Managing Construction Claims

Managing ConstructionManaging Construction Claims

Calvey Consulting, LLC8473 Settlers PassageCleveland, OH 44141

440-740-1132

Managing Construction ClaimsManaging Construction Claims

Why are Claims are disputed.Why are Claims are disputed.What is Typical ClaimWhat does a Consultant use to develop aWhat does a Consultant use to develop a Claim.What are the Key ComponentsWhat are the Key Components. What are Accepted Methods of Analysis

Calvey Consulting, LLC 440-740-1132

h i l i i dWhy are Construction Claims Disputed ?The Issues are complex.The Issues are complex.The Claims are loosely documented.Breakdown in communicationBreakdown in communication.There is an honest difference in opinion. No budget dollarsNo budget dollars.


What is a Typical Construction Claim?

Claimant Multi Prime ContractorClaimant Multi Prime ContractorMoneyTimeTimeSource of the Dispute Third Party No Exact AccountingNo Exact Accounting


What does a Claims Consultantuse to develop his analysis?

ContractContractProject SchedulesPay ApplicationsPay ApplicationsCertified PayrollsProject Meeting noteProject Meeting noteDaily Logs


What are the Key Components of a Typical Contractors Claim?

The Planned ScheduleThe Planned Schedule The Actual SchedulePredecessor DelayPredecessor DelayImpact on the ContractorQuantify the DamagesQuantify the Damages


Methods of Delay AnalysisTi I A l iTime Impact Analysis

Impacted As PlannedImpacted As PlannedAdjusted As BuiltWindowsWindowsConstructive Acceleration


Calculating Damages

Extension of General ConditionsExtension of General ConditionsExtension of Home Office OverheadEscalationEscalationLoss of Productivity


AACE - Purpose of Recommended Practice

Identify Lost Productivity EstimatingIdentify Lost Productivity Estimating MethodologiesRank Order the MethodologiesgDefine and Discuss Each MethodologyIdentify Selected Studies Applicable to EachIdentify Selected Studies Applicable to Each Methodology


Methods of Estimating Lost ProductivityMethods of Estimating Lost Productivity

Project Specific StudiesProject Specific StudiesProject Comparison StudiesSpecialty Industry StudiesSpecialty Industry StudiesGeneral Industry StudiesCost BasisCost Basis


What is Productivity?What is Productivity?

Productivity =Productivity Output (units completed)

Input (work or equipment hours)Input (work or equipment hours)

Productivity Factor =Productivity Factor = Actual ProductivityBaseline or PlannedBaseline or Planned

Productivity


Common Causes of Lost ProductivityCommon Causes of Lost Productivity

Acceleration (directed or constructive)Acceleration (directed or constructive)Crowding of labor or stacking of tradesOver manningOver manningLearning CurveExcessive overtimeExcessive overtimeAdverse or unusually severe weatherDilution of SupervisionDilution of Supervision


Common Causes of Lost ProductivityCommon Causes of Lost Productivity

Changes, ripple impact, cumulative impact ofChanges, ripple impact, cumulative impact of multiple changes and rework Defective engineering, recycle and/or reworkg g, yAbsenteeism and the missing man syndromeCraft turnoverCraft turnoverMaterial, tools and equipment shortagesSite or work area access restrictionsSite or work area access restrictions


Project Specific StudiesProject Specific Studies

Measured Miles StudyMeasured Miles StudyEarned Value AnalysisWork Sampling MethodWork Sampling MethodCraftsmen Questionnaire Sampling Method

H l i i ?How long is it?


Measured Mile Physical UnitsMeasured Mile Physical Units

Measured Mile10 Miles of pipe installed 1,000 manhours

100 manhours/mileImpact4 Miles of pipe installed 640 manhours

/160 manhours/mileLoss of Productivity

60 manhours/mile60 manhours/milex4 miles

240 manhours


240 manhours

Earned Value AnalysisEarned Value Analysis

Measured Mile70% Labor Complete 1,000 manhours

14.3 manhours/1%Impact30% Labor Complete 640 manhours

/ %21.3 manhours/1%Loss of Productivity

7 manhours/1%7 manhours/1%30%

240 manhours


240 manhours

Project Specific StudiesProject Specific Studies

Measured Miles StudyMeasured Miles StudyEarned Value AnalysisWork Sampling MethodWork Sampling MethodCraftsmen Questionnaire Sampling Method

H l i i ?How long is it?


Project Comparison StudiesProject Comparison Studies

Comparable Work StudyComparable Work StudyComparable Project Study


Specialty Industry StudiesSpecialty Industry Studies

AccelerationAccelerationChanges, Cumulative Impact and ReworkLearning CurveLearning CurveOvertime and Shift WorkProject CharacteristicsProject CharacteristicsProject ManagementWeatherWeather


Specialty Industry StudiesSpecialty Industry Studies

Selected StudiesSelected Studies

Weather Impact on ProductivityWeather Impact on Productivity

Overtime Impact on Productivity



120

100

120

60

80

f

f

i

c

i

e

n

c

y

20

40%

E

f

0

20

-20 -10 0 10 20 30 40 50 60 70 80 90 100

Eff ti T t (F)


Effective Temperature (F)

Weather Impact on Productivity (NECA Studies)

Temperature (effective) ImpactTemperature (effective) Impact

Eff ti T t R FEfficiency

Effective Temperature Range F%

+40 to 80 100

-20 to +20 20 95

80 to 100 85 - 60



Daily Log Documentationy gFrequency (AM, Noon, PM)TemperatureWindPrecipitation (rain, snow, sleet)E i H iditExcessive Humidity

Historic DataNational Oceanic & Atmospheric AdminNational Oceanic & Atmospheric Admin. (NOAA) National Climatic Data Center


Overtime Industry StudiesOvertime Industry Studies

Bureau Labor Statistics 1947 (Mfg.)Bureau Labor Statistics 1947 (Mfg.)Business Roundtable 1980

10 year study of P&G plant projects10 year study of P&G plant projectsNational Electrical Contractors Assn.

1969 (rev 1989)1969 (rev. 1989)Construction Industry Institute 1988

7 projects all crafts7 projects, all craftsCost Engineering Composite - 2004


Overtime Impact on ProductivityOvertime Impact on ProductivityNECA Study

90

100

e

60

70

80

r

o

d

u

c

t

i

v

40

50

60

%

P

r

301 2 3 4 5 6 7 8 9 10 11 12

Weeks


Weeks

Overtime Impact on ProductivityOvertime Impact on Productivity

Days hours per day Productivity Range2 wks to 12 wks

5 - 10s 95 % to 70 %

6 - 10s 91 % to 62 %

5 - 12s 85 % to 52 %6 - 12s 75 % to 45 %

7 - 12s 70 % to 40 %


General Industry StudiesGeneral Industry Studies

U.S. Army Corps of Engineers ModificationU.S. Army Corps of Engineers Modification Impact Evaluation GuideMechanical Contractors Association of AmericaNational Electrical Contractors AssociationEstimating Guides


General Industry StudiesGeneral Industry Studies

MCAAMCAA16 FactorsRange of LossRange of Loss

NECA25 Factors Checklist25 Factors ChecklistNormal Difficult Most Difficult

US Army Corps of EngineersUS Army Corps of EngineersNumber of FactorsNo Longer Published


o o ge ub s ed

Cost BasisCost Basis

Total Unit Cost MethodTotal Unit Cost MethodModified Total Labor Cost MethodTotal Labor Cost MethodTotal Labor Cost Method


Measured MileMeasured Mile

MEASUREDMILE40,000

Actual Production

32,668

MEASUREDMILE

30,000

e

r

P

e

r

c

e

n

t

20,000

M

a

n

h

o

u

r

s

p

e

60% Complete: 14,762 Manhours

-

10,000


-

1

0

%

2

0

%

3

0

%

4

0

%

5

0

%

6

0

%

7

0

%

8

0

%

9

0

%

1

0

0

%

Percent based on Foundation Concrete

Court Case (A) Clark Concrete Contractors, I 99 1 BCA 30 280 [1]Inc., 99-1 BCA 30,280 [1]

[The Government] is correct in asserting that the work [ ] gperformed during the periods compared by [the Contractor] was not identical in each period. We would be surprised to learn that work performed inwould be surprised to learn that work performed in periods being compared is ever identical on a construction project, however. And it need not be; the

f f ffascertainment of damages for labor inefficiency is not susceptible to absolute exactness. (Citation omitted). We will accept a comparison if it is between kinds of p pwork which are reasonably alike, such that the approximations it involves will be meaningful.


Documents

Managing Construction Claims