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George T. McLaughlin PMP
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CONSTRUCTION CLAIMS and DISPUTES – (Part 7)
August 6, 2013 By George T McLaughlin PMP CCM
Scope of Work – Plans and Specifications
This McLaughlin and McLaughlin (M&M) post is the seventh in a Subject Series Construction Claims and Disputes. This Subject Series contains discussions regarding construction claims and disputes.
Recent and subsequent posts (Parts 6, 7 and the next few) (will) address scope of work within the overall subject of Construction Claims and Disputes. Disputes and claims regarding scope of work are a highly pervasive problem and represent the most common type of claim or dispute. Perhaps 75 to 90% of all engineering and construction claims and disputes involve contract scope of work.
Virtually all disputes and claims arise as a result of departures from the baseline. These variances (cost, time or other) create the dispute. Therefore, understanding the baseline is essential. In construction claims and disputes, the baseline is (almost) always the contract. The contract is the “deal” or the agreement between the parties. While it must meet several legal tests, the contract is the baseline that will be the focus of this discussion. You must have, know and understand the contract, or at least all portions and provisions that relate to scope of work.
In this discussion, the plans and specifications are the scope of work baseline. Typically, the plans and specifications are augmented by other contract documents (such as terms and conditions, site services, execution plan documents and others). Using the term “design specifications,” let us view these documents as “…the specific requirements for constructing, testing, inspecting, and the materials provided for the project” (Brams and Lerner).
The majority of the discussion will address entitlement to recovery (rather than pricing or quantum). [Read more…]
Filed Under: Claims, Featured, General, Projects Tagged With: Change Orders, Construction Claims, Construction claims and disputes, construction claims damages, Construction Claims Management, Construction Claims Management Plan, construction claims pricing, Construction Claims Quantum, Construction Contract Claims, Field work orders, George T. McLaughlin PMP, McLaughlin & McLaughlin, Plans and Specifications, Scope of Work Claims, www.mclaughlinandmclaughlin.com
CONSTRUCTION CLAIMS and DISPUTES – (Part 6)
June 25, 2013 By George T McLaughlin PMP CCM
Scope of Work – Baseline
This McLaughlin and McLaughlin (M&M) post is the sixth in a Subject Series Construction Claims and Disputes. This Subject Series contains discussions regarding potential and actual construction claims and disputes situations.
In the realm of construction claims and disputes, claims regarding scope of work are the largest or highest single category. The George Washington University publication Construction Contracting states that “Not surprisingly, specifications and plans are the focal point of most construction contract performance disputes and requests for price adjustments.” While this source pertains to US Federal government contracting, the same pattern can be seen in the private sector on a worldwide basis. Even more general, scope of work disputes extend beyond construction contracting, into engineering and procurement in the Engineering, Procurement and Construction (EPC) industry.
This series of posts will address scope of work within the overall subject of Construction Claims and Disputes. Since disputes and claims regarding scope of work are such a pervasive problem, some degree of detail will be presented. Further, the majority of the discussion will address entitlement to recovery (rather than pricing or quantum).
The source of all disputes and claims is departures from the baseline. These variances (cost, time or other) create the dispute. Therefore, understanding the baseline is essential.
In construction claims and disputes, the baseline is (almost always) the contract. The contract is the “deal” or the agreement between the parties. While it must meet several legal tests, the contract is the baseline that will be the focus of this discussion. You must have, know and understand the contract, or at least all portions and provisions that relate to scope of work.
Success in this area of claims and disputes depends almost exclusively on how well you know the contract. More specifically, how well you know and understand the scope of work.
Later in this post, the formulation of a Claims Management Plan (CMP) is discussed and related to contract scope of work. [Read more…]
Filed Under: Claims, Featured, General, Projects Tagged With: Claims Management Plan, Construction claims and disputes, construction claims damages, Construction Claims Management, Construction Claims Management Plan, construction claims pricing, Construction Claims Quantum, George T. McLaughlin PMP, McLaughlin & McLaughlin, Scope of Work Claims, www.mclaughlinandmclaughlin.com
A View from the Field Project Execution / Contracting Strategies Large and Complex Industrial Projects
May 6, 2013 By George T McLaughlin PMP CCM
This article from the Division 1 of the ABA Forum on the Construction Industry Newsletter “The Dispute Resolver” represents George T. McLaughlin’s “View from the Field” formed throughout the course of his 30+ year career in the industrial marketplace.[1] His article is broken into four parts. Part 1, below, describes the evolution of the delivery systems in large and complex industrial projects[2]. The remaining sections, which we will publish in our next three newsletters, will discuss the legal implications (Part 2), impact on claims, disputes, and resolutions (Part 3), and prevention and corrective processes (Part 4).
Part 1 of 4 – Framing the Issue
When the earth’s tectonic plates shift, unless there is a resulting earthquake, it goes unnoticed. The movement is not perceptible. Nevertheless, major changes are occurring. In large and complex projects, with three to five (or longer) year schedules, industry shifts may not be perceptible. Nevertheless, major changes and related impacts may be in progress. Trends and changes in project execution and contracting strategies are similar. These trends, however gradual and unnoticed on a daily or monthly basis, cause major impacts on existing and future projects. While industry experts cite or drive these changes, the impact on the field may be delayed or go unrecognized by many, if not all stakeholders. The business motivations driving the trends discussed below are varied and complex. Perhaps, the central theme is risk tolerance or management. The large worldwide prime contractors (typically Engineer Procure Construct) migrated toward limiting major risks by limiting scope of work, insisting on reimbursable cost (as opposed to fixed price) commercial terms, or both. Owners chose to limit or compartmentalize risks by breaking scope of work into smaller packages and seeking fixed price on these smaller packages. Construction Contractors retained a willingness to work on fixed price commercial terms; but, increased their tendency toward claims and disputes processes in order to manage their risks. Collectively, we see a myriad of fixed price scope of work packages being pieced together to form a complete project. Formerly, this mosaic of work scopes was under one Prime Contract. [Read more…]
Filed Under: Claims, Featured, General, Productivity, Project Planning, Projects, Uncategorized Tagged With: Construction Claims, Construction Contract Claims, Construction Contract Planning and Scheduling, contracting strategies, Disruption, George T. McLaughlin PMP, large and complex industrial projects, Large and Complex Projects, McLaughlin & McLaughlin, megaprojects, Productivity Management, Project Execution Plan, Time Management Strategy
CONSTRUCTION CLAIMS and DISPUTES – (Part 4)
March 17, 2013 By George T McLaughlin PMP CCM
Pricing Construction Claims
This post is the fourth in McLaughlin & McLaughlin’s Project Professionals Subject Series Construction Claims and Disputes which are (will be) discussions regarding challenges in potential and actual construction claims and disputes situations. In this series, we focus on the key aspects of construction claims and disputes management. This discussion addresses the pricing of claims and disputes. The compulsion or question is – “How much is a potential claim worth?” In virtually all disputes, the central issue is the money. Since it is a win-lose situation, the outcome may be that someone (one party) will pay another party. Hence, the money is the ultimate issue (sometimes time is at issue, generally presenting itself in money or damages related to the time).
There is an old saying “win the battle, lose the war” which applies to damages in construction claims and disputes. With facts, logic and analyses on their side, one party (Party A) can prepare and present a very compelling argument regarding the claim (against Party B). However, winning the argument on the cause (or as it is called, entitlement) is relatively useless without winning the argument on the money related to the effect (or sometimes called damages, quantum, compensation).
Even more compelling, the decision to proceed with a claim (and potentially spend millions of dollars on expenses such as legal fees) should be heavily driven by the potential recovery (the money). Consequently, parties must have a reasonable assessment of the true value of the dispute and the ability to successfully demonstrate or prove these damages in the resolution process. Without the ability to prevail on a suitable and acceptable level of damages, pursuing a construction claim through a costly dispute resolution process could be an unwise decision.
In this discussion, we are guided by a highly useful and well grounded newly published book. It is published by the American Bar Association (ABA) and has been recently (2013) been updated. This publication is Construction Damages and Remedies, second edition, by Forum on the Construction Industry, American Bar Association. It is edited by W. Alexander Moseley of the law firm Hand Arendall LLC. There are nine authors. [Read more…]
Filed Under: Claims, Featured, General, Projects Tagged With: Construction claims and disputes, construction claims damages, Construction Claims Management, construction claims pricing, Construction Project Management, constructions claims quantum, EPC Project Management, George T. McLaughlin PMP, McLaughlin & McLaughlin, Project Management, Project Management Institute (PMI), Project Management Plan, www.mclaughlinandmclaughlin.com
CONSTRUCTION CLAIMS AND DISPUTES – (Part 1)
January 22, 2013 By George T McLaughlin PMP CCM
This McLaughlin & McLaughlin post is an introduction to an ongoing Subject Series regarding Construction Claims and Disputes in engineering, procurement and construction industry.
In relation to construction claims and disputes it is important for all readers, contributors, participants and others regarding the general subject of claims and disputes to be equally informed. This discussion is directed toward engineering and construction claims and disputes.
In the engineering and construction industry, contract claims and disputes are common issues. They occur between: owners and contractors (prime), contractors and their subcontractors, contractors and (their) vendors, and at other contractual interfaces. Resolution of the claims and disputes can be a costly, disruptive and aggravating process for all parties.
Filed Under: Claims, Featured, Projects Tagged With: AACE International, Barry B. Bramble, Best Practice, Best Practices, Christopher Lerner, Claims, Construction Claims, Construction Contract Claims, Dispute Resolution, engineering and construction claims, George T. McLaughlin PMP, John McNamara, Jon Wickwire, Keith Pickavance, McLaughlin & McLaughlin, Michael T. Callahan, PMI, Robert S. Brams, Society of Construction Law, U.S. Army Corps of Engineers, William Ibbs, William Schwartzkopf, www.mclaughlinandmclaughlin.com