2010 aacei great debate - approval of schedule revisions

The Great DebateShould Schedule Revisions Require

Owner Approval?

Should Schedule Revisions Require Owner Approval?

• The Debaters:

• Pro position debated by the team of Chris Carson and Mark Boe– affectionately called “The Naysayers”

• Con debated by the other team of Mark Sanders and Carmelita Thorndike – just call them “The Manipulators”

• Now, for those that are unenlightened enough that they don’t know these famous orators, a few biographical facts:

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Carmelita Thorndike

• The SCL COO, Contractor Rep (you want what? when?)

• Represents the Contractor viewpoint

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Mark Boe, P.E., PSP, all around good guy

• Master of the “it depends” response (Partner in charge of RFIs)

• Represents the Owner viewpoint

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Mark Sanders, P.E., PSP, CCE

• Contractor – friendly consultant (ohhh, the poor contractor!)

• Represents the Contractor viewpoint

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Chris Carson, PSP, CCM, PMP

• Pure and Subjective Owner CM (never met a change order he liked)

• Represents the Owner viewpoint

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• NOTE:

• The Pro position is that revisions should require Owner approval

• The Con position is that revisions should be allowed without approval and should not require Owner approval

• The terms come from shortening of the Latin phrase, “pro et contra” which means “for and against”

• Now for some background to frame the debate…

• These slides look like they were designed by the cost engineers.

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• Definitions– Schedule Revisions

• Any change to the schedule except for progress updates

• Serious changes to network logic and/or durations

– Schedule Updates

• Progress only

• No changes to any logic, durations, calendars, lags, constraints, or other

software settingssoftware settings

• And we choose:– Schedule Revisions

• Serious changes to network logic and/or durations

• Minor changes to accommodate project management minor changes to

plan are included in schedule updates

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• Available Owner Actions– Silence (as Donald calls it) of the owner – receipt only, no response to schedule

submission

• Owner anticipates that the schedule will meet the schedule specifications

• Owner does not provide any response to the schedule

– Review and acceptance

• Owner acknowledges schedule contains no conflicts with their needs

(milestones, Owner responsible work, access)(milestones, Owner responsible work, access)

• Owner checks to see that schedule meets schedule specs

• Owner review comments on issues with the statement above

– Review and Approval or Rejection

• Owner reviews for technical accuracy, and agrees that the project is

constructible as represented in the schedule

• Owner review comments clarify approval of constructability

• Owner review comments on any technical issues, generally providing

deficiencies and best practice violations (hopefully separately)

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• Available Contractor Actions for Submissions– Contractor language indicating silence is approval (Donald)

– Failure to submit schedule

– Failure to respond to Owner’s comments

– Rebuttal of Owner’s comments

– Build claim

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• Legal positions concerning approval (see end):– oDoes it matter where a schedule is approved or not?

– oHow does it affect time extension requests?

– oHow does it affect forensic claims?

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• When a schedule is approved there is a rebuttable presumption of correctness or reasonableness of the schedule. Santa Fe, Inc., VABCA No. 2168, 87-3 BCA ¶ 20,104 (1987). – Because of this rebuttable presumption of the reasonableness of the

schedule where an approval is in place, many Owners are afraid of approving any schedule much less an early completion schedule. approving any schedule much less an early completion schedule.

– However, the approval process is the only chance for the Owner to weigh in on overly aggressive or erroneous schedules (with all float removed, defective logic, unauthorized inclusion of constraints, unrealistically short approval cycles, etc.).

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• Case law holds that even where a schedule has been approved it will be thrown out if it contains unrealistic logic and/or durations. – See e.g. Neal & Co. v. United States, 36 Fed. Cl. 600 (1996); Hensel

Phelps Construction Co., ASBCA No. 49270, 99-2 BCA par 30,531 (1999).

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• Owners and/or their Construction Managers will occasionally refrain from approving or acting upon a Contractor’s proposed schedule because they fear that their response can later be used by the Contractor as acceptance of the schedule and the Owner’s responsibility under the schedule. – In many cases, this type of forbearance is unsuccessful. Courts have – In many cases, this type of forbearance is unsuccessful. Courts have

imposed implied obligations upon Owners with regard to the schedule despite the Owner’s silence.

– In one case, when an Owner even orally disclaimed parts of the schedule but failed to actually reject the Contractor’s initial proposed schedule, the Owner was held to be bound to time durations contained in the submitted schedule. Fullerton Constr. Co., ASBCA No. 12275, 69-2 BCA ¶ 7876 (1969). See also G. Blindzius Contractors, Inc., ASBCA No. 37707, 90-2 BCA ¶ 22,835 (1990).

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NOW, ON TO THE DEBATE!

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• Doesn’t the Contractor own the schedule?– Pro – Project is for the use of the Owner

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• Doesn’t the Contractor own the schedule?– Con – Contractor has risk of performance

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• Shouldn’t the Schedule model the project plan?– Pro – Updated schedules will be the basis for future Time Impact Analyses

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• Shouldn’t the Schedule model the project plan?– Con – Nimble project management requires that the Contractor make changes

constantly to keep up with field decisions and deviations

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• Didn’t the Owner already review and approve the original baseline schedule?

– Pro – Why should new revised schedules escape this scrutiny?

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– Con – Update is a different condition; owner already knows means and methods

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• Isn’t the approval process difficult?– Pro – Analysis must be done anyway, just another step

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• Isn’t the approval process difficult?– Con – Adds another cycle or requires dual schedule submission, and what

happens when Owner wants to reject revisions?

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• How to handle time frame for review/comment/approve?– Pro – Can be done easily during update review

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• How to handle time frame for review/comment/approve?– Con – Takes too much time away from management

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• Doesn’t the Owner provides a double check that all scope is included?

– Pro – Raises quality of schedule & ensures that predictions of completion are more accurate

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• Doesn’t the Owner provides a double check that all scope is included?

– Con – Scope and performance risk is up to Contractor

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• Doesn’t the Contractor own the schedule?– Pro – Project is for the use of the Owner

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• Doesn’t the Contractor own the schedule?– Con – Contractor has risk of performance

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• Shouldn’t the Schedule model the project plan?– Pro – Updated schedules will be the basis for future Time Impact Analyses

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• Shouldn’t the Schedule model the project plan?– Con – Nimble project management requires that the Contractor make changes

constantly to keep up with field decisions and deviations

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– Pro – Why should new revised schedules escape this scrutiny?

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– Con – Update is a different condition; owner already knows means and methods

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• Isn’t the approval process difficult?– Pro – Analysis must be done anyway, just another step

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• Isn’t the approval process difficult?– Con – Adds another cycle or requires dual schedule submission, and what

happens when Owner wants to reject revisions?

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• How to handle time frame for review/comment/approve?– Pro – Can be done easily during update review

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• How to handle time frame for review/comment/approve?– Con – Takes too much time away from management

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• Isn’t there a risk of claims positioning in revisions?– Pro – Owner must have ability to enter into discussion about claims positioning

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• Isn’t there a risk of claims positioning in revisions?– Con – Claims only happen when there is an impact event or productivity drag

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• Shouldn’t the Owner must have input into how its work interfaces with schedule changes ?

– Pro – Contractor often does not include Owner responsible work, such as review time, or Owner-furnished equipment delivery

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• Shouldn’t the Owner must have input into how its work interfaces with schedule changes ?

– Con – Schedule has milestones and information for Owner to use

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• Don’t changes in the schedule make it harder to monitor and compare?

– Pro – Analysis must be done anyway, just another step

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• Don’t changes in the schedule make it harder to monitor and compare?

– Con – Adds another cycle or requires dual schedule submission, and what happens when Owner wants to reject revisions?

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• Shouldn’t the Owner have an expectation that the Contractor will build according to submitted baseline?

– Pro – Owner’s plans are based on baseline schedule, any deviations must be reviewed

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• Shouldn’t the Owner have an expectation that the Contractor will build according to submitted baseline?

– Con – Owner can watch the schedule and must be flexible enough to allow progress, including changes in plan

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• Shouldn’t the Owner have an opportunity to run risk management on the revised schedule?

– Pro – Risk management is a serious need and requires constant review

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• Shouldn’t the Owner have an opportunity to run risk management on the revised schedule?

– Con – Risk of performance is Contractor’s

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• Aren’t there Liquidated Damages for late completion?– Pro – Goal is for the project to finish on time, not to earn LDs

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• Aren’t there Liquidated Damages for late completion?– Con – Risk of LDs should be enough control for Owner

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• Shouldn’t the Owner be allowed to protect against early completion schedules produced during updates?

– Pro – Float is generally available to first need, early completion schedules can be a Contractor’s attempt to take possession of float

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• Shouldn’t the Owner be allowed to protect against early completion schedules produced during updates?

– Con – Good progress will cause this situation anyway

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• Doesn’t the Owner have a right to ensure schedule includes resource planning and availability?

– Pro – Failure to continue to plan for resource availability will ensure failure of project

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• Doesn’t the Owner have a right to ensure schedule includes resource planning and availability?

– Con – Risk and resource availability is up to Contractor

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• Can’t the Owner reject the submitted revised update schedule anyway?

– Pro – Better to know it immediately than later when it causes a problem

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• Can’t the Owner reject the submitted revised update schedule anyway?

– Con – Exactly, if Owner disapproves, schedule is worthless to Contractor for management

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• Doesn’t the process of review and approval result in better negotiated schedule changes?

– Pro – This is a good thing, better to negotiate than to wind up in a claim situation

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• Doesn’t the process of review and approval result in better negotiated schedule changes?

– Con – Just increases the burden on an already overworked project manager and field staff

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• This Debate is Terminated for Convenience!!

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You have just the skills we need in a consultant


• In the 2005 AACE International Transactions, Pat Galloway states in her paper on “CPM Scheduling and How the Industry Views Its Use”,

– “Owners have a variety of reasons that they specify revisions in their specifications. The largest response as to why a schedule revision was required was equally shared, 72 percent between:

• Project behind Schedule

• Change Orders. • Change Orders.

– The next major reason cited was critical path changes, 56 percent.

– Other reasons noted by Owners for requiring schedule revisions included:

• Resource changes for either manpower or equipment.

• Logic changes/duration changes/or Contractor sequence changes.

• When requested by the Owner.

• When time extensions are approved.”

• All these reasons might result in a revision, no matter whether the Owner requested them or not

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• In the 2005 AACE International Transactions, Jim O’Brien and Earl Glenwright state in their paper, “Contemporary Controversies – Circa 2005”– “A schedule cannot be continuously changed if the project is to be

completed 'as scheduled'.”

– “Deviations from the 'planned' schedule will always occur for no other reason than the planned durations and resource performance are estimates. The deviation must be watched as a sequence of activities is estimates. The deviation must be watched as a sequence of activities is accomplished.

– When the deviation[s] become a problem then corrective action must be taken but the planned schedule is not changed. The corrective actions are taken to put the project back on the planned course.”

• This position supports not keeping the schedule model current with the plan, following this philosophy, revisions would not be an issue.

• Reactions?

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• How do today’s schedules with resource and/or cost loading deal with full or partial acceptance by Owner? (suggestion by Donald McDonald)

• Assuming cost and resource loaded schedules, does that change the argument?

– Pro – No, it gets even more important that Owner has ability to review and – Pro – No, it gets even more important that Owner has ability to review and approve

– Con – No, it just increased the complexity and time involved in allowing the Owner to review and comment

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• So, what’s the answer? Approve or not?

• VOTING TIME!

• Should Schedule Revisions Require Owner Approval?

– Yea -

– Nay -

• And the winners are:

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The Great DebateShould Schedule Revisions Require

Owner Approval?

2010 aacei great debate - approval of schedule revisions

Technology

owner approval

schedule submission

schedule specifications

schedule review

schedule owner review

schedule failure

submitted schedule

definitions schedule