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Dec 282013
 

David Adelstein

This guest post is by construction attorney David Adelstein (photo). David is a Florida Board Certified Construction Attorney with the law firm of Kirwin Norris, P.A. He maintains the website Florida Construction Legal Updates where he blogs about various legal issues that pertain to the construction industry.

Enter David Adelstein:

Strong project management is critical to prime / general contractors in furtherance of ensuring the successful and profitable completion of a project. Among other things, strong project management involves understanding the scope of work activities that drive the timely completion of the project. Having a good plan at the beginning (that is peer reviewed) as detailed in a baseline schedule will enable project management to best coordinate and sequence trades knowing the total float for the project and the float identified for non-critical path trades. The baseline schedule is not written in stone. If it was, it would never need to be updated. But, construction involves unanticipated and unforeseen issues and risks that make it virtually impossible for the baseline schedule to be followed to the tee. No matter the size or complexity of the project, there are always variables that will require the re-sequencing of activities (and their start and finish dates) that will push different activities on and off the critical path. The more complex the project the more likely there will be variables that a strong project management team will need to address and work through.

One way project management can be proactive is to have a scheduling consultant on the front end. The consultant can be used in numerous roles including preparing the baseline schedule with the input from the contractor’s project management and subcontractors regarding the appropriate duration for activities. The consultant can assist in a peer review capacity to understand the scheduling plan and perform an objective check of the schedule. Or, the consultant can be used to assist in updating the schedule once the project gets going and variables are encountered. As the idiom goes, “An ounce of prevention is worth a pound of cure.” Utilizing the appropriate assistance to ensure (i) a good plan is in place from the get-go, (ii) that the plan is actually implemented and followed, and (iii) that there are plans in place when variables are encountered, is worth it instead of trying to deal with a bad plan after-the-fact or a good plan that is never actually implemented.

When consultants get involved, they will want to know and understand the project’s critical path. If the consultant gets involved on the front-end, they can assist in determining the critical path based on the project management’s plan. If they get involved after-the-fact, they will want to understand the plan by tracking the baseline schedule with updates that reflect as-built conditions. This will help determine where time impacts / delays occurred. The consultant can then take this information as to those activities that impacted the critical path to figure out why. Was there a bad plan from the get-go? Was there a good plan that was never actually implemented and followed? Were there design errors and omissions that resulted in numerous RFIs, supplemental instructions, or revisions to the plans? Were there numerous changes, whether owner-directed or due to design errors and omissions? Did a trade subcontractor simply struggle with quality control or sticking to durations? These are all issues that will be analyzed in connection with the schedules to best determine why time impacts occurred. Now, when the consultant gets involved after-the-fact, there is a little recreating of history (or revisionist history) since the consultant needs to reinterpret events and schedules after they already occurred. However, if the consultant is utilized from the get-go, hopefully, the time schedule impacts and documentation / evidence is being reviewed and organized to best capture the time impacts. This is valuable because it will allow project management to timely notify the owner of the time impacts and the appropriate extension of time and additional compensation to request. (Keep in mind that most contracts provide that a failure to timely notify the owner results in a waiver of the additional time or cost.) This is also valuable, as explained above, to best determine how to update the schedule and potentially re-sequence scope of work activities and coordinate the trades.

The critical path becomes a very important issue when the project is not going to be completed by the original substantial completion date. Because contracts allow the owner to assess liquidated damages due to delays (or actual damages if there is not a liquidated damages provision), the contractor will need to prove that any delays to the critical path are not its fault, not only to offset any assessment of liquidated damages, but also to establish an affirmative entitlement to extended general conditions. This is why the contractor will want to timely submit a claim for time impacts that include an appropriate amount of time to rebound from the impact. Also, in the event time impacts were in fact caused by the contractor, it will want to know which trade subcontractors contributed to the impact in order to flow down liquidated damages and its own extended general conditions.

Typically, contractors have the burden in proving delays attributable to the owner which will require it to establish the critical path. See Daewoo Engineering and Const. Co., Ltd. v. U.S., 73 Fed.Cl. 547 (Fed.Cl. 2006); accord George Sollitt Const. Co. v. U.S., 64 Fed.Cl. 229 (Fed.Cl. 2005); Morrison Knudsen Corp. v. Fireman’s Fund Ins. Co., 175 F.3d 1221 (10th Cir. 1999); U.S. Fidelity & Guar. Co. v. Orlando Utilities Com’n, 564 F.Supp. 962 (M.D.Fla. 1983). This type of proof will require a witness–really, an expert witness–that understands scheduling and the software used to develop the schedules to explain the critical path and the impacts to the critical path of the project. This will require testimony of the baseline schedule or plan along with the as-built conditions. Without this proof, the contractor is not going to be able to specifically prove that the delay(s) to the substantial completion date was caused by the owner and its consultants. The proof should entail the witness proving the time period in which the impact occurred and the issues that caused this impact (i.e., design error or omission, delay in design professional responding to RFI, design revisions, change order work, etc.). The same burden will be required when the contractor tries to flow down liquidated damages or seek its extended general conditions from a subcontractor that caused the time impacts.

Time impacts, however, cannot be perceived in a vacuum. In other words, time impacts are not always so clean that one discrete issue undeniably caused the delay. Because there are many activities taking place at the same time and many balls being juggled during the course of construction, oftentimes multiple issues that occurred around the same time period need to be analyzed. The reason for this is to determine whether there was a concurrent delay where both parties to the dispute (whether owner verses contractor or contractor verses subcontractor) contributed to the same delay time period, and thus, neither should recover from the other. “The doctrine of concurrent delay involves the premise that where both parties to the litigation caused delays then neither party can recover damages for that period of time when both parties were at fault.” Broward County v. Russell, Inc., 589 So.2d 983, 984 (Fla. 4th DCA 1991); accord Blinderman Const. Co., Inc. v. U.S., 695 F.2d 552 (Fed.Cir. 1982). Hence, if there is a concurrent delay, neither party will be able to recover (which, sometimes, this is what a contractor is seeking to simply offset liquidated damages exposure) unless the contractor can apportion the delay attributable to each party during the concurrent delay time period. See George Sollitt Const. Co. v. U.S., 64 Fed.Cl. 229 (Fed.Cl. 2005); accord Smith v. U.S., 34 Fed.Cl. 313 (Fed.Cl. 1995); William F. Klingensmith, Inc. v. U.S., 731 F.2d 805 (Fed.Cir. 1984).

There is much more to critical path scheduling and proving delays then discussed here. The bottom line is having strong project management requires an understanding of scheduling or utilizing the appropriate scheduling consultant to best achieve the successful and profitable completion of a project.

David Adelstein practices construction law throughout Florida. He has represented contractors, subcontractors, design professionals, developers, associations, suppliers, sureties, and owners in a myriad of construction matters including, without limitation, construction / design defect claims, schedule-based claims (including inefficiency, lost productivity, and acceleration claims), bid protests, payment disputes, lien and bond claims, liability and property insurance issues, and a host of other issues that affect the construction industry. He can be reached as follows:

Website: http://www.floridaconstructionlegalupdates.com/

Address: Kirwin Norris, P.A.
110 East Broward Boulevard, Suite 1570
Fort Lauderdale, Florida 33301

Email: dma@kirwinnorris.com

Phone: (954) 759-0026
Fax : (954) 759-0028

Jul 262013
 

construction-schedule-complex-projectThings change rapidly on construction projects: the site changes; the weather changes; personnel and equipment change; the design changes. Impacts and challenges occur that must be overcome. The original plan for the project may quickly become obsolete. As a result, on nearly all construction projects the schedule needs to be updated on a regular basis to ensure that it reflects the team’s current plan for completing the project.

This article provides a step-by-step method for updating and modifying a construction project schedule to reflect the current project status.

Why schedules are updated

Schedules are updated at regular intervals in order to:

  • Evaluate a project’s status
  • Predict the completion date
  • Create a historical record of the project

The most important reason for a schedule is to track and monitor project status. The status of each activity should be evaluated independently in order to serve as the basis of evaluating the project’s overall status.

Almost all construction projects require that the project be substantially completed by a specified date or within a specified duration of calendar days. If a contractor fails to complete the project on time, the contractor may be charged liquidated damages or be liable for actual damages for each day the project is late. Thus, it is very important that the team know the currently-forecasted completion date so that the plan can be adjusted as necessary to mitigate delayed completion.

Historical update information can be used as a basis to plan and schedule future projects. It can also be a useful in a claims situation or if a forensic schedule analysis is needed to analyze and identify liability for project delays.

Establishing a baseline schedule

In order to be meaningful, there has to be an official baseline schedule to compare against in order to determine a project’s status. The baseline schedule is the starting point in preparing a schedule’s update. The current baseline is the contemporaneous schedule in effect since the last time the schedule was updated. The baseline schedule is the schedule that progress and the affect of changes since the last update are measured against and analyzed.

Frequency of updates

The frequency of updates should be determined by:

  • The project’s complexity
  • The frequency of unexpected events
  • As specified by the contract

The more complex a project, the greater need for more frequent updates. Complex projects have more entities working at the same time, thus they require more coordination.

When an unexpected event occurs that will impact the ability to complete the project on time, the schedule should be updated. The updated schedule will become a valuable tool in order to develop strategies to overcome and mitigate the impact of the unexpected event.

At a minimum, the schedule should be updated as specified in the contract documents. For most projects, the schedule is updated monthly to correspond with the contractor’s pay applications. Monthly updates are normally sufficient, however some sophisticated owners require weekly or bi-monthly schedule updates.

Florida Consultants seeks to educate and inform by way of our blog. We choose such topics because we know them, inside and out. If you have further questions about how to update a project’s schedule, this post will be continued in Part 2, where we outline the step-by-step procedures.. We’re also available via phone and form for your questions or comments!

Jun 162013
 

danger

It is common for construction projects to experience delays throughout the life of the project, which can cause serious financial losses. In some cases, delay claims are asserted to make up for some or all of the expenses incurred. Experts are often retained to look into documents, methods, schedules, and events that affected the construction project in order to determine if the claim is valid and to identify the issues that caused the delay.

There are many different delay analysis methods, to say the least. It’s imperative to know which analysis method the expert is using because some have serious flaws and inherent weaknesses. They have many different names and it can be confusing:

  • Total Time
  • Impacted As-Planned
  • Windows Analysis
  •  As Built Critical Path
  • Collapsed As-Built
  • Time Impact Analysis
  • Fragnet Analysis
  • Contemporaneous Period Analysis

For example, in an important ruling by the Armed Services Board of Contract Appeals (ASBCA) in Haney v. United States (ASBCA No. 23392) the expert’s impacted as-planned delay analysis method was rejected for being “inherently biased, and could lead to but one predictable outcome.”

Thus one must be wary of which method the supposed expert is using. Why pay an expert thousands of dollars to perform an analysis only to have it rejected by the court or board?

There are two delay analysis methods that are both widely accepted and recommended, Time Impact Analysis and Contemporaneous Period Analysis.

 Time Impact Analysis

 Sometimes called “fragnet analysis,” Time Impact Analysis (TIA) is appropriate as a forward-looking method for analyzing delays before the event occurs. That means that it is used during the project to estimate and evaluate the time impact of changed or added work so it can be compared with the current schedule.

In this method, the analyst updates the project schedule as of the day the change or added work was scheduled to occur. The analyst then develops a “fragnet” or fragmented network of activities that represent the changed or added work. An example of a fragnet might be the following activities, all linked with finish-to-start relationships:

Submit RFI #5 – 1 workday

Government Response to RFI#5 – 15 workdays

Contractor Review Government’s Response to RFI#5 – 1 workday

Complete Change Work – 7 workdays

The fragnet is then inserted into the updated schedule and a comparison can be made to the forecast completion or milestone date to determine the time impact, if any. TIA is required by contract on most federal government construction projects.

Contemporaneous Period Analysis

Contemporaneous period analysis is typically used in a forensic schedule analysis conducted after the project is completed. This method uses the contemporaneous project schedules that were developed and maintained during the project.

The critical path is the main focus of this analysis. The critical path is followed day-by-day to the project’s completion date, while taking into account the progress (and lack thereof) of all of the activities in the schedule. Its strength is in how the dynamic nature of network scheduling is recognized and handled. This method not only identifies the magnitude of every delay or gain along the critical path, but it identifies when the critical path shifts and why the shift occurred.

Another important aspect of contemporaneous period analysis is that it identifies and isolates delays or gains caused by changes or revisions to the schedule during the update process. For example, sometimes changes are made to schedule logic and durations in order to mask a critical path delay that has occurred. So even if there is no readily-apparent delay shown in a published schedule update, contemporaneous period analysis can uncover these changes and identify separately the delays due to lack of progress and changes made to the schedule logic to mask those delays.

Contemporaneous period analysis is often referred to as an “observational” method, as the analyst is using the schedules as they are. This is the biggest difference from TIA and other delay analysis methods, as he or she is not creating, inserting, or deleting activities in the schedule.

The main idea behind contemporaneous period analysis is to retroactively adopt the perspective of the personnel onsite as the delay occurred. Thus, delays are measured using the actual schedules that the project team and the owner used to make decisions.

Steps for performing a contemporaneous period analysis:

  1. Identify delays and gains between updates
  2. Chronologically track progress along the critical path
  3. Assess each activity separately
  4. With each delay, adjust the succeeding planned activities, taking these delays into account

Delay claims are some of the most complicated types of claims to analyze, as construction projects have many moving parts and opportunities for the critical path to change or slip. If you’re considering having an analyst perform a delay analysis on a project, ensure that he or she is using a well-respected method to avoid having the product of your time and money rejected in court.

At Florida Consultants, we are confident in the validity and reliability of our results and use only the most established and accepted methods of delay analysis. Contact us today for more information or with any questions you may have.