Advancements in Construction Project
Administration
Session: 41 October 28, 2014
Room: C220-222 3:00PM – 3:45PM
Claims Avoidance, Mitigation and Resolution Take Advantage of New Tools
Presented by: Moderator:
Andrew Morse, PSP Chris Engle
Brian Goodreau, PSP
Introduction to ARCADIS
• 6,200 Employees in United States • 30+ years providing construction claims services BUILDINGS ENVIRONMENTAL INFRASTRUCTURE WATER Global Company Global Company Experience Experience4
On-call Claims Transportation Clients
Introduction – Brian Goodreau
Experience at ARCADIS •5 Years at ARCADIS
-Scheduling projects to $500 million -Claims avoidance, mitigation and
resolution
•BS Construction Management
•Planning and Scheduling Professional (PSP) -Association for the Advancement of
Cost Engineering International (AACEI) •Associate Constructor (AC)
-American Institute For Constructors (AIC)
Introduction – Andrew Morse
Experience at ARCADIS • Over 3 years at ARCADIS • 10 plus years of industry experience • Successfully managed complex construction
schedules on projects ranging from $2 million to well over $1 billion
• Planning and Scheduling Professional (PSP) -Association for the Advancement of Cost
Engineering International (AACEI) • Associate Constructor (AC)
7
Resolve
Mitigate
Avoid
Notice to Proceed Projec t Com p letio nDispute Management
8Dispute Management
Resolve Mitigate AvoidAvoid
Document management
Schedule development
Cost controls
Risk management
Value engineering
Document management
Schedule development
Cost controls
Risk management
Value engineering
Document Management Systems
Avoid •Choose the right system •User training •Enforce the rules •Choose the right system •User training •Enforce the rules
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Document Management Systems
Resolve Mitigate Avoid Key Features: • Project bookshelf • Process workflows • Monitor ball‐in‐court • Financial and schedule data Key Features: • Project bookshelf • Process workflows • Monitor ball‐in‐court • Financial and schedule data 11
Schedule Development
Resolve Mitigate Avoid Basic Software Packages Advanced Software Packages Primavera SureTrak Project Manager Primavera P3 Microsoft Project Primavera P6 Low initial cost High initial cost Limited project capacity Handles small to extremely large projects Single user Enterprise management Limited analytics Cost / resource / risk analysis Features • Select software • Establish milestones • Develop specifications • Baseline schedule review • Select software • Establish milestones • Develop specifications • Baseline schedule review 12Schedule Development
Why do contractors schedule? Why do contractors schedule? Resolve Mitigate Avoid •TO USE AS A TOOL TO BUILD THE JOB •To provide answers to: What are you obligated to do? What are others obligated to do? What are you building? •Document the as‐built condition •Demonstrate cause/effect •TO USE AS A TOOL TO BUILD THE JOB •To provide answers to: What are you obligated to do? What are others obligated to do? What are you building? •Document the as‐built condition •Demonstrate cause/effect13
Schedule Development
Why do owners schedule? Why do owners schedule? •Understand the contractor’s plan •Decision making tool •Performance measurement •Baseline to measure delays •Reconcile hindsight and blind sight •Understand the contractor’s plan •Decision making tool •Performance measurement •Baseline to measure delays •Reconcile hindsight and blind sight Resolve Mitigate Avoid 14Schedule Development
Understand the critical path! Understand the critical path! Resolve Mitigate Avoid “Critical Path. The series of activities that determines the duration of the project…it is the longest path through the project.”Why Schedule?
Avoid16
Cost Management
Resolve Mitigate Avoid 17 Resolve Mitigate Avoid •Choose the right system •User training •Enforce the rules •Choose the right system •User training •Enforce the rulesCost Management
18 • Most overlooked aspect of claims • Contractors have sophisticated systems • Owners lag behind • To equitably and quickly resolve claims, systems must roll up and be able to accurately capture key data beyond quantities: –Labor and equipment usage Resolve Mitigate AvoidCost Management
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Risk Management
Resolve Mitigate Avoid Name Company @RISK Palisade Crystal Ball Oracle Active Risk Manager (ARM) Sword Active Risk Acumen Risk Acumen Full Monte Barbecana Polaris Booz Allen Hamilton Predict Risk Decisions Primavera Risk Analysis (Pertmaster) Oracle Proteus Safran North America RiskyProject Intaver Institute • Select software • Identify risks/stakeholders • Hold risk workshops • Establish contingencies • Select software • Identify risks/stakeholders • Hold risk workshops • Establish contingencies “Risk: Uncertain event or condition that could affect a project objective” 20Risk Management
Resolve Mitigate Avoid Typical Risks: • Design errors/changes • Schedule • Quality • Safety • Existing conditions • Environmental concerns • Project delivery method • Security • Political • Permitting • Funding • Contractual • End user satisfaction Typical Risks: • Design errors/changes • Schedule • Quality • Safety • Existing conditions • Environmental concerns • Project delivery method • Security • Political • Permitting • Funding • Contractual • End user satisfactionRisk Management
Avoid Cumulative Distribution Function (CDF) for Cost Cumulative DistributionFunction (CDF) for Schedule
•Deterministic Schedule: 11/2/2015 •17% probability that project completed on 11/2/2015
•P80 Schedule: 4/4/2016 •Schedule Contingency: 154 Days
•Current Estimate: $272.58 Million •8% probability that project will not exceed current estimate
•P80 Cost: $287.87 Million •Cost Contingency: $15.29 Million
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Dispute Management
Resolve Mitigate Avoid Update schedule
Monitor cost
Good decisions
Update schedule
Monitor cost
Good decisions
Mitigate
23Update the Schedule
Resolve Mitigate Avoid Schedule Maintenance Maintain Schedule Baseline Schedule Tracking Schedule Progress Cost & Resource Management Acceleration Schedule Maintenance & Feedback Output & Deliverables Control Level Schedules Variance & Trends Schedule Analysis Schedule Forecasts Constructability Review Progress Reports & Reviews Recovery Schedules Management Summary Progress Measurement • Level of effort • Physical progress • Milestone achievement • Activity start/finish • Supervision judgment Progress Measurement • Level of effort • Physical progress • Milestone achievement • Activity start/finish • Supervision judgment 24
The output from schedule review software can
be voluminous and overwhelming and:
• Does not tell the whole story • Cannot explain constructability • Misrepresented as cause for delay Don’t get behind with update review!!Update the Schedule
Resolve Mitigate
25
Update the Schedule
Float Suppression Float Suppression Concerns: • Manipulates the critical path to flow through: –Problem areas –Work at a high risk of change –Owner responsibilities –Third party responsibilities • False indication of what the contractor knows is actually happening Techniques: • Activity durations –Excessive/conservative durations –Additional (unanticipated) activities • Preferential logic • Constraints –Insertion of an artificial constraint –Impacts float calculations –Influences the longest/critical paths Resolve Mitigate Avoid 26
Update the Schedule
Resolve Mitigate
Avoid
Update the Schedule
Avoid
Schedule recovery techniques are:
• Proactive, not reactive • Premium time / multiple shifts • Logic revisions (more aggressive) • Stacking trades • Resource leveling28
Time Impact Analysis (TIA) ‐ traditional scenario: Time Impact Analysis (TIA) ‐ traditional scenario:
Update the Schedule
Resolve Mitigate Avoid Delay Delay Erect Steel Bridge A Erect Steel Bridge A Erect Steel Bridge B Erect Steel Bridge B Erect Steel Bridge C Erect Steel Bridge C 29
Update the Schedule
Delay Delay Erect Steel Bridge B Erect Steel Bridge B Erect S Erect S Erect Steel Bridge A Erect Steel Bridge A Preferential logic does not exist Time Impact Analysis (TIA) ‐ with resource leveling: Time Impact Analysis (TIA) ‐ with resource leveling: • Delays are mitigated • Delays only occur when resources are over‐allocated • Delays are mitigated • Delays only occur when resources are over‐allocated Resolve Mitigate Avoid 30
Monitor the Cost
Keys to successful cost control:
• Consistent cost reporting • Quality inspection reports –Reconcile actual quantities –Identify quantity overruns • Monitor early warnings • Timely pricing of change orders Resolve Mitigate Avoid31
Decisions
To be used as an effective claims mitigation
decision tool schedule and cost systems:
• Must be scalable to the project or program • Must fit the skills of the user • Must work together Resolve Mitigate Avoid 32Dispute Management
Resolve Mitigate Avoid Document review
Schedule / financial
analysis
Litigation preparation
Document review
Schedule / financial
analysis
Litigation preparation
Resolve
Resolution
Avoidance and Mitigation are the keys to
successful resolution
• Technology will not help at this stage if it was not employed early • Document management and trial presentation software can help you get ready for mediation, arbitration or trial Avoid34
Document Review
Resolve Mitigate Avoid •Wide range of vendors •Compile documents •Create issue coding •Focus on key issues •Wide range of vendors •Compile documents •Create issue coding •Focus on key issues 35Litigation Preparation
Resolve Mitigate Avoid Trial Director Office Timeline Plus •Mutual understanding leads to resolution •Technology helps present your side of the story •Mutual understanding leads to resolution •Technology helps present your side of the story 36Resolution
• No magic contract clause • No magic cost control or scheduling system • No magic presentation technology • Resolution prior to trial still hinges on the willingness of the parties to settle. Resolve Mitigate Avoid© 2013 ARCADIS 3 December 2014 37
Questions?
Andrew Morse, AC, PSPClaims Analyst 213 Court Street Middletown, CT 06457 Brian Goodreau, PSP, ENV SP Claims Analyst 213 Court Street Middletown, CT 06457 [email protected] (860) 503-1521 [email protected] (860) 503-1511
