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[... this Technical Paper was submitted by Ashutosh Maurya for Certified Cost Engineer (CCE) Certification in April 2010 ...]
Abstract
Considerable number of construction contract experience delays. Project can be delayed due to default either by the contractor or by the employer or by both of them together. Delay in the contracts necessitates undergoing Extension of Time (EOT) procedures. EOT computations are complex. Forensic Delay Analysis (FDA) methods are used to determine EOT. There are several FDA techniques. All these techniques are based upon Critial Path Method (CPM) method. Impacted as Planned, Collapsed as Built, As-Planned vs. As-Built Time Impact Analysis and Windows Analysis are few FDA techniques. FDA techniques are not precise methods and need expert judgment while determining EOT. These characteristics of FDA technique leads to disagreement between the parties and EOT related disputes are caused.
Regardless of the FDA method being used, Baseline Schedule and delay records documents remains the key input to forensic schedule analysis. Scheduler skills play major roles too. Schedule lifecycle in project can be broken into four phases of schedule development, schedule approval, schedule update and control, and schedule revision. Adopting an integrated approach towards these schedule phases is helpful in project schedule management. A schedule management and control plan can be developed addressing all the scheduling phases and integration between them. If integrated with cost and risk planning of the project, it can be more powerful in achieving project objectives. Recommendations and best practices require meticulous implementation to produce results. The best way to achieve this purpose is by enforcing it through the contract. Therefore, schedule specification requiring implementation of integrated schedule management and control is must for minimization of EOT related disputes.
Introduction
Contracts are most common methodology of construction projects delivery. Regardless of where the contract is being executed or which facility is built, considerable numbers of construction contracts fail to complete within the duration stipulated. The reasons for delay may vary extremely, from design changes to problematic commissioning and numerous issues in-between. This necessitates contracts to undergo EOT procedures. Computing EOT is a difficult task at first place, this requires professional and costly resources. Scheduling is more art than science and no Forensic Delay Analysis (FDA) method is precise. In the absence of establish project controls framework and procedures these analysis tend to be more judgmental rather facts based. This lead to disagreements between the parties, thus thw root cause of disputes. Application of project management tool and technique in schedule management can help to setup project schedule management framework and, help minimizing delays and EOT related disputes. The author has more than 11 years experience in construction scheduling, costing and claims. He is certified Project Management Professional by PMI and worked both on the contractor and employer side on EOT claims preparation and approval. Author has used this knowledge and experience to design and arrange this article. Current body of knowledge on EOT has also been studied. SSL-Delay and Disruption protocol and AACEI RP No. 29 R-03, Forensic Schedule Analysis, are two primary document which are referred in synthesis of this technical paper. For propose of standardization of taxonomy, term Schedule is used for Programme or CPM Schedule. Term Baseline Schedule is used for planned schedules and subsequent schedule updates thought the project duration are referred as Updated Schedule. Term Employer refers to the both the employer, owner team, and their authorised representative i.e. engineer, project manager, contract administer and cost consultant.
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Employers delays are generally- Late Notice to proceed - Delay in making Site available to contractor - Delay in release of Design Information - Delay in Release of Provision Sub Item - Funding changes - Suspension of works - Delay in Appointing Nominated Contractor - Delay in Providing approval to Contractor - Delay in Obtaining statuary approval (in Employer scope) - Delay in sourcing utilities (power, water etc.) for testing and commissioning - Defective contract documents - Change directive/order work additions Contractors delays are generally- Poor workmanship requiring rework - Insufficient labour equipment and their low productivity - Failure to handover the facility with timeframe stipulated in the Contract - Failure to provide access to Employers nominated contractor - Failure to partially handover of facilities (as per the contract the contract milestone) - Failure obtain certain performance result (as per the contract the contract milestone) There can be other set of reasons which are neither through default of employer nor by the contractor, but due to unforeseen conditions not envisaged at the time contract. These events are called force majeure. Contractor in generally eligible for EOT due to the delays caused by force majeure, but without additional cost, such delay event can be- Exceptionally adverse climatic condition - War, riots - Subsurface condition exceptionally different from pre-contract soil investigation report Impact of delays on project time and cost baseline depends upon project team approach towards its mitigation. Delay impact can be proactively reduced and in worst scenarios small delay events can lead to large schedule creep. Some delay can have clear impact on the project critical path e.g. delay in release project site to the contractor, suspension of works, non-releasing of payment allowing contractor to suspend the works etc. These explicit delays are easy to identify. Prompt agreement can be made both in the terms of the individual responsible for the delay and its impact on the project, while comparing to other ambiguous delays. Certain delay events does not impact the project critical path distinctively as they occur. These ambiguous delays, for example delay in material for non critical activity, do not seem to delay the contract completion date as it occurs. However, what if the other delays in the project has put this non critical activity to project critical path? Another example can be continuous change in design on non critical activity causing frustration to project team therefore leading to productivity loss on whole project including the critical path. This complexity is further amplified due to the fact the EOT procedure are generally done retrospectively. Prospective delay analysis and grating of EOT can be done; it is not a widespread practice. In additional to being complex to identify, such delay do poses big challenge while analyzing their impact on the project time and cost. These delays are root causes of EOT related disputes.
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Invariably EOT ends with some sort of disagreements and disputes. Some are resolve by the mediation of higher management of Contractor and Employer, some goes to arbitration board. However, some of the EOT disputes do end up lengthy and costly legal proceedings. Extent of disputes may vary from outright rejection of EOT request, disagreement on amount of extension, party at default, and amount of additional cost due to delay. Disputes arise for a number of reasons, but typically because of contractors improper presentation of the delay events, their causes and impact on project critical path, a lack of perspective toward resolution of agreement by the parties involved, and political and commercial reasons related to the project.
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c. As-Planned v As-Built
This method is based on the comparison between Baseline Schedule and how the actual work is carried out i.e. As Built Schedule, difference between the overall completions dates of the two being the basis of the delay claim. This technique can be used when sufficient as built information is available. This method can have several variant based upon its application on Baseline and As Built Schedule. At its simplest, comparison can be done between Baseline and final As Built Schedule. On the other hand scenario analysis can be developed by making comparisons between Baseline and final As Built Schedule at different period of the Contract.
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a. Schedule Development
Schedule should consist of whole contract scope. Ideally scheduler must start the schedule preparation with understanding scope specified in the contract. WBS should be prepared so that none of the project scope is missed in the schedule. This WBS can also be used for other project control item like cost and documents. It is good to have risk management approach towards contract administration at the beginning. Identification of risks in the contract, their probability and impact helps the project team to understand project in better way therefore to produce more realistic schedule. Project phases such as engineering, procurement, construction and commission and their integration to WBS should be defined. Contract scope should be broken down by the responsibilities i.e. by employer, contractor or sub-contractor. Integration of responsibilities to WBS is also recommended. Milestone dates should be taken out from the contract and incorporated in the schedule, these milestones can be supply of design information to contractor by employer, partial handover date etc. If contracts are silent on milestones date, in such situations the scheduler should rationally determine the dates for such milestones. Turnaround duration for submittal should be captured in schedule appropriately. Materials, method statements, specialized vendor or suppliers require employer approval before commencing the work/procurement. Generally contract specifies approval duration; the same must be taken in schedule. If the contract does not specify such duration, an appropriate duration should be assumed recoded as schedule assumptions. Schedule should be compatible with project contract/information management system of contractor, employer and subcontractors. Scheduling software, its version should be agreed between the parties involved before the preparation of schedule. Same way activity, WBS code logic, schedule calendars should be agreed prior to commencement of schedule preparation. It is also good to agree the level of detail of the schedule prior to schedule preparation. It is recommend that duration of individual activity be less than 1.5% to 2% for project duration and always less than successive schedule updating period. If the information is not available to decompose the activities as sufficient detail level, a summary level activity can be inserted in the schedule and assumption should be recorded. Another important aspect at time of schedule preparation is project control methodology which is planned to be followed in the project. Earn value, work done quantity based performance indicator bases reporting may require loading of cost and resources to the schedule. This may lead to substantial work for scheduler to prepare the schedule. Assumption like workmen and equipment productivity should also be recorded. Schedule should be forwarded to the employer along with brief method statement describing how project delivery is planned. Assumption made to prepare the schedule should also be specified in the method statement. It is good practice that the project teams reviews the whole schedule before it is sent to the employer for obtaining approval. Several iteration may be carried out make produce realistic schedule.
b. Schedule Approval
This stage schedule lifecycle relates to validation to contractors prepared schedule with the contract requirement. Employer should verify that the schedule confirms to be contract completion date requirements. This may be date for whole project, or the partial completion as required by the contract. Employer should do sanity check for schedule being realistic; review the processor-successor relationship. Look on the resource and time estimation. Employer should use the contract schedule for his own purposes. All the efforts should be made to have one schedule in the project.
d. Schedule Revision
Schedule baseline should only be revised for approved changes. Baseline can also be revised if EOT is granted during the execution of project. A schedule management and control plan can be developed addressing all above mentioned items. If integrated with cost and risk planning of the project, it can be more powerful in achieving project objectives. All the recommendations shall remain best practices unit they are being adopted in the projects. The best way to achieve this purpose is by enforcing it through the contract. A schedule specification can be can developed to incorporating all recommendation made above. SCL Delay and Disruption Protocol, Appendix B, provides a good set of Model Specification Clauses. Caution should be exercised while using them. Coherency with the form of general condition of contact both at individual clause, contract principles at whole level and project needs should be keep in mind, as ambiguity in contract may lead to other set of disputes. Contract should also outline the record keeping requirements, frequency of report, daily weekly, monthly, their content and the time limits for submission of such reports. Document management and project collaboration software too can be helpful for speedy communication and for maintaining document records.
Conclusion
There shall be quite some time until project management, contract management, financial management practices and construction technology are mature enough to complete project without any delays. Project on time as well within budget can remain distant dream for construction professionals. Until then project delays shall remain reality, so shall be the EOT related disputes.
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Appropriate application of project management tool and technique promise delivery within the stipulated time frame therefore reduces project delays and eventually reduced EOT related disputes. In the event of delay, selection of appropriate FDA technique can be big help presenting the delays and increase the probability on the agreement on EOT related issues. Schedule management is vital to FDA analysis. An integrated approach is required for schedule preparation, review and update. Preparing a schedule management plan summarizing all these aspects of schedule management can help in producing better results. Good document management is also important. Last but not the least contractual enforcement of judiciously selected schedule management and control specification are must to reduce the EOT related disputes.
References
1. AACE International, 5 ec om m e nd e d P rac tic e 1 o. 2 5 -02 ) o re ns ic 6 c h e d u le $ n a lys is , 2009. 2. AACE International, 5 ec o m m e n de d P rac tic e 1 o . 45 5 -0 6 c h e d u ling & la im P ro te ctio n Me th o d , 2009. 3. The Society of Construction Law, ' e lay a nd ' is ru ption P ro to col, 2002. 4. Project Management Institute, $ * u ide to P roM e ct Mana g e m ent % o dy o f . n o Z le d g e P M% 2 . * u ild e 4th edition, 2008. 5. Roger Gibson, & o n s tru c tio n ' ela ys Extens io ns o f tim e a n d prolo n g a tio n c laim s , 1s t edition, 2008. 6. Keane, P. J. & Caletka A. F., ' e la y $ na lys is in & on s tru c tio n & on trac ts , 1s t edition, 2008. 7. Nael G. Bunni, Th e ) , ' , & ) o rm s o f & on tra ct , 3rd edition, 2005.
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