Opinion ID: 1205070
Heading Depth: 3
Heading Rank: 4

Heading: the problems

Text: The problems began when ARCO moved the tank site, causing delays in earthwork and design. Instead of completing the design and engineering and formulating project specific specifications at the start of the project, Bell Lavalin furnished designs as the project went along. Bell Lavalin had announced its intention to ARCO to rely on the general specifications included in the RFP, but did not communicate this to Conam. Only a small percentage of the plans were completed by June 1. Conam repeatedly requested the missing design and engineering and advised Bell Lavalin that the lack of design information was causing delays. The project fell behind schedule quickly. Bell Lavalin made repeated requests upon Conam to accelerate work. At ARCO's request, Bell Lavalin relieved Conam of its quality control responsibilities. Conam submitted several CCRs as the project went along. ARCO approved more than $1 million in changes through this procedure. Bell Lavalin, however, frequently changed cost and other data before forwarding the forms to ARCO, including deleting all parts of the CCRs which indicated that there would be a schedule impact. Similarly, references to the lack of contract drawings were deleted. Additionally, Bell Lavalin would extend to Conam a portion of the additional expenses granted by ARCO. The project was dealt a serious setback when Rockford walked off the job on July 19, 1985, after ARCO rejected the steel tank sections supplied by Rockford. [3] Following the Rockford walkoff, Conam requested that Bell Lavalin ask ARCO to grant a time extension for completion. Bell Lavalin requested of ARCO that the completion date be moved to the spring and the project shut down for the winter. The specified work could not be performed in the winter because the project called for the installation of a dynaloy liner. Dynaloy is a vinyl product which becomes very brittle in cold and would be impossible to install in the winter. On July 31, 1985, Bell Lavalin proposed two alternative schedules to ARCO. One schedule assumed that Conam could get Rockford back on the job. The other assumed a new vendor would be found. Both provided for a winter shutdown. On August 1, 1985, Bell Lavalin, ARCO and Conam met to discuss the scheduling proposals. Conam left the meeting with the understanding that an extension was granted. [4] Conam then resubcontracted with Rockford and also with Interstate Coatings for work which assumed a winter shutdown. The new subcontracts were made with Bell Lavalin's approval. Rockford returned to the project on August 4, 1985. On August 8, ARCO advised Bell Lavalin that it would require a detailed analysis of the impact of the Rockford walkoff and documentation demonstrating how a time extension would be utilized before granting an extension. On that same date, Bell Lavalin indicated to Conam that ARCO had reneged on the promised extension. Around August 15 Bell Lavalin rejected a Conam schedule including the six month extension. On August 26 Conam submitted another revised schedule which showed a December 15 completion date, but included the caveat that some of the work may be a problem due to weather. This revised schedule was approved by ARCO. Problems arose again in September. After Rockford completed work on the first tank, the quality control inspector, an FRB employee under Partec supervision, approved the work and released the tank to be sandblasted and coated by Interstate Coatings. Interstate Coatings mobilized its operations to the North Slope. However, shortly after it began the sandblasting, Interstate Coatings was ordered to stop by Bell Lavalin after ARCO inspectors rejected the tanks. Conam was forced to hand-grind the tanks and work was delayed for 2-1/2 weeks. Also, after two tanks had almost been completed, Partec substantially revised the piping requirements. Substantial reworking was required and the sandblasting was further delayed. Ultimately, Interstate Coatings was not able to recommence work until October 8, 1985. By this time, weather conditions made it very difficult to coat the tanks. On November 15, 1985, Conam indicated to Bell Lavalin by letter that further work on the project was commercially impracticable and proposed a revised schedule, consistent with the schedule presented to ARCO in July, with weather sensitive work being performed in the spring. Conam continued working pending an answer from Bell Lavalin. Bell Lavalin stopped payment on a progress payment check previously delivered to Conam. The check was for over $800,000. Bell Lavalin demanded that Conam continue work without interruption. On November 19, 1985, Conam demobilized its work force. Bell Lavalin completed the project in March 1986 after ARCO eliminated the requirement for the dynaloy liner. At the time of Conam's walkoff, about 87% of the base contract work had been completed. The contract sum claimed by Conam for the work completed, including agreed upon change orders was $9,738,932. Conam also claimed that it was due an additional $1,668,597 for other change order work, the value of which had not yet been agreed. Conam had been paid $5,486,350. Thus Conam's contract claim was for $4,438,200, 87% of the value of the work actually performed ($11,407,529 X .87, or $9,924,550), less the amount received ($5,486,350). ARCO settled with both parties paying Conam $1 million and Bell Lavalin $1.2 million.