communication & marketing meeting - driver group … · • driver trett established in 2012...
TRANSCRIPT
Contract ManagementTraining to Keppel Seghers (3 & 4 September 2015)
Mark Castell – Regional Managing [email protected]
Our expert witness support service. World-class quantum,delay, and technical experts for litigation and provision ofinternationally experienced adjudicators, arbitrators, andmediators.
Provision of project management alongside transactionadvisory services to clients for the delivery of concessionprojects using PFI, PPP and DBFO procurement options.
Our project controls team, delivering commercialmanagement, quantity surveying, and planning servicesthroughout the project lifecycle.
Our dispute and advisory team, delivering high-levelcommercial and contract management, procurementadvice, planning and programming services, disputeresolution support and training and seminars.
What we do
• Driver Group is a global construction consultancy, providing
construction and engineering focused services since 1978
• Stock exchange listed plc. – AIM (2005)
• Driver Trett established in 2012 when Trett Consulting became
part of the Driver Group.
• Market leader in expert witness, planning, commercial and
disputes.
• Nearly 500 global staff. >£40m turnover.
• Network of offices across Europe, Africa,
Americas, Asia Pacific, and the Middle East.
• Global reach with projects undertaken
worldwide.
GROUP OVERVIEW
6
Q: What is a Contract?
A: Simply speaking, it is an agreement.
Q: What is the objective of a contract?
A: To define the relationship and how the
parties act – the ‘rules of the game’.
Q: What is common to every project?
A: Contracts, whether with a client, a
supplier or a subcontractor.
7
Q: What is contract management and
what does it cover?
A: Management of:Risks & opportunities
Change
Entitlement
Claims
The Client or Subcontractor
It should include the avoidance of Disputes
Is this not project management?
8
Q: When should the management of
contracts begin?
A: At the conception of a contract.
Q: When should the management of
contracts end?
A: At the finalisation of all matters.
Contracts involve a process – from ‘conception to grave’
Understanding the clients’ needs and the risks involved
Making an offer, or tender
Forming a legal agreement
Understanding the parties’ obligations under the agreement
Monitoring the parties’ actions against these obligations
Identifying any variance
Invoking the terms of the contract according to the circumstances
Issuing and / or receiving requests for payment and additional time
Agreeing financial and other matters
9
10
From time to time, you may have experienced a bad
contract. What do we mean by the term ‘bad
contract’?
Discrepancies / anomalies
Unclear wording
Too much risk
Technical difficulties
Price too low
Schedule too tight
etc10
1111
Q: Is it true (or fair) to say that a bad
contract is the fault of those involved
at the tender stage?
A: No. Why?
Q: Is it true (or fair) to say that an
unprofitable project is the fault of those
involved at the implementation stage?
A: No. Why?
Q: Who is involved in managing a contract?
A: Everyone within the business...
12
I suggest that this could be the key
challenge with respect to contract
management
Revised Q: Who should be involved in
managing a contract?
Managing contracts must be ‘from conception to grave’;
hence, course agenda
Pre-contract phase Tendering Procurement and sub-contracting Contracts and letters of intent
Introduction to FIDIC standard forms
Implementation phase Setting up the project Planning and progress
Commercial issues Management of change Claims – time and / or money Dispute Resolution
13
Contract Management Workshop Objectives
To:
Increase your awareness and understanding of contract management.
Demonstrate how you can improve Keppel Seghers contractual and commercial position in both the pre-contract and post-contract phases of projects.
Introduce the main FIDIC standard forms of contract.
Explain the philosophy of the main FIDIC standard forms of contract and what their use means.
14
The tender stageWhat is its main purpose?
Pre-contract phase
Photograph credits to FreeDigitalPhoto.net & Grant Cochrane
The priority is for a tenderer to understand what will beexpected of him.
This involves:
Studying all parts of the RFQ or tender documents. Verify all documents have been received
Verify the correct documents have been received
Recognising the responsibilities to be placed on the parties.
Risk and opportunity management. Identification
Quantification
Evaluation
16
The client will have considered risk allocation.Remember:
Risk should be allocated to the party best able to manage it.
Standard Forms of Contract (such as one of the FIDIC forms)
generally allocate risk reasonably and fairly.
What type of risks should be considered?
17
Some Contracting Risks
1. Clear scope of work
2. Provision of bonds, guarantees
3. Security for payment
4. Physical conditions and access
5. Practicality of schedule dates
6. Use of specialist suppliers/sub contractors/ third parties
7. Extension of time provisions
8. Safety provisions
More Contracting Risks
1. Clarity of the contract wording and provisions (no
discrepancies)
2. Wording and provisions that can be easily understand
by all concerned
3. Document submittals at, or just after commencement
4. Conditions precedent clauses
5. Notice requirements
6. Requirement for record keeping
7. Change process
8. Claims process
Manner in which contract was secured
The consultants and their roles
The level of definition of the works
Feasibility
The procurement status
Financial circumstances
Political aspects
Legal / contractual
New concept
20
Contracting risks are often indicated by:
Apart from risk allocation, why else should major revisions
to Standard Forms of Contract be considered carefully by
tendering contractors?
21
The revisions may prevent the contract from working in certain circumstances.
In other words, links from one clause to another may be broken.
22
To understand the customer’s needs
To see whether the proposed contract describes the same
thing
To influence the customer’s way of thinking
To influence the provisions of the contract (terms and
conditions)
To influence the allocation of risk
To agree the duration for undertaking the works
To agree the price for undertaking the works
To agree security of payment
etc
What opportunities exist at tender stage?
Management of the tender stage also requires.
Clarifying the responsibilities and / or risks. Document control essential – single point communication?
Register of questions and answers – summarises status
Records of any verbal discussions and meetings – how?
Establishing a commercial strategy for the project.
23
Risk should be allocated to the party best able to manage it.
In sub-contract relationships, risk that is passed on should be stepped down.
Sometimes risk is retained at main contractor level.
Risk sharing and allocation
Examples of typical risks
Clear scope of work (including design) and interface
Provision of bonds and guarantees
Practicality of programme dates within overall duration
Extension of time provisions
Notice and reporting provisions
Safety provisions
If we are main contractor, what do we want to happen with these risks in our subcontracts?
If we are a subcontractor, what do we want to happen with the contents of the main contract?
Which terms and conditions are to be used for a subcontract?
The ‘main’ contract conditions?
Revised ‘main’ contract conditions? If so, how to revise?
The Keppel Seghers standard terms?
Revised Keppel Seghers standard terms? If so, how to revise?
The phrase ‘back to back with the main contract’? If so, what
does it mean?
28
Back to back
A commonly used phrase that can lead to practical problems
How can ‘applying the provisions of a main contract to a
subcontract’ work in practice?
Is Contract Price the same as Subcontract Price?
Are all the main contract conditions applicable?
Involvement of the client (i.e. approvals)?
Values of bonds?
Insurance coverage?
It’s not a shortcut for proper drafting of sub-contracts
Can create a strong potential for disputes29
30
Examples of subcontract wording…
Article 3.1 says that ‘Subcontractor shall be deemed to have full knowledge of the provisions of the Main Contract...Contractor shall (if requested) make available a copy of the Main Contract.
Article 3.2 says ‘Subcontractor shall carry out and complete Subcontract Works so that no act or omission of the Subcontractor shall result in any breach of the Main Contract by the Contractor.
Article 3.3 says ‘to the extent that such obligations and liabilities relate to the Subcontract Works, the Subcontractor shall perform the obligations and assume the liabilities of the Contractor under the Main Contract.’
Article 3.4 says ‘Subcontractor shall indemnify the Contractor against any claim, arising from any breach or non observance of such obligations or non compliance therewith.’
Which terms and conditions are to be used for the subcontract?
The ‘main’ contract conditions?
Revised ‘main’ contract conditions? If so, how to revise?
The Keppel Seghers standard terms?
Revised Keppel Seghers standard terms? If so, how to revise?
All can work but in all cases, the parts of the main contract
relevant to the subcontract need identifying (and possibly
revising), and then be incorporated into the subcontract.
31
33
A Contract is an agreement, which
should be based upon the mutual
understanding that was built up in
the tender stage.
‘Contractual agreement’
But, to be a legal contract, there must be:
Capacity (i.e. authority)
Offer, acceptance and consideration
What is what?
What is a counter offer?
34
35
You receive a Purchase Order from a customer that does not
refer to a Keppel Seghers quotation or terms.
The Purchase Order includes certain terms and has on the
back of the document, the customer’s general terms and
conditions.
The first general term and condition says that “acceptance of
this order constitutes unconditional acceptance of these conditions”.
What is the Purchase Order?
What should you do?
Offer and Acceptance with POs
‘Contractual agreement’
But, to be a legal contract, there must be:
Capacity (i.e. authority)
Offer, acceptance and consideration
What is what?
What is a counter offer?
A requirement (i.e. the scope of work)
A willingness to undertake the requirement
Terms of contract for the requirement
36
Contract terms comprise
Express terms
Implied terms – generally from Statute or Civil Code
To provide for changes in scope i.e. variations
To provide for changes in duration i.e. EoT
To allocate responsibilities and risksTo set out who does what and when
To provide for time and money
Failure to comply is a breach of contract
Follow contractual procedures if an express term
If an implied term, potential claim for damages
Stated damages for delay
Stated damages for late completion allow definition of risk, if it is the only remedy for delay.
If none stated, damages still apply.
Liquidated damages (LDs) must be a genuine pre-estimate of the likely damage and not a penalty (under English Law).
Who’s problem is it?
Who should resolve it?
What can you do / ensure happens?
It is the customer’s problem.
It may however, be in your interest to start.
Resolution needs to be undertaken together.
But you must ensure the basis upon which work is
started should be defined in writing
Letters of Intent
Advantages:
When customers / employers are faced with time constraints in negotiating full contract documentation
To enable the start of the procurement process where there are long lead in times, or the start of engineering
Alternative to delaying contract commencement
Offers protection to the contractor
One available option is....
Letters of Intent
Difficulties:
Sometimes unclear as to the extent of the parties’ commitment (i.e. entire project, initial works)
Are they binding? Often, one party’s intention towards another and no agreement.
Sometimes the description of work to be performed or material to be procured is inadequate
Letters of Intent
Required inclusions for agreement:
A full description of the work to be done and a direction to start work
The time period or end date that the work must be done by
The payment to be made – maybe a maximum
The terms and conditions governing the work
Part 1
Example Letter of Intent sent by main contractor to sub-contractor
“As you know from our meeting this morning, we have just received a letter of
intent from [X] for the [Y] project, which includes your [equipment].
In our turn, we are pleased to confirm that it is our intention to enter into a sub
contract with [you] for your [equipment], this will be generally be on the basis of
the Sub Contract document that we discussed this morning (ref…)
We also agreed that we would incorporate your final comments on the draft Sub
Contract and that you would provide details of the Advance Payment Bond, on-
demand Performance Bond and insurance that you can offer.
The main contract commencement date is…
Please acknowledge receipt.”
Please consider what this letter is saying and what your response would be
Part 2
Second example Letter of Intent sent by main contractor to sub-contractor
“This is to place a letter of intent (LOI) for [W] works to [X] ... by [Y] … strictly in
accordance with the following terms and conditions and to give an authorisation to
proceed immediately with the engineering, procurement and manufacturing in
accordance with this requisition.”
Sections then cover matters including:
Scope and Price
Payments Terms
Delivery Terms and Date
Contract Documents
Etc.
Consider what this letter is saying and what your response would be
FIDIC(Fédération Internationale des
Ingénieurs-Conseils)
Federation of national associations of consulting engineers
Based in Geneva
Founded in 1913 with original founding members from France, Belgium and Switzerland
UK joined 1949, USA joined 1958
Seen as international from 1970s and members from about 70 counties
FIDIC aims
High ethical standards
High professional standards
Development of engineering profession in developing countries
FIDIC documents
Standard Forms of Contracts – since 1957
Guides to Standard Forms of Contracts
Tendering procedures
Model Agreements
General principles of FIDIC Standard Forms of Contract - 1
Often known by their colour i.e. red, yellow, silver, blue.
Historically based on Anglo Saxon type contracts. So, more reliance on documentation.
Drafted for general use on an international basis. So,applicable law and ruling language needs to be stated.
Modifications may be required in some jurisdictions. These should be included as revisions.
General principles of FIDIC Standard Forms of Contract - 2
FIDIC standard forms are generally accepted to be well-written and capable of being understood by users.
They recognise there will be problems and potential for conflict and dispute on projects but set out processes to resolve them including:
Placing a significant administrative burden on the parties and;
Requiring the parties to deal with issues at the time.
Current FIDIC Main Standard Forms of Contract
Green (1999)Blue (2006) Red (1999) Pink (2010)
Yellow (1999) Silver (1999) Gold (2008)
Current FIDIC Main Standard Forms of Contract
Green book.Short Form
Blue book.Dredgers Contract
Red book.Construction
Contract
Pink book.MDB
Construction Contract
Current FIDIC Main Standard Forms of Contract
Yellow book.Plant and
Design-Build Contract
Silver book.EPC/Turnkey
Contract
Gold book.DBO Contract
STRAIGHTFORWARDPROJECT ?< $500K or < 6 months
EMPLOYER DESIGN ?
CONTRACTOR DESIGN
All types of project withpotential for high unforeseenrisks
Little employer involvementno major unforeseen risks
no
noyes
Otherwise, which contract should be used?
yes
yes
Ongoingoperation no
yes
no
yes
Generally – Red Book
FIDIC produces the General Conditions (20 clauses) and anticipates separate Particular Conditions to be used (notes for guidance are included).
Appendix to Tender used to contain project-specific information.
Forms of Letter of Tender, Contract Agreement (including Appendix to Tender), Dispute Adjudication Agreement and Forms of Securities are included.
Letter of Acceptance signifies a contract has been entered into.
Tenderers issued with Specification, Schedules (includes Bill of Quantities) and Drawings
Clause 1 - General Provisions
Clauses 2 to 4 – The Employer, the Engineer and the Contractor
Clause 5 – Nominated Subcontractors
Clauses 6 and 7 - Staff, labour, plant, materials and workmanship
Clause 8– Commencement, delays and suspension
Clauses 9 and 10 – Tests on Completion and Employer’s Taking Over
Clause 11 - Defects Liability
Clause 12 – Measurement and Evaluation
Clause 13 – Variations and Adjustments
Clause 14 – Contract Price and Payment
Clauses 15 and 16 – Termination and suspension
Clauses 17 to 19 – Risk, Insurance and Force Majeure
Clause 20 – Claims, Disputes and Arbitration
Red Book General Conditions
65
Generally – Red Book
Clause 1 includes:
Definitions (sub-clause 1.1).
Communications shall be in writing, transmitted using specific methods and to the addresses stated in Appendix to Tender. Allowable electronic systems of transmission also stated in Appendix to Tender (clause 1.3).
Applicable law and ruling language stated in Appendix to Tender (sub-clause 1.4).
Priority of documents provisions (sub-clause 1.5).
Contract Agreement to be put into place after contract entered into if Letter of Acceptance used (sub-clause 1.6).Otherwise, signifies contract entered into.
Generally – Red Book
Employer has a limited role after contract is signed (clause 2).
Engineer appointed as representative of Employer acting after contract is signed (sub-clause 3.1).
Engineer can delegate specific duties and authority to assistants (sub-clause 3.2).
Contractor shall comply with instructions in respect of the Works given by the Engineer (sub-clause 3.3).
Contractor appoints Contractor’s Representative who is the only person authorised to receive instructions (sub-clause 4.3).
Generally – Red Book
Contractor to commence Works on the Commencement Date and complete within the Time for Completion (sub-clauses 8.1 and 8.2).
Provision for Tests on Completion (clause 9).
Employer issues Taking Over Certificate to signify works are ready for taking over and not necessary complete (sub-clauses 10.1 and 10.2).
Period for undertaking outstanding work and remedying defects stated in the Appendix to Tender (sub-clause 11.1).
Performance Certificate issued at the end of Defects Notification period and confirms Employer acceptance of the Works (sub-clause 11.9)
Generally – Red Book
Works to be valued on a re-measurable basis (clause 12).
Only the Engineer (or delegated assistants) can vary the Works (sub-clause 13.1).
Variations is a defined term.
The Engineer certifies the monthly interim payments to be paid to the Contractor (clause 14).
Notice shall be issued by Contractor whenever it considers it to be entitled to more time and / or money and within 28 days of being aware (or should have been aware). Failure to comply means a loss of rights to claim (sub-clause 20.1).
Subsequent procedure for submission of any claims also subject to timescales (sub-clause 20.1).
DAB appointed to resolve disputes (sub-clause 20.2).
Generally – Yellow Book
FIDIC produces the General Conditions (20 clauses) and anticipates separate Particular Conditions to be used (notes for guidance are included).
Appendix to Tender used to contain project-specific information.
Forms of Letter of Tender, Contract Agreement (including Appendix to Tender), Dispute Adjudication Agreement and Forms of Securities are included.
Letter of Acceptance signifies a contract has been entered into.
Tenderers issued with Employer’s Requirements
Clause 1 - General Provisions
Clauses 2 to 4 – The Employer, the Engineer and the Contractor
Clause 5 – Design
Clauses 6 and 7 - Staff, labour, plant, materials and workmanship
Clause 8– Commencement, delays and suspension
Clauses 9 and 10 – Tests on Completion and Employer’s Taking Over
Clause 11 - Defects Liability
Clause 12 – Tests after Completion
Clause 13 – Variations and Adjustments
Clause 14 – Contract Price and Payment
Clauses 15 and 16 – Termination and suspension
Clauses 17 to 19 – Risk, Insurance and Force Majeure
Clause 20 – Claims, Disputes and Arbitration
Yellow Book General Conditions
72
Generally – Yellow Book (as Red Book)
Clause 1 includes:
Definitions (sub-clause 1.1).
Communications shall be in writing, transmitted using specific methods and to the addresses stated in Appendix to Tender. Allowable electronic systems of transmission also stated in Appendix to Tender (clause 1.3).
Applicable law and ruling language stated in Appendix to Tender (sub-clause 1.4).
Priority of documents provisions (sub-clause 1.5).
Contract Agreement to be put into place after contract entered into if Letter of Acceptance used (sub-clause 1.6).Otherwise, signifies contract entered into.
Generally – Yellow Book (as Red Book)
Employer has a limited role after contract is signed (clause 2).
Engineer appointed as representative of Employer acting after contract is signed (sub-clause 3.1).
Engineer can delegate specific duties and authority to assistants (sub-clause 3.2).
Contractor shall comply with instructions in respect of the Works given by the Engineer (sub-clause 3.3).
Contractor appoints Contractor’s Representative who is the only person authorised to receive instructions (sub-clause 4.3).
Generally – Yellow Book
Contractor to design and construct the Works so they are fit for the purposes for which the Works are intended as defined in the Contract (sub-clause 4.1).
Intended purpose must be specified in the Employer’s Requirements as defined in sub-clause 1.1.1.5.
Treatment of errors in the Employer’s Requirements provided for by the ‘experienced contractor test’ (sub-clause 5.1).
Resolution could be as a Variation or a claim.
Procedure for the Engineer to review and / or approve submitted documents (sub-clause 5.2).
Generally – Yellow Book (mainly as Red Book)
Contractor to commence Works on the Commencement Date and complete within the Time for Completion (sub-clauses 8.1 and 8.2).
Provision for Tests on Completion (clause 9) and Tests after Completion (clause 12).
Employer issues Taking Over Certificate to signify works are ready for taking over and not necessary complete (sub-clauses 10.1 and 10.2).
Period for undertaking outstanding work and remedying defects stated in the Appendix to Tender (sub-clause 11.1).
Performance Certificate issued at the end of Defects Notification period and confirms Employer acceptance of the Works (sub-clause 11.9)
Generally – Yellow Book (mainly as Red Book)
Only the Engineer (or delegated assistants) can vary the Works (sub-clause 13.1).
Variations is a defined term.
Works to be valued on a lump sum basis (clause 14).
The Engineer certifies the monthly interim payments to be paid to the Contractor (clause 14).
Notice shall be issued by Contractor whenever it considers it to be entitled to more time and / or money and within 28 days of being aware (or should have been aware). Failure to comply means a loss of rights to claim (sub-clause 20.1).
Subsequent procedure for submission of any claims also subject to timescales (sub-clause 20.1).
DAB appointed to resolve disputes (sub-clause 20.2).
Generally – Silver Book (as Yellow Book)
FIDIC produces the General Conditions (20 clauses) and anticipates separate Particular Conditions to be used (notes for guidance are included).
Appendix to Tender used to contain project-specific information.
Forms of Letter of Tender, Contract Agreement (including Appendix to Tender), Dispute Adjudication Agreement and Forms of Securities are included.
Letter of Acceptance signifies a contract has been entered into.
Tenderers issued with Employer’s Requirements
Clause 1 - General Provisions
Clauses 2 to 4 – The Employer, the Employer’s Administration and the Contractor
Clause 5 – Design
Clauses 6 and 7 - Staff, labour, plant, materials and workmanship
Clause 8– Commencement, delays and suspension
Clauses 9 and 10 – Tests on Completion and Employer’s Taking Over
Clause 11 - Defects Liability
Clause 12 – Tests after Completion
Clause 13 – Variations and Adjustments
Clause 14 – Contract Price and Payment
Clauses 15 and 16 – Termination and suspension
Clauses 17 to 19 – Risk, Insurance and Force Majeure
Clause 20 – Claims, Disputes and Arbitration
Silver Book General Conditions
80
Generally – Silver Book (as Yellow Book)
Clause 1 includes:
Definitions (sub-clause 1.1).
Communications shall be in writing, transmitted using specific methods and to the addresses stated in Appendix to Tender. Allowable electronic systems of transmission also stated in Appendix to Tender (clause 1.3).
Applicable law and ruling language stated in Appendix to Tender (sub-clause 1.4).
Priority of documents provisions (sub-clause 1.5).
Contract Agreement to be put into place after contract entered into if Letter of Acceptance used (sub-clause 1.6).Otherwise, signifies contract entered into.
Generally – Silver Book (different to Yellow Book)
Employer has a limited role after contract is signed (clause 2).
Employer’s Representative may be appointed to act on Employer’s behalf after contract is signed (sub-clause 3.1).[Prime duties restricted to monitoring progress, quality and testing]
Employer or Employer’s Representative can delegate specific duties and authority to assistants (sub-clause 3.2).
Contractor shall comply with instructions in respect of the Works given by the Employer or Employer’s Representative (sub-clause 3.4).
Contractor appoints Contractor’s Representative who is the only person authorised to receive instructions (sub-clause 4.3).
Contractor to design and construct the Works so they are fit for the purposes for which the Works are intended as defined in the Contract (sub-clause 4.1).
Intended purpose must be specified in the Employer’s Requirements as defined in sub-clause 1.1.1.5.
Contractor generally responsible for the accuracy of the Employer’s Requirements (sub-clause 5.1).
Procedure for the Employer or Employer’s Representative to review submitted documents (sub-clause 5.2).
Generally – Silver Book (different to Yellow Book)
Generally – Silver Book (as Yellow Book)
Contractor to commence Works on the Commencement Date and complete within the Time for Completion (sub-clauses 8.1 and 8.2).
Provision for Tests on Completion (clause 9) and Tests after Completion (clause 12).
Employer issues Taking Over Certificate to signify works are ready for taking over and not necessary complete (sub-clauses 10.1 and 10.2).
Period for undertaking outstanding wok and remedying defects stated in the Appendix to Tender (sub-clause 11.1).
Performance Certificate issued at the end of Defects Notification period and confirms Employer acceptance of the Works (sub-clause 11.9)
Generally – Silver Book (different to Yellow Book)
Only the Employer (or delegated assistants) can vary the Works (sub-clause 13.1).
Variations is a defined term.
Works to be valued on a lump sum basis (clause 14).
The Employer assesses the monthly interim payments to be paid to the Contractor (clause 14).
Notice shall be issued by Contractor whenever it considers it to be entitled to more time and / or money and within 28 days of being aware (or should have been aware). Failure to comply means a loss of rights to claim (sub-clause 20.1).
Subsequent procedure for submission of any claims also subject to timescales (sub-clause 20.1).[Responsibility for nearly all risk with the Contractor]
DAB appointed to resolve disputes (sub-clause 20.2).
Employer design
Contractor design
Re-measurable
Lump Sum
Low High
For each book:
1. Who has design responsibility?
2. What is the basis of valuation?
3. Who supervises the Works?
4. Where do you find the project specific data?
5. Arrange in the order of risk to Contractor (low to
high).
Exercise
Engineer
Employer’s Representative
Appendix to Tender
Particular Conditions
Employer design Contractor design
Re-measurable Lump Sum
Answer - 1
Engineer Engineer Employer’s Representative
Appendix to Tender
Particular Conditions anticipated
Appendix to Tender
Appendix to Tender
Particular Conditions anticipated
Particular Conditions anticipated
Contractor design
Lump Sum
Internal issues to be addressed
Organisational At project level Inter company conflict Role of Project Manager
Project definition Specified time, cost, quality Risk management Available resources
What happens at Keppel Seghers?
91
Have a process for transferring knowledge internally;
from tender to implementation personnel?
If so, what is discussed? Who is involved?
Do you?
Review your contract to identify obligations and the need for
project-specific systems?
If so, what for?
Notices Deliverables Discrepancies Securities and guarantees; insurance requirements Planning Payments Correspondence and reporting
Do you?
Have a kick off meeting with the client?
If so, what do you cover:
Confirmation and clarification of scope or uncertainties Agreement of formats / procedures for reporting and coordination Communication routes / details
How useful is a kick off meeting with the client when considering commercial strategy for a project?
Do you?
The Planning process
The planning process involves deciding
What to do
How to do it
When to do it
What resources to use
Planning and Programming
A programme is a project management tool used to monitor and control the project
It is not just a ‘picture’
97
Consider
Should the Contractor submit a programme (schedule) early in the implementation stage?
On what basis should this programme (schedule) be put together?
Should the submitted programme (schedule) be the ‘real’ one?
How should the programme (schedule) show sub-contracted works?
Should the programme (schedule) be agreed?
99
The programme (schedule) should:
Reflect Contract requirements (the baseline)
Show Contract milestones
Show intended sequence of works
Incorporate any resource constraints
Show the critical path
100
Sub-clause 8.1 - Engineer gives notice of Commencement Date
- Contractor shall proceed with due expedition and
without delay
Sub-clause 8.2 - Contractor shall complete in the Time for Completion
Sub-clause 8.3 - A detailed time programme to be provided within 28
days of notice to commence
- Engineer has 21 days to give notice if it does not
conform to the contract
- Contractor to proceed in accordance with it
- Revised programmes to be submitted in various
situations
FIDIC endorses these principles
The Critical Path - Why it is important?
Determines the earliest completion date for the project.
Determines the earliest and latest completion dates for
individual activities.
Calculates float.
Identifies which activities are important to the completion of
the project.
Identifies areas of risk.
Identifies areas where action should be taken to reduce the
project duration or recover from delays.
Critical path
The Critical Path - Shortest route between work and the pub
1
2
3
4
ActivityNo 1 2 3 4 5 6 7 8 9 10 11 12Time (days)
New Wall
13 14 15 16 17 18 19 20 21 22 23
5
6
7
8
Critical path analysis
Link Activity
Excavate the trench
Pour the foundation
Raise the brickwork
Place the coping
Complete
Critical Link
Critical Activity
1
2
3
4
ActivityNo 1 2 3 4 5 6 7 8 9 10 11 12Time (days)
New Wall
13 14 15 16 17 18 19 20 21 22 23
5
6
7
8
Critical path analysis
Excavate the trench
Pour the foundation
Raise the brickwork
Place the coping
Complete
1
2
3
4
ActivityNo 1 2 3 4 5 6 7 8 9 10 11 12Time (days)
New Wall
13 14 15 16 17 18 19 20 21 22 23
5
6
7
8
Critical path analysis
Critical Link
Critical Activity
Excavate the trench
Pour the foundation
Raise the brickwork
Place the coping
Complete
Order concrete
Design
Order bricks
1
2
3
4
ActivityNo 1 2 3 4 5 6 7 8 9 10 11 12Time (days)
New Wall
13 14 15 16 17 18 19 20 21 22 23
5
6
7
8
Critical path analysis
Excavate the trench
Pour the foundation
Raise the brickwork
Place the coping
Complete
Order concrete
Design
Order bricks
1
2
3
4
ActivityNo 1 2 3 4 5 6 7 8 9 10 11 12Time (days)
New Wall
13 14 15 16 17 18 19 20 21 22 23
5
6
7
8
Critical path analysis
Excavate the trench
Pour the foundation
Raise the brickwork
Place the coping
Complete
Order concrete
Design
Order bricks
1
2
3
4
ActivityNo 1 2 3 4 5 6 7 8 9 10 11 12Time (days)
New Wall
13 14 15 16 17 18 19 20 21 22 23
5
6
7
8
Critical path analysis
Excavate the trench
Pour the foundation
Raise the brickwork
Place the coping
Complete
Order concrete
Design
Order bricks
1
2
3
4
ActivityNo 1 2 3 4 5 6 7 8 9 10 11 12Time (days)
New Wall
13 14 15 16 17 18 19 20 21 22 23
5
6
7
8
Critical path analysis
Excavate the trench
Pour the foundation
Raise the brickwork
Place the coping
Complete
Order concrete
Design
Order bricks
Total Float
111
Make a programme (schedule) for:
When you are alone
When you have a friend helping
When you have two friends helping
Activity No Description Duration010 Apply hand brake 0020 Find spare wheel 2 min030 Check that there is air in the spare wheel 1 min
(if 020 & 030 are unsuccessful the whole sequence is obsolete)
040 Find something to chock wheels 2 min(safety should be planned into a project)
050 Chock car wheels 1 min060 Find car jack & wheel brace 2 min070 Loosen wheel nuts 6 min080 Position jack 3 min090 Raise car 4 min100 Remove wheel nuts 1 min 110 Remove wheel 1 min120 Install spare wheel 1 min130 Replace wheel nuts 1 min140 Tighten wheel nuts 2 min150 Lower car 1 min160 Final tighten wheel nuts 2 min170 Remove jack 1 min180 Stow jack, wheel brace & punctured wheel 2 min190 Remove chocks 1 min200 Wipe hands 1 min210 Complete 0
112
When you are alone
Barchart for Wheel Change - Alone (35 minutes)Activity Activity Description Duration Hour 1
No Minutes 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
10 Apply hand brake 0
20 Find and remove spare w heel 2
30 Check air in spare tyre 1
40 Find something to 'chock' w heels 2
50 Chock car w heels 1
60 Find and remove jack & brace 2
70 Loosen w heel nuts 6
80 Position jack 3
90 Raise car 4
100 Remove w heel nuts 1
110 Remove w heel 1
120 Install spare w heel 1
130 Replace w heel nuts 1
140 Tighten w heel nuts 2
150 Low er car 1
160 Final tighten w heel nuts 2
170 Remove jack 1
180 Stow jack, brace & punctured w heel 2
190 Remove chocks 1
200 Wipe hands 1
210 Wheel change complete 0
Legend :
Project : Wheel Change Current Plan
Date : 1 Jan 2015
Prepared by : Superplan
113
When you are with a friend
Barchart of Wheel Change - With a Friend (26 minutes)Activity Activity Description Duration Hour 1
No Minutes 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
10 Apply hand brake 0
20 Find and remove spare w heel 2
30 Check air in spare tyre 1
40 Find something to 'chock' w heels 2
50 Chock car w heels 1
60 Find and remove jack & brace 2
70 Loosen w heel nuts 6
80 Position jack 3
90 Raise car 4
100 Remove w heel nuts 1
110 Remove w heel 1
120 Install spare w heel 1
130 Replace w heel nuts 1
140 Tighten w heel nuts 2
150 Low er car 1
160 Final tighten w heel nuts 2
170 Remove jack 1
180 Stow jack, brace & punctured w heel 2
190 Remove chocks 1
200 Wipe hands 1
210 Wheel change complete 0
Legend :
Project : Wheel Change Driver Passenger
Date : 1 Jan 2015
Prepared by : Superplan
114
When you are with two friends
Barchart for Wheel Change - With 2 Friends (24 minutes)Activity Activity Description Duration Hour 1
No Minutes 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
10 Apply hand brake 0
20 Find and remove spare w heel 2
30 Check air in spare tyre 1
40 Find something to 'chock' w heels 2
50 Chock car w heels 1
60 Find and remove jack & brace 2
70 Loosen w heel nuts 6
80 Position jack 3
90 Raise car 4
100 Remove w heel nuts 1
110 Remove w heel 1
120 Install spare w heel 1
130 Replace w heel nuts 1
140 Tighten w heel nuts 2
150 Low er car 1
160 Final tighten w heel nuts 2
170 Remove jack 1
180 Stow jack, brace & punctured w heel 2
190 Remove chocks 1
200 Wipe hands 1
210 Wheel change complete 0
Legend :
Project : Wheel Change Driver Passenger
Date : 1 Jan 2015
Prepared by : Superplan 2nd Passenger
115
Resource planningBarchart for Wheel Change - With 2 Friends (24 minutes)
Activity Activity Description Duration Hour 1
No Minutes 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
10 Apply hand brake 0
20 Find and remove spare w heel 2
30 Check air in spare tyre 1
40 Find something to 'chock' w heels 2
50 Chock car w heels 1
60 Find and remove jack & brace 2
70 Loosen w heel nuts 6
80 Position jack 3
90 Raise car 4
100 Remove w heel nuts 1
110 Remove w heel 1
120 Install spare w heel 1
130 Replace w heel nuts 1
140 Tighten w heel nuts 2
150 Low er car 1
160 Final tighten w heel nuts 2
170 Remove jack 1
180 Stow jack, brace & punctured w heel 2
190 Remove chocks 1
200 Wipe hands 1
210 Wheel change complete 0
Legend :
Project : Wheel Change Driver Passenger
Date : 1 Jan 2015
Prepared by : Superplan 2nd Passenger Critical path
Driver
Passenger
2nd Passenger
116
Cha
ngin
g w
heel
40 2 50 1
10 0 20 2 30 1 80
60 1 70 1 90 3 100 4
110 1 120 1 130 1 140 1 150 2
170 2 190 1
160 1 180 1 200 1 220 1 230 0
210 1
zoek blokken
blokkeer de wielen
zoek krik en
verwijder wieldop
los de wielbouten
Trek handrem
zoek het reserve
controleer druk in
krik de auto
verwijder wiel
verwijder wiel
plaats reserve
maak handen
wiel is verwisseld
trek wielbouten
plaats wieldop
laat auto zakken
Plaats de krik
verwijder blokken/st
verwijder krik
berg krik, de sleutel
plaats wiel bouten
zet bouten vast
Issues to be addressed continued
Internal procedures
Planning (or scheduling)
Progress Reporting
117
The need for progress records & monitoring
Accurate assessment of status of project Accurate & agreed records in case of dispute Record and keep results
How deal with changes? Plot and compare results Analyse trends - predict the future Compare different trends
Contractor may not want to declare the actual status of project Contractor may not want accurate & robust records – confuse the
issue
Contractors Progress Records & Monitoring
Consider…
The items the contractor should include in its progress reports.
Should the contractor prepare different progress reports for
internal circulation to that submitted to the customer?
If so, what would be the differences?
119
Clause 4.21 – progress reports
To be submitted monthly from Commencement Date until completion of all work
Comprehensive - shall include:
a) Charts & descriptions of progress for each stage
b) Photographs
c) Manufacture report
d) Contractor’s personnel & equipment
e) QA documents, test results etc
f) Notices of claims (Employer’s and Contractor’s)
g) Safety statistics
h) Comparisons planned versus actual progress, risks and mitigation measures
120
FIDIC requirements
FIDIC standard forms place significant importance on
planning and progress. This is apparent by sub-clause 8.6
in the red, yellow and silver books:
“If, at any time:
1. Actual progress is too slow to complete within the Time for Completion,
and / or
2. Progress has fallen (or will fall) behind the current programme under
Sub-Clause 8.3…
other than as a result of a cause listed in Sub-Clause 8.4 [Extension of
Time]…121
Sub-clause 8.6 – rate of progress (continued)
…then the Engineer [Employer] may instruct the Contractor to submit…a revised programme…
Unless the Engineer [Employer] notifies otherwise, the Contractor shall adopt these revised methods, which may require increases in the working hours and / or in the numbers of Contractor’s Personnel or Goods, at the risk and cost of the Contractor…
…If these revised methods cause the Employer to incur additional costs, the Contractor shall subject to Sub-Clause 2.5 [Employer’s Claims] pay these costs to the Employer, in addition to delay damages (if any) under Sub-Clause 8.7 below.”
Issues to be addressed continued
Internal procedures
Planning (or scheduling)
Progress Reporting
Other submittals
123
Assuming a longer duration FIDIC project, list with clause references:
The documents that the Contractor should expect to submit within a period of say 28 days of Contract Award
The ‘things’ that the Contractor should expect to receive from the Employer and/or his representative within say 28 days of Contract Award
124
Exercise
Exercise - answers
The documents that the Contractor should expect to submit within a period of say 28 days of Contract Award:
Sub-Clause 1.6 [Contract Agreement] says that the Employer and Contractor shall enter into a Contract Agreement within 28 days of the Contractor receiving the Letter of Acceptance.
Sub-Clause 4.2 [Performance Security] states that the Contractor shall provide to the Employer Performance Security.
Sub-Clause 4.3 [Contractor’s Representative] provides for the Contractor to appoint a Representative who will have the authority to act for the Contractor (including issuing and receiving communications).
A detailed time programme (and separate report) under sub-clause 8.3 [Programme].
If Sub-Clause 14.4 [Schedule of Payments] applies and the Contract does not contain a schedule of payments, the Contractor shall submit to the Engineer within 42 days of the Commencement Date, non-binding estimates of the expected payments during each quarterly period.
If Sub-Clause 14.2 [Advance Payment] applies, the Contractor shall provide to the Employer an advance payment guarantee.
Sub-Clause 18.1 [General Requirements for Insurances] requires that the relevant insuring Party shall provide to the other Party evidence that the insurances have been effected, copies of policies and evidence of payment of premiums; and give notice of such to the Engineer.
Exercise - answers
The ‘things’ that the Contractor should expect to receive from the Employer and/or his representative within say 28 days of Contract Award:
• Sub-Clause 1.6 [Contract Agreement] says that the Employer and Contractor shall enter into a Contract Agreement within 28 days of the Contractor receiving the Letter of Acceptance.
• Sub-Clause 2.1 [Right of Access to Site] says that the Employer shall give the Contractor right of access to, and possession of parts of the Site as stated in the Appendix to Tender.
• Sub-Clause 3.2 [Delegation by the Engineer] allows the Engineer to assign duties and / or delegate authority to Assistants; this would include authority to communicate with the Contractor on certain matters.
• Not less than 7 days notice of the Commencement Date (sub-clause 8.1).
• If Sub-Clause 14.2 [Advance Payment] applies, the Employer shall pay the advance payment in accordance with Sub-Clause 14.7 [Payment].
• Sub-Clause 18.1 [General Requirements for Insurances] requires that the relevant insuring Party shall provide to the other Party evidence that the insurances have been effected, copies of policies and evidence of payment of premiums; and give notice of such to the Engineer.
Indicators of potential problems-at tender
Manner in which contract was secured
The consultants and their roles
The level of definition of the works
Feasibility
The procurement status
Financial circumstances
Political aspects
Legal / contractual
128
Early days of project execution
Drawings, information and ‘Holds’
Approvals
Relationships
Consultants’ performance
Access to works
Public authority / government bodies
Payment
The manner in which early problems are dealt with
Performance of nominated sub-contractors
129
The project under way
130
Major design changes Policy changes by client Many variations Lots of day work Long information
outstanding list Inability to procure long
lead items Payment problems Valuation problems Interim payments not
detailed
Widening gap between application and certification
Programme slippage Problems with
sub-contractors Labour disputes Poor drawings Arguments about
consultants’ responsibilities
Acceleration Tone of letters Relationships
Example areas of ‘change’
132
Additional or omitted work
Varied or modified work Substituted work Standard of work Physical or geological or
marine conditions Time of year work
carried out Location work is carried
out
New or revised drawings being issued
Holds being placed on drawings
Identity of owner representative/ consultants/ subcontractors/ vendors
Identity of contractors personnel
Late access to site Late issue of material
So can affect scope and/ or schedule and/ or conditions
The customer can ‘change’
The scope of work
The location of the work / equipment within
The timing and extent of access to site
The amount of information available to the Contractor
The period for drawing review / approval
The period for responding to requests for information
The extent of interference
The amounts and timing of payment
The supervisory staff or personnel
The type of equipment or materials it provides 133
The contractor can ‘change’ its:
Method of working
Sequence of working
Coordination of the work processes
Timing of undertaking the works
Quality or standard of the permanent works
Submission of required records and notices
Workers, staff or supervision personnel
Provision of access / facilities / materials to Subcontractors
Design
Use of Subcontractors134
The subcontractor can ‘change’ its:
Method of working
Sequence of working
Timing of undertaking the works
Quality or standard of the permanent works
Submission of required records and notices
Workers, staff or supervision personnel
Manning levels
Price of work
Location of off site works
Design 135
In Construction / Engineering projects, ‘change’ means what?
Something different from the contractual agreement.
It can affect scope and/ or schedule and/ or conditions
And can be initiated by:
subcontractor’s
and/ or
contractor’s
and/ or
customer’s.136
137
Management of change
Involves awareness that change will occur, recognition of the change itself and
the subsequent actions - 5 steps
Management of change
1. Read the contract to understand the baseline2. Identify a change has occurred3. Follow the appropriate contractual process4. Maintain records5. Assess the time and money effects
138
Contracts contain obligations and responsibilities
What if the obligations within the contract are unclear?
Is there a contract clause for dealing with anomalies?
Does it matter whether such a clause exists?
139
Yellow Book
Sub-clause 1.5 states:“The documents forming the Contract are to be taken as mutually explanatory of one another. For the purposes of interpretation, the priority of the documents shall be …:
[a] The Contract Agreement (if any)[b] The Letter of Acceptance[c] The Letter of Tender[d] The Particular Conditions[e] These General Conditions[f] The Employer’s Requirements[g] The Schedules, and[h] The Contractor’s Proposal and any other documents
forming part of the Contract
If an ambiguity or discrepancy is found … the Engineer shall issue any necessary clarification or instruction.”
As an example…
140
Contracts contain obligations and responsibilities
What if the obligations within the contract are unclear?
Is there a contract clause for dealing with anomalies?
Does it matter whether such a clause exists?
Contracts also foresee / allow certain types of changes
What types?
141
Yellow Book
This provides for various types of changes, including:
1) Failure of the Employer to give the Contractor right of access to Site
(Sub-Clause 2.1).
2) The existence of Unforeseeable physical conditions (Sub-Clause 4.12).
3) Suspension of part or all of the Works by the Engineer (Sub-Clause 8.8).
4) Variations (Sub-Clause 13.1).
5) The Contractor to propose value engineering (Sub-Clause 13.2).
6) The whole or part use of Provisional Sums (Sub-Clause 13.5).
7) Force Majeure (Clause 19).
As an example…
142
Allowable and foreseeable changes - issues
What constitutes each type of change?
Has the correct procedure been followed?
Who has the authority to initiate each type of change?
Are there any limitations or restrictions?
143
Yellow Book
In the case of variations under Sub-Clause 13.1, further details are contained elsewhere and include:
1) The definition of a Variation (Sub-Clause 1.1.6.9).
2) The communications rules (Sub-Clause 1.3).
3) The language for communications (Sub-Clause 1.4).
4) The Engineer’s duties and authority (Sub-Clause 3.1).
5) Any delegation of duties and authority by the Engineer (Sub-Clause 3.2).
6) Instructions of the Engineer (Sub-Clause 3.3).
7) Variation procedure (Sub-Clause 13.3).
As an example…
144
Management of change
1. Read the contract to understand the baseline2. Identify a change has occurred3. Follow the appropriate contractual process4. Maintain records5. Assess the time and money effects
145
Early identification is essential
Be aware that changes will occur
Appreciate that the correct contractual process may not always
be followed
Refer back to the baseline as a reference point
Constantly monitor events, occurrences and communications to
identify the cause or effect of change
Drawings – new ones, revisions and holds
Progress updates
Cost reports
146
Management of change
1. Read the contract to understand the baseline2. Identify a change has occurred3. Follow the appropriate contractual process4. Maintain records5. Assess the time and money effects
147
Contractual processes- issues
What type of change has occurred?
What is the correct procedure to be followed in this case?
Written notification is often required.
Is there a specified timeframe in which to do it?
Format of the notice?
Who from and who to?
Is it condition precedent to payment and / or extension of time?
If an instructed change, must the contractor comply?
148
Sub-clause 20.1 – Contractor’s claims
Notices must be submitted to the Engineer within 28 days of
Contractor being aware (or should have been aware) of an event
or circumstance that gives rise to entitlement to an Extension of
Time and / or additional payment
It must state the event and be clear it’s notice of a potential
claim
Note, it’s mandatory and condition precedent to additional
payment / extension of time
149
As an example…
Instructed changes
Who from? Sub-clause 3.1 gives authority to the Engineer but
sub-clause 3.2 allows delegation to assistants
Sub-clause 3.3 says contractor must comply but if a Variation,
clause 13 applies
Sub-clause 13.1 allows limited cases in which contractor is not
bound by a Variation
Note, written notice to the Engineer is then required
150
As an example…
Management of change
1. Read the contract to understand the baseline2. Identify a change has occurred3. Follow the appropriate contractual process4. Maintain records5. Assess the time and money effects
152
Record Keeping
Why?
What type?
Should they be agreed?
How should they be maintained for future use?
153
Sub-clause 20.1 – Contractor’s claims
Records to be maintained and Engineer permitted to view
154
As an example…
Management of change
1. Read the contract to understand the baseline2. Identify a change has occurred3. Follow the appropriate contractual process4. Maintain records5. Assess the time and money effects
155
Valuation of change
What type of change has occurred?
Any procedural requirements for the valuation?
Time frames for submission
Time frames for response
What is the correct method for valuation to be followed?
Money – value, cost or cost and profit?
Time – prospective or respective?
Consider direct and indirect effects.
156
And what is a ‘claim’?
Simply, a request for reimbursement, from one party to another, of
the money and / or time consequences flowing from an event that
the contractor was not required to anticipate.
Valuation rules again apply – money mainly cost or cost and profit;
time either prospective or respective.157
Under FIDIC, what is a ‘variation’?
Simply, an instructed change to the baseline scope of work.
Definitions vary for each book.
Valuation should include time impact as well as money impact.
Valuation rules apply – money is often value; time either
prospective or respective.
As an example…
Sub-clause 20.1 – Contractor’s claims
Notices must be submitted within 28 days of any event or
circumstance that gives rise to entitlement including full
supporting particulars
Records shall be kept, Engineer permitted to view
Fully detailed claim to be submitted within 42 days of any
event or circumstance that gives rise to entitlement including
full supporting particulars
Further claims to be submitted on a monthly basis if ongoing
Final submission within 28 days of end of effects
158
As an example…
Sub-clause 20.1 – Contractor’s claims
Engineer to respond with 42 days of submission
May request further particulars but must respond on principles of claim
Interim payments allowed for amounts substantiated
Engineer to agree / fairly determine (clause 3.5)
159
Valuation of variations
Adjustments to the Contract Price are to be agreed or determined by the Engineer (Employers Representative)
Reasonable profit is to be included
161
Valuation of claims
To be at Cost (see definition)
Reasonable profit is only to be included where stated
162
Extension of Time
An Extension of Time does not mean an entitlement to
additional money
An Extension of Time relieves Contractor liability to pay delay
damages
An Extension of Time establishes a new completion date
An Extension of Time allows the Employer to impose delay
damages after the new completion date
164
Extension of Time - considerations
Contract provisions define the basis of entitlement
Delay to be on the critical path
‘Ownership’ of Float
Effect of Concurrency
Choice of delay analysis technique
165
Sub-clause 8.4 – Extension of Time
Sub-clause 8.4 - Lists grounds for entitlement
Varies between books
Sub-clause 8.4 - Refers to clause 20.1 i.e. notice, submissions of
details
Sub-clause 8.4 – entitlement if completion for Taking Over is
delayed
No provision for Engineer to unilaterally award Extension of Time
166
Delay analysis techniques
Time extensions after completion of project (retrospective): Impacted As-Planned Time Impact Analysis Collapsed As-built As-planned –v- As-built (plus Windows Analysis)
Retrospective or Actual Based Analysis
168
ACTIVITY A
ACTIVITY B
ACTIVITY C
1 2 3 4 5 6 7 8 9 10 11Activity
Why Delay?
OriginalCompletion
Delay analysis techniques
Time extensions after completion of project (retrospective): Impacted As-Planned Time Impact Analysis Collapsed As-built As-planned –v- As-built (plus Windows Analysis)
Time extensions during currency of project (prospective) Impacted As-Planned Time Impact Analysis
Prospective or Model Based Analysis
170
ACTIVITY A
ACTIVITY B
ACTIVITY C
1 2 3 4 5 6 7 8 9 10 11Activity
Event
Estimate of Delay
OriginalCompletion
Delay analysis techniques
Time extensions after completion of project (retrospective): Impacted As-Planned Time Impact Analysis Collapsed As-built As-planned –v- As-built (plus Windows Analysis)
Time extensions during currency of project (prospective) Impacted As-Planned Time Impact Analysis
Activity AActivity BActivity CActivity DActivity ECompletion
• The as-planned programme
Impacted as-planned method
Activity AActivity BActivity CActivity DActivity ECompletion
• Impact (add) the delaying event
Impacted as-planned method
Delaying event
Activity AActivity BActivity CActivity DActivity ECompletion
• Reschedule the programme
Impacted as-planned method
Delaying event
Impacted completion date
(extension of time)
Advantages Quick Simple to carry out and understand Transparent As-built programme not required Can demonstrate acceleration and mitigation
Disadvantages Theoretical conclusions Requires a reasonable and robust as-planned programme Ignores actual progress Can hide concurrent delay
Impacted as-planned method
Activity AActivity BActivity CActivity DActivity ECompletion
• The as-planned programme
As-planned v as-built method
Activity AActivity BActivity CActivity DActivity ECompletion
• Plot the as-built programme
As-planned v as-built method
Activity AActivity BActivity CActivity DActivity ECompletion
• Identify the employer delay events
As-planned v as-built method
Activity AActivity BActivity CActivity DActivity ECompletion
• Assess delaying effect of events
As-planned v as-built method
(extension of time)(contractor culpable)
Advantages Simple to understand Transparent Does not require a networked programme Relies upon actual progress
Disadvantages Subjective assessment of critical delays Depends also on opinion Requires as-built programme
As-planned –v- as-built method
Which technique should be used?
Consider: Contract conditions Records available Time available Applicable law Value of dispute Most practical and common sense approach in circumstances
Delay analysis methods
X
or X or X
Delay analysis techniques
From SCL Delay and Disruption Protocol, paragraph 4.13
As-planned programme
without network
Networkedas-planned programme
Updatedas-planned networked programme
As-built records
As-planned v as-built
Impacted as-planned
Collapsed as-built
Time impact analysis
X and X
X
and X
X or X and X
Factual material
Type of analysis
An ‘X’ indicates the factual material that is required for a particular analysis
in some cases there are alternatives, as indicated in the table:
Recovery of entitlement
Requires timely notice
Require a well drafted document, showing:
Contractual entitlement
Narrative / story
Cause and effect
Apportionment
Quantum of time or money
Requires recognition of strengths and weaknesses
6 Steps for making an Extension of Time Claim
1. The contract
2. The records
3. The facts
4. The planning analysis
5. The Scott Schedule
6. The Statement of Claim
185
6 Steps for making an Extension of Time ClaimStep 4 – The planning analysis
186
1 2 3 4 5 6 7 8 9 10 11 12 13 14
1 STEEL FRAME
2 WALLS & ROOF
3 SWITCH GEAR
4 ACCESS GANTRY
200T CRANE
Sub-Contractor A
Main Contractor
Sub-Contractor B
Main Contractor
Main Contractor
Approved Programme
PlannedCompletion
Delay 3Inherent Design Fault
Discovered
plus1 week’s float
6 Steps for making an Extension of Time ClaimStep 5 – The Scott Schedule
187
Event No
Description Brief Facts Clause Notice Ref Relevant Docs
Activity Affected
Period of Delay
1 Design Fault to Access Gallery
The connection detail for the upper part of the gantry was identified as being underspecified on 10.10.01. The engineer was immediately notified. A revised drawing was issued on 22.10.01 and the works proceeded on 24.10.01.
26.4(ii) Letter 10.10.01
MOM 31.10.01Drg 201 rev A dated 27.10.01Progress report 30.11.01
Act 4.AG 2 wks
6 Steps for making an Extension of Time Claim
Step 6 – The Statement of Claim
In accordance with clause x, the contractor claims a 2 week extension of time arising from Event 1, notified on 10.10.01, all as particularised in the Scott Schedule and planning analysis.
188
Dispute avoidance
1. A clear, comprehensible contract
The enquiry Scope Conditions Risks
The negotiated agreement
Shared understanding
191
Dispute avoidance – the basics
Have a commercial strategy
Work procedures
Agree records
Encourage, submit and respond to notices
Publish in compliance with the contract
192
Dispute resolution - generally
193
Non-binding
Negotiation us Mediation us with help Conciliation us with more help Mini trial us with even more help Expert determination them Adjudication them
Binding Arbitration them Litigation them
Resolution of Disputes under FIDIC
If not agreed, Engineer to fairly determination (cl. 3.5).
Any dispute can be referred to the procedure in cl. 20:
Adjudication by a Dispute Adjudication Board (DAB) in accordance with the rules in the standard form
If any Party dissatisfied or decision not made when it should, Notice of Dissatisfaction issued within 28 days
Arbitration in accordance with the Rules of Arbitration of the International Chamber of Commerce (ICC)
194
Yellow Book typical sequence of dispute events envisaged in clause 20
<28d >56d<28d<84d
Parties present submissions to DAB Amicable settlement
196
Mark CastellRegional Managing Director
Photograph credits to FreeDigitalPhoto.net & David Castilo Dominici