within the client’s organization fail to inform an expert of additional information that is available. Oral or written briefings and a written narrative of the dispute and tentative legal theories are also helpful in getting up to speed at a minimum cost.

The most critical documents to be identified for a scheduling claim are the original (as-planned) schedule and the periodic updates, as well as any draft schedules prepared but not submitted. These show the original plan and what actually happened. The final update often can be used as the as-built schedule.

Documents needed to supplement the schedules include correspondence, daily diaries, inspection reports, foremen’s and superintendent’s reports, submittal logs, photographs, weekly labor cost reports, certified payroll reports, timesheets (especially if annotated), test reports (which, for example, provide the dates of concrete pours), progress payment requests, submittal logs, shop drawings, and even delivery tickets. Other items include the contract documents (with all modifications), subcontracts and purchase orders, requests for information (RFIs), change order proposals and notice of claims, approved change orders, and minutes of meetings.

Discovery and Depositions

If all documents will not be copied, your expert should assist client staff and paralegals with discovery, in order to identify those few critical documents that are too obscure for a non-expert to recognize as important. For example, penciled notations by the reviewing architect/ engineer on the file copy of shop drawings may be crucial to proving or defending claims for slow review or unreasonable rejection of substitutions. The expert must be briefed and conduct an initial review before discovery, in order to know what might be important. The expert can also prepare suggestions for deposition questions. This may resolve issues not clearly documented or help determine their defense to anticipated legal strategies.

Site Visit and Interviews

If warranted, the expert should visit the job site (especially if work is still progressing) and interview job personnel. Failure to do so can result in a lesser grasp of the project and loss of credibility during cross-examination.

Analysis of the Data

Objectives, Legal Strategy and Work Plan

Before starting analysis, identify the objectives and tentative legal strategies. You should require an agreement on the scope of the expert’s investigation and analysis, the time required, and budget. For schedule-related claims, the objectives usually include finding and/or creating the following:

• As-Planned Schedule
• As-Built Schedule
• Comparison and Analysis of Differences
• Determination of Cause and Effect
• Would-Have-Been, But For … Schedule
• Comparison and Analysis of Differences
• Computation of Damages

A detailed work plan for the investigation, and all other aspects of the litigation, will help ensure accomplishing all objectives while maintaining the schedule and budget. The work plan should be in the form of a bar chart or network diagram and be “resource loaded” with the estimated expenses and effort by each individual. This will generate the budget and can be used to track and control the work.

Problems Often Encountered with the Data

Construction disputes often involve mountains of conflicting, fragmentary evidence. Memories may be vague, incorrect, or self-serving. Correspondence may be of limited value-beyond proof of notice, intent, and when the parties were aware of an event-due to the posturing of most parties in a dispute. It cannot be relied upon, even for the accuracy of stated dates. Original schedules are often incomplete, with insufficient detail, or simply incorrect. Schedule updates are often not prepared, and if existing usually contain only the percent complete of each task as of the update date.

Daily diaries may fail to include important information, or may not consistently record it. The accounting records seldom identify the extra costs of impacts, or fail to separate impacted work from non-impacted work, and the timesheets upon which they are based are often too numerous to review. Too frequently cost records fail to note the quantity of work accomplished each period so that separate productivity rates can be established for impacted versus unimpacted work. Photographs, if made, often lack dates and never include a clear explanation of what is happening. In short, it is very difficult to determine what actually happened, let alone the impact of those events and their costs.

Computerization of Historical Data

Laptop computers and improved software have changed data collection and analysis dramatically. One can abstract critical documents and index each record of the database to a source document, to multiple claims or other topics, to a date, and to an activity number on the as-planned schedule. This can be accomplished during the initial document review, if the expert assists in discovery. If available, electronically stored data can be imported to the database without retyping.

The computerized database can be sorted by topic and then in chronological order for review. This facilitates understanding each topic and the overall project, and ensures that no issues are overlooked. References to the source documents and proper organization of those documents (chronological by type) will permit more detailed review later and provide an “audit trail” if statement is challenged. If a written report is needed, the researcher’s database will provide the basis of that report, and the narrative portion of the report can include as many references as necessary to substantiate each event and its impact.

Issue Analysis and Working Papers

The expert will often be asked to analyze specific issues, such as possible concurrent delay by the contractor, industry practice, the expert’s interpretation of critical clauses in the specifications, etc. These analysis and factual investigations of key events are usually accomplished as discrete tasks. They define the issue, assemble and analyze the material available, identify items needing further effort and reach a conclusion with recommendations. As long as they can be preserved from discovery as attorney work products, issue analyses are best done in written form because they can be shared by all individuals of the dispute resolution/litigation team. This helps ensure that everyone is aware of and understands the key issues. Unlike a verbal briefing, they can be referred to later and refresh memories.

Working papers should be prepared on a word processor or a spreadsheet, so that information from the historical database and schedules can be readily incorporated. Easy transfer of data between various programs is essential for economical analysis.

Written Reports

Written reports are often needed to explain complex issues to the dispute resolution/litigation team, and in some cases may be provided to the opposing party and fact finder. They can present a chronology of the project, a narrative to accompany the schedules and establish entitlement, and the cost data and computations to prove damages. If issue analyses have been documented and are pertinent, they should be incorporated into the report. Reports should be prepared for counsel, instead of directly for the client, to limit the ability of the opposing side to obtain them during discovery.

Written reports, if requested, should be heavily referenced to source documents or noted as the opinion of an expert or a comment by an individual involved on the project. If available, the opposing party’s records should be referenced in preference to your client’s records, because they are less likely to be contested. There should be an “audit trail” from every conclusion back to detailed facts in the body of the report and from each fact to one or more source documents. References can be in square brackets; as an example [L-COE/GC 14Jun91] would be a letter from the Corps of Engineers to the General Contractor dated June 14, 1991 and [J] would be based on the judgment of the author and the preceding text. If the source documents are organized by type (i.e., letter telephone conversation, submittal, etc.) and sorted chronologically within each type, location of a referenced document is quite easy.

Issues not yet fully resolved, notes, and questions for reviewers in draft documents can be placed in different brackets ( ) to facilitate global editing after resolution.

“As-Planned” and “As-Built” Schedules

There should be a detailed and accurate as-planned schedule. If not, it will need to be reconstructed-based on whatever data is available. If the as-planned schedule is a bar chart, it can be converted into a timescale arrow diagram-either by drawing relationship lines between the bars or by computerizing and adding relationships. Obvious, minor errors can also be corrected.

Computerization of a hand-drawn “As-Planned” schedule is usually recommended, to aid in analysis and comparisons. Most claim consultants prefer a specific scheduling software program; if the as-planned schedule was generated with a different program, it is easy to generate an ASCII file (by sending reports to a disk file), which can be imported to the preferred program. The better scheduling programs can import several different data formats and all the major programs claim to comply with the Corps of Engineers’ NAS Data Exchange format (ER 1-1-11, March 15, 1990) for transfer of scheduling data between different programs.

The final schedule update constitutes an as-built schedule (except for the work remaining in the final work period). Unfortunately, updates are sometimes inaccurate, incomplete, or nonexistent. One should always validate the schedule updates, and expand the level of detail to aid in creating the “Would-have-Been, But For …” schedule.

Creating an As-Built Schedule If Incomplete Data

Three Alternatives

Sometimes the data provided is not adequate for a normal investigation and determination of the facts-at a reasonable cost and some certainty. Then you and your client need to decide whether to pursue a “total cost” approach, rely on an expert’s “judgment,” or commit the time and money to reconstruct the project with a “detailed as-built schedule.”

The total cost approach to construction claims is to present the actual cost of the work, subtract the estimated cost as bid, and ask for the difference as damages. Much has been written about this approach, and the difficulty of having it accepted in court. It is not generally recommended.

The standard alternative to a total cost approach is to put together the best analysis possible using conventional procedures based on the client’s allegations or an expert’s opinion. This requires expert judgment based on years of experience, and involves many assumptions and a lot of uncertainty. It is not difficult to prepare and is reasonably economical. In court, however, it often becomes a contest of whether your expert or the other side’s expert comes across as more credible. See “Conventional Methods of Delay and Impact Analysis,” infra.

An alternative to either an expert’s “judgment” or a total cost claim is an integrated, multi-document analysis that reconstructs the project on a day-by-day basis. This synthesizes numerous source documents (accounting records, timesheets, daily diaries, correspondence), each of which is incomplete for purposes of determining the events that happened and their consequence, into a coherent single document that describes what happened and why. This requires a format that can accept thousands of separate notes with references to individual source documents, brief narrative statements describing what happened and why, tabular information such as daily rainfall and crew sizes, graphical information such as a resource histogram or a percent complete curve, and some form of network diagram that displays the data in a readily understood manner.

The best format is a timescale arrow diagram, although a spreadsheet with notes can be used in simpler cases. Narrative reports or working papers are inadequate for organizing the data so that it can be understood.

Creation of a “Detailed As-Built” Schedule

A Detailed As-Built Timescale Arrow Diagram of a construction project starts with a large sheet of paper (up to 3 feet by 5 feet with a grid pattern to help in organization (Clearprint® paper is recommended). A calendar is placed across the top of the drawing with one or more grid squares for each day of work. The layout of the schedule is more like a modified bar chart rather than a network diagram.

Using the “As-Planned” schedule as a guide, each daily actual event from the source documents is recorded on the paper to form the “As-Built” schedule. Brief comments are made as needed. If necessary, individual one-day events forming a task are coded (e.g., the letter “p” above the line to signify a concrete pour and “r” for rebar as part of a “construct footing” activity) and referenced below the line with a code for the source document (e.g., “FDR” for foreman’s daily report). Crew sizes for each cost code or task can be printed across the bottom of the drawing in a matrix format to aid in identifying the start and finish of each task, periods of inactivity, and levels of effort. Each task on the detailed as-built timescale arrow diagram is built a day at a time until the start and finish dates are established for each, along with any periods of inactivity. Sequential tasks are then linked by arrows to show the flow of work. Judgment must be applied to fill in the blanks and to connect dependent tasks.

Creating a detailed as-built schedule can be very difficult. Activities are often intermittent, with varying (and often inadequate) crew size, which should be identified. The as-planned logic is often incorrect and grossly simplified as the actual relationships of tasks are very complex. Tasks often overlap and frequently are performed in a seemingly random order based on the manager’s preference or perceived efficiency.

The actual start and finish dates may be difficult to determine precisely. Should they, for example, include a subcontractor’s mobilization, material delivery and layout, or repair and rework; or should those be separate tasks?

The reliability of source documents cannot be assumed. Basic business records maintained by field personnel (foremen, superintendents, and inspectors), such as timecards and daily diaries, are generally more reliable than records maintained by jobsite managers or the home office. With experience, one can judge the veracity and accuracy of an individual’s records from cross-checks with other records, comments by the author, and even the “tone” of the text.

Inconsistencies and conflicts may create questions that cannot be fully resolved. On one project, the backside of a number of daily reports copied during discovery were stapled to the wrong front sheet, which took considerable time to identify and correct. Client-prepared data sometimes contains small errors that may preclude full reliance without some verification. Recording of facts must be without error in order to avoid inconsistencies during analysis or possible exclusion as an exhibit.

The result of the investigation is a very detailed document, often containing thousands of individual events with references. It becomes a secondary source document and can be referenced by a written report or in testimony. If challenged, each element can be traced to an original source document or to the expert’s judgment.

Even when the documentation is grossly inadequate, a detailed timescale arrow diagram can be useful, as a large number of small judgments are more reliable and more credible than a few gross assumptions by a hastily briefed expert.

The primary problems with this approach are the cost and time to prepare, plus the difficulty in finding someone with the experience and skills needed to perform the analysis.

Costs can be reduced by focusing on critical issues. For example, on a recent claim analysis, a detailed as-built was prepared only for the first 60 days, which was the most important period, and the as-built information from the monthly updates was used for the balance of the “As-Built” schedule.

Conversion to a “Condensed As-Built” Schedule

The next step is to condense the detailed as-built schedule into a more understandable form for computerization and further analysis. Depending upon the complexity and completeness of the detailed as-built diagram, this may require the use of clear acetate and colored pens to define the tasks and flow of work. The result is the condensed as-built schedule (timescaled) which can be plotted by a computer program (similar to Figure I).

The condensed as-built schedule defines the actual progress and flow of work, and will be compared to the as-planned schedule. It should, therefore, have the same activities and the same general layout on the network diagram, whenever possible. Normally, it has more activities than the as-planned schedule-for unanticipated tasks, added work, and impact activities. It may have intermittent progress of some tasks due to inclement weather, contract delays, or insufficient personnel. It should be annotated to highlight delays, acceleration, impact, and the events that caused them. It should also show the original completion date, the revised completion with approved changes, the actual substantial completion, and the final completion date. A narrative of all assumptions and judgments made with condensing the detailed as-built can be associated with each task.

Creation of the condensed as-built schedule can be quite difficult, especially in establishing the relationships between tasks. This often requires considerable experience and judgment, in addition to careful review of the as-planned schedule and the actual logic of the work. The physical effort, however, is relatively easy as you simply copy the computerized as-planned schedule and edit it for differences in duration, logic, and additional activities.

The Cost of Preparing a Detailed Schedule Analysis

Preparation of a detailed as-built schedule can be expensive, with the cost varying widely depending upon the quality of the available data and the size and complexity of the project. For example, the basic claim analysis to defend a transit agency from a fiercely contested $250,000 suit on a $900,000 public works project cost $5,000, and a detailed as-built schedule to confirm the initial conclusions cost about $10,000. Other analysis, preparation of exhibits and four days of testimony and cross-examination cost substantially more-but our client was awarded $130,000 for contractor delays and attorney’s fees. A smaller example is a project review, analysis of multiple disputes, preparation of an as-built schedule (not detailed), and a preliminary estimate of delay and impact costs on a $400,000 building remodel for purposes of negotiation. The cost was under $5,000. An expensive example is the detailed as-built schedule for a $20 million advanced wastewater treatment plant that cost nearly $50,000 due to grossly insufficient, conflicting records and a very complex project. Typically the cost for such a project would be $15,000 to $30,000 less if the records are good.

The cost of claim preparation or analysis must be proportional to the benefit expected. The additional cost of a detailed as-built schedule and a more thorough would-have-been schedule and damage computations must be balanced against the likelihood of a more favorable award. A compromise using the detailed as-built schedule for critical periods and more traditional analysis for the balance of the project may provide a satisfactory product at substantially less cost. In any case, you should require a reasonably detailed work plan from your experts and establish clearly defined budgets and schedules for each phase of their work.

The most effective means to reducing the cost of a claims analysis is to keep good records.

Fixed-price agreements are not recommended for claims analysis because the effort required is difficult to estimate in advance and may change as the analysis proceeds. Time and material agreements with a not-to-exceed budget for each phase (unless authorized) are recommended. Be prepared for changes as the analysis proceeds.

The “Would-Have-Been, But For …” Schedule

Determining what happened is only the first step. Next, the events that are due to actions or inactions of the other party or are otherwise reason for a time extension and/or compensation must be linked to their impacts and from there to a scenario of what would have happened absent the identified events. One method of doing this is to compare the as-built schedule to the as-planned schedule and determine why they are different. The events that are the responsibility of the other party can be identified and analyzed for their impact and whether the damages and resulting delays are compensable. Concurrent delay by the contractor, if any, must be addressed as it will preclude award of delay damages. Non-excusable delay by the contractor or better-than-expected progress should also be identified.

A bar chart is usually best for comparison of plan to actual and the scheduling program can quickly generate such charts (Figure 3). Relationships between tasks can be displayed with some software, although showing all relationships may make the drawing too confusing. Overlaying cumulative curves of work accomplished (and/or effort expended) and histograms of planned and actual resource use (labor and equipment) on the bar chart can be useful in analyzing the data, especially when the events causing the impact are plotted on the diagram. Tabular comparisons are also needed and some scheduling programs have special features for such analysis.

The as-planned and as-built schedules, supporting computations, and previously-generated database and issue analyses will be used to create the would-have-been schedule, and all should be documented with a narrative for each task. In some cases, schedule simulation and other computerized techniques beyond the scope of this paper will be used to qualify the delays and their cost impact.

The result is the “Would-Have-Been, But For …” schedule that identifies what would have happened absent the events that are the responsibility of the other party or that are non-compensable reasons for time extension. It should be in the same format (timescale arrow diagram), the same level of detail, and generally have the same activities as the “As-Planned” and “Condensed As-Built” schedules. This is where experts truly earn their fee. Again, the physical effort is fairly easy as either the computerized as-planned or the condensed as-built schedule is copied and edited.

Some experts start with the as-built schedule and subtract the claimed impact events to generate the would-have-been schedule. This writer generally prefers to build the would-have-been schedule a step at a time from the beginning. One must analyze what “would have” happened at the time a specific event occurred, based on the intent and knowledge of the jobsite management at the time, instead of what “could have been.” This is where correspondence can be very helpful, although the as-planned schedule is more important than any other document to establish intent.

Activities on the would-have-been schedule that would be accomplished under different conditions than the as-built must have their durations adjusted appropriately. This doesn’t mean just using the as-planned schedule durations, but may require a comparison of similar activities accomplished in unimpacted conditions. In some cases this may require a detailed analysis of the activity (the author once spent three weeks analyzing the critical piledriving activity on a large South American harbour project, which controlled the duration of the entire contract). The results, however, can be significant; on one recent project such an analysis determined that a twelve-day delay to a six-month project increased the cost by nearly 50 percent. This became understandable when the analysis revealed that those twelve days represented 42 percent of the available time to do the weather-sensitive earthwork before the winter rains began.

Comparison of the “As-Built” to the “Would-Have-Been, But For …” schedule will determine the allowable time extension and thus entitlement. The time extension may be partly compensable and partly non-compensable.

Other Analysis Methods and Issues

Other Techniques and Issues

Fragnets are portions of a network that are displayed separately for easier analysis and understanding. They are extremely useful for both analysis and exhibits.

Cumulative curves of percent complete or cash flow and histograms of planned and actual resource use are sometimes useful for analyzing impacts from delays, impact and acceleration. They can be easily generated for each version of the computerized schedule by cost-loading and resource-loading each task. In addition, a narrative should be written for all schedules (as-planned, as-built, and would-have-been) documenting the assumptions and expectations.

CAD drawings, or at least colored drawings or colored acetate overlays, can be helpful in identifying and analyzing what areas were impacted. Photographs and videos can also aid analysis. In addition to verifying statements in the other documents they can provide a great deal of additional information. For example, rock stockpile quantities can be computed by horizontal scaling from objects with known dimensions and the angle of repose for the specific material. A powerful, well-lit magnifying glass will help identify details.

When analyzing delays, it is important to identify mitigation efforts and the cost of acceleration to avoid further delays. These costs should be compensable.

The analysis should also investigate possible and alleged concurrence to ensure that contractor-caused delays were not concurrent with owner delays so as to prevent compensation for delay costs. In many cases, contractors will slack off on some near-critical activities in order to minimize costs, which can lead to allegations of concurrent delay.

There are other techniques available and issues applicable to specific projects; which are beyond the scope of this document. Your expert can identify which are relevant.

Conventional Methods of Delay and Impact Analysis

More conventional methods of schedule analysis are:

Global Impact or “Total Delay” Approach. This is a simplistic and usually inaccurate method of showing delay, acceleration and impact-similar to the “Total Cost” approach of computing damages. It plots the as-planned and as-built schedule and sometimes the would-have-been schedule as either single bars or highly summarized bar charts, and alleges the differences to be the fault of the owner. No attempt is made to show possible contractor error or concurrent delay, or to show the logic of cause and effect on the overall project. At best, a list or descriptions of the alleged delays will be presented to substantiate the claim. It is a satisfactory method only when used to summarize the results of more detailed analysis.

Net Impact Approach. This attempts to deal with concurrence by displaying only the net effect of claimed delay. It displays the as-planned and as-built schedules as either single bars or summary bar charts and shows the period of each alleged delay either separately or embedded in the as-built schedule. Often, the entire period of a change order from issuance to completion of the work is shown as a delay to the overall project. The total sum of all the delays is either considered irrelevant or alleged as proof of constructive acceleration in order to achieve the as-built completion date.

One-Sided “But-For” Approach. This inserts into the as-planned schedule the admitted delays of the party preparing the document (usually a far smaller number than warranted) and alleges that all other delays are the fault of the other party. In addition to being a one-sided approach with seriously understated impacts from the admitted delays, it also makes no adjustment for circumstances and the schedule status at the time the event occurred. Nor does it provide an adequate connection between the alleged cause and its effect.

Adjusted As-Built Approach. This often uses a critical path network of the as-built schedule and inserts alleged delays as distinct activities restraining the project. It is similar to the “Net Impact” approach, except that it alleges to use critical path analysis.

Time Impact Analysis Approach. This describes an iterative process of multiple analyses, starting with the as-planned schedule which is adjusted each time an impacting event occurs. It is far superior to the methods described above, and is similar to this author’s approach as described in “The ‘Would-Have-Been, But For …’ Schedule,” supra.

Verification of the Analysis

The analysis should be verified by reviewing it (or at least discussing key points) with client personnel and subcontractors. It is difficult to defend a position when your client’s staff and subcontractors don’t agree with it.

You should also either get a signed agreement from the subcontractors that the claim fully represents their damages, or exclude subcontractor claims from your settlement.

Computation of Damages

All the work done to this point will lead to naught, unless you can now prove damages — a specific, reasonably accurate dollar amount. This may be the most difficult task facing the expert, and one that often relies on professional judgment as much as on quantification and analysis.

A full review of the methods and techniques for computing damages is beyond the scope of this document; they are amply described elsewhere.

Preparation and Presentation of Exhibits

Whereas the expert normally has considerable leeway in the claim analysis, within the defined scope and budget, the trial lawyer needs to exercise close control of exhibit preparation and has total control of the presentation.

The essential requirement in the presentation of schedule-related claims is that it be as simple and straightforward as possible. It is therefore best to limit the number of exhibits or to only briefly review the detailed exhibits and focus on the summaries, because too many exhibits can dilute the overall impact of the presentation.

We recommend that detailed information be presented only to the extent necessary to build a foundation, to establish credibility in the mind of the fact finder, and to intimidate the opposing side with the thoroughness of your preparation. The presentation should focus on summaries of the schedules and damages, with specific details only when warranted.

Summary of Exhibits

Exhibits for a construction scheduling dispute will normally include the following and be introduced in the same general order:

Overview of the Claim and how it will be proven, so that the fact finder knows what to expect.

As-Planned Schedule that identifies what the contractor expected to do when starting the project.

As-Built Schedule that describes what actually happened.

Comparison Schedule of the “As-Planned” to the “As-Built” schedule with an analysis of what caused the differences.

“Would-Have-Been, But For …” Schedule that describes what would have happened absent the actions of the other party.

Comparison Schedule of the “As-Built” to the “Would-Have-Been” schedule and analysis of the differences and who is responsible. It proves entitlement.

“Fragnets” of critical portions of the schedule that focus on the activities impacted for each issue analyzed.

Other Exhibits demonstrating specific issues. These may include percent-complete curves, resource histograms, pie charts and photographs.

Cost Data to prove damages.

Summary Chart or Table recapping the presentation and focusing attention on the key issues.

Network Diagram Exhibits

Original As-Planned Schedule and Updates

If an as-planned schedule and updates were submitted by the contractor to the owner or designer, they should normally be included as exhibits, in order to establish the validity of subsequent exhibits. It is helpful to have them blown up to be approximately the same size as the other schedule exhibits. Acetate overlays with colored relationship lines and other information can be used to explain job logic.

Modified and Redisplayed As-Planned Schedule

The original as-planned schedule often has some obvious errors. These can be corrected and the modified as-planned schedule can be displayed as a timescale arrow diagram. If the original as-planned schedule was a bar chart, relationships can be added. Conversion to a timescale arrow diagram makes it much easier to follow the logic and understand what was planned. To aid in understanding, the tasks should be grouped in subnetworks and labeled (as in Figure 1), and a summary as-planned schedule should be prepared for easy explanation of the initial plan when the project started. The presentation of the summary as-planned schedule can be made concurrently with presentation of the site/phasing plan described in “Site and Phasing Plans,”infra.

Detailed As-Built Schedule

If an accurate, as-built schedule was prepared during the course of the project, that document can be displayed as the as-built schedule. Frequently that has not been done and a detailed as-built schedule must be prepared, as described in “Creating an As-Built Schedule If Incomplete Data,” above (Figure 2).

The detailed as-built schedule is presented to validate the condensed as-built schedule. A clear acetate overlay with felt-tip pen coloring of the activities can be used to link the two together.

Condensed As-Built Schedule

This is the computerized version of what actually happened, which condenses the thousands of references on the detailed as-built to the same general level of detail as the as-planned schedule. It normally has more tasks than the as-planned schedule, with the same layout and activity descriptions where possible. If the exhibits are used for in-depth study by the fact finder, the condensed as-built schedule may become the key document for explaining what happened.

The presentation of the condensed as-built schedule must build from the detailed as-built schedule, in terms of what happened. It isn’t necessary to explain each task or even the overall chronology, but only to demonstrate the thoroughness of your analysis. The testimony can then focus on the summary as-built schedule, as it can be easily understood-which is essential to explaining what happened to the fact finder.

Summary As-Built Schedule

For easy comprehension by a fact finder, a higher level of summary (with at most thirty to forty tasks), with graphical highlighting of key events (milestones) and narrative text, will be needed. This diagram should have the same layout and the same scale as the condensed as-built schedule, and should use color to highlight and simplify the logic. It may also include superimposed resource histograms (Figure 2) and percent-complete curves. It can be presented in a modified timescale arrow diagram format, similar to a bar chart. Some scheduling programs can generate this type of chart automatically, through a “roll-up” feature.

You now have a complete, auditable trail from thousands of individual source document references to a clearly understandable exhibit that summarizes what happened and demonstrates the time impact on the project.

“Would-Have-Been, But For …” Schedules

There will often be two “Would-Have-Been” schedules- one with the same level of detail as the condensed as-built and one at a summary level. They should have the same general layout as the other schedules, and must be based on the as-planned schedule, as modified by the events chronicled by the as-built schedule. They cannot be just “could-have-been” schedules, but must represent the most likely course of action absent the claimed event(s).

Presentation of the “Would-Have-Been” schedule and its acceptance by the fact finder is crucial, as this is where you prove entitlement. All questions and doubts should be resolved at this time, before proceeding to damages.

Comparison Schedules

After each of the schedules has been presented (as-planned, as-built, and would-have-been), they can be compared to show how the project changed and how it would have been absent the disputed events. Color is best to show the work and to differentiate between the two schedules being compared, but hatching can be used if necessary. Schedule comparisons are best done with bar charts (Figure 3).

Fragnet Schedules

Fragnet schedules are portions of a network diagram, showing only the pertinent portions for easier analysis and understanding. They should be extracted from the full network, blown up in size and displayed as separate exhibits explaining specific events and issues. Some software can do this automatically.

Cumulative (Percent Complete) Curves

Cumulative curves are frequently used to show progress (percent complete, cash flow, and earned value), and to compare planned with actual progress. An abrupt change in slope of the curve (e.g., a flatter slope, indicating slower progress) coinciding with an event (i.e., an alleged cause of delay) and a steepening when the issue is resolved, supports the contention that the event caused the change.

Cumulative curves can overlay a summary schedule to graphically illustrate the pace of construction. The as-built curve can be compared to the as-planned or would-have-been curves to illustrate the differences.

Rainfall is normally displayed with a histogram, which underemphasizes the impact of winter rains. An alternative is to use a cumulative curve, with the increased slope in winter clearly illustrating the onset of the rainy season. Starting with a base of zero in early summer will further emphasize the cumulative impact of winter rains after the limited rainfall of summer.

Histograms (Periodic Curves)

Histograms (periodic curves) are most frequently used to show planned and actual resource use (i.e., the number of workers). The planned staffing of a project with a steady increase of crew size followed by a constant crew size and then a slow decline to project completion can be compared to the impacted schedule with lower initial staffing during good weather, excessive peaks during inclement weather, and wildly fluctuating levels through to completion. This is especially effective if the start and finish of the impact are plotted on the diagram and correspond to reduced staffing and then excess staffing to make up for lost time.

Histograms (of resource use or rainfall) can be overlaid on a summary schedule and combined with a cumulative curve (of progress) to explain what happened.

Tabular Schedule Reports

Tabular data are needed to support the testimony and other exhibits and are used extensively in claim documents or written reports. It should seldom be used as demonstrative evidence except to lay a foundation, as it requires careful study and expert knowledge to understand. Presentation of specific dates or tabular data is best done in conjunction with graphics, as in Figure 3.

Other Types of Exhibits

Cost Data

Cost data are normally in tabular form and presented in a spreadsheet. Where possible, graphical representation of costs will aid in understanding. For example, variations in productivity rates (cost or labor hours per unit of output) can be plotted on a vertical scale as a line drawing for each reporting period. The learning curve effect of increased efficiency with experience will be apparent, as will abrupt changes at the beginning and end of the period of impact.

Photographs

Photographs can be very helpful in providing an understanding of what happened on a project and in demonstrating impact conditions that result in extra costs. Photographs of mud, rain, snow, crowded conditions, etc. can generate a feeling for the problems experienced. They need to be organized either chronologically or grouped by claim or topic, with the date on each photograph and a description of what is happening and where it is.

For inclusion in a report or for individual review, 3″ X 5″ prints give adequate definition. Four can be pasted on 8 ½ ” X 11″ paper with a brief description for color copying at less than one dollar per page. Aerial photographs (which in some areas can be obtained for around $200 per flight if ordered monthly) and other items needing more definition can be printed at 8″ X 10″ and pasted onto 8 ½ ” X 11″ paper for inclusion in a report. For courtroom exhibits, larger blowups may be used. Photographs can be used to supplement a verbal description of conditions in order to give a better understanding of actual conditions. Selective presentation of photographs can give a distorted view of conditions. To correct the problem if used by the other party, you can show a more representative series of photographs or photos of work either progressing or not during the impacted period.

Videos

Video cameras are easy to use, small enough to carry around a jobsite, and economical. Many project owners and contractors are using videos to document problems or the general course of construction. If available, videos of the project can be extremely helpful. A few minutes of film illustrating impact and difficult working conditions can be extremely effective in convincing jurors of the general extent of damages (sometimes out of proportion to the actual impact). Careful editing and a clear narrative can focus attention on important elements. In some cases, “freezing” selected views or insertion of text and simulation of events can help the presentation. If only selected material is presented, all film must be made available to the opposing party in unedited form.

Time-lapse Photography

This condenses a full day’s progress into a few minutes to provide a quick review of daily progress. It also makes work patterns and inefficiencies obvious to non-experts, and can be analyzed by a time-and-motion study expert to determine productivity rates and impacts.

Pie Charts

Pie charts can be used to display costs, resource use or other numerical information. They help focus attention on differences between cost elements and the relative distribution of costs, or resource use.

Site and Phasing Plans

A simplified plan of the overall project, with boldly lettered descriptions of each work area or where specific claims occurred, can be helpful in understanding the project and should be referred to frequently during testimony. Large bold text, hatching and half-tones, or color can be used to show project phasing. In some cases, colored acetate overlays can be used to show project phasing.

Drawings

Detailed drawings are very helpful in explaining specifics .of the project, especially if color-coded for easier understanding. This can be done directly on copies of the drawing and blown up if needed, or on acetate overlays to show various conditions. More sophisticated analysis can use computer-generated CAD drawings to show impacts and areas affected by change.

Written Reports

Written reports can be helpful for review by a judge or arbitrators on large, complex cases. They must be clearly written and professionally produced. Review by an experienced technical editor is highly recommended.

Defense Against Scheduling Claims

Normally, the best defense against a scheduling claim is to attack the following issues:

• The logic and durations of the “as-planned” schedule, as they frequently are inaccurate, incomplete and of insufficient detail.

• The accuracy and completeness of the “as-built” schedule, which are often incorrect in details and have an insufficient level of detail to reflect the true job logic.

• The validity of the “would-have-been, but for” schedule and how the delays are allocated between the parties.

• Whether the computation of damages is adequately proven, given the normal level of detail and completeness of the job records.

• Whether the unimpacted work being compared to impacted work to determine cost differences is truly equivalent to the impacted work. The productivity of unimpacted work may actually be too low if it occurred on the “learning curve.”

• Other items to watch for in contractor claims include:

• Reams of computer printout with tremendous detail, no summary, and few graphics. The contractor may be trying to overwhelm the owner with complexity. Or, hidden features in the scheduling program, such as no credit for out-of-sequence progress, may be used to generate misleading results.

• Excessively simple analyses without supporting detail and linking of cause to specific effect.

• Complex computer scheduling analysis and simulation purporting to prove some theoretical approach.

If the owner has reviewed and approved or even received and not rejected the contractor’s schedule there is an assumption that it is correct and the burden of proof is shifted to the owner.

Although it is less expensive to attack the contractor’s presentation rather than to prepare an independent analysis, in some cases that may be necessary — especially when the claim is thought have some validity but is grossly inflated. If so, the process described in “Creating an As-Built Schedule If Incomplete Data,” supra, is as applicable to a defense of a schedule claim as it is to the plaintiff.

By |January 20th, 2015|Steve Pinnell|