Posts Tagged ‘Construction Claims’

Claims Analysis Case Study

Tuesday, November 8th, 2016

PIC#15Blog Article – Claim Analysis Case Study

11 November 2016


The information depicted in this document is of a preliminary and incomplete nature.  All relevant qualification, facts, and factors are not included.  This document is prepared in anticipation of litigation at the direction of and with input of the attorneys assisting the client on the project to which this document relates.

VN Services worked on a delay and disruption claim analysis case with the parties finally reaching a settlement; and I thought I would share some of the story. This discussion won’t get into specifics for the simple reason that the settlement was confidential, so we can’t get into real details. However, I would add that the settlement was exceptionally favorable to our client inferring to me, at least, that the analysis we did had some very real strengths.

We represented a subcontractor that experienced a loss of productivity, additional field conditions costs, and extended field conditions costs. In the world of claims, additional and extended conditions are usually pretty solid claims in terms of being able to quantify them because there are typically labor reports and job cost records for the material, equipment, and labor hours being tracked. You do still have to demonstrate causation and entitlement; but in general, these types of claims tend to be fairly defensible as it was in this particular recent case.

I would like to point out a couple of things regarding the schedule analysis used to support causation and its effects. The CM did such a poor job developing a schedule and accurately updating it that the schedules produced were not particularly useful. Happily, our client did something that I consistently recommend to contractors of all sizes – they kept detailed daily reports. Combined with certified payroll data, our client was able to (painstakingly) put together a daily as-built schedule showing where people were working and how many people were in those locations. It’s difficult to argue against something that detailed.

Loss of productivity is where things always get tricky. No matter what methodology you use, you’re guaranteed to be questioned thoroughly on pretty much every topic and angle related to the loss. This case was no different, but there were some major strengths. The biggest strength was that the client was using an earned value measurement that collected data for each room of the project and included how many pieces were installed. This could then be compared to the estimated labor hours per piece to get to the “earned” labor hours. This calculation showed that field labor was slightly less productive than estimated in the period of time prior to the occurrence of major impacts.

The key here is that, even though a comparison was made to estimated labor hours (Measured Mile analyses typically do not reference the estimate), the calculation at its core is based on actually installed materials. Because of that, we were able to use a very strong Measured Mile methodology comparing the productivity of the “least impacted” period of time versus the impacted period of time. It’s also clever in that it allowed us to calculate an aggregate productivity that included a variety of tasks being done by this contractor.

This comparison was also made possible because the multiple areas of the project had reasonably similar scopes (another requirement of the Measured Mile analysis). Comparing areas or periods of time as part of the Measured Mile is a popular avenue for attack by the opposition. The basic argument usually devolves to saying that any comparison is impossible because the scopes weren’t similar enough. We get it; but, the courts have ruled that the scopes being compared do not have to be identical. I’ll be the first to criticize an analysis that uses ridiculously different scopes for comparison; but again, let’s try to be reasonable.

It’s also well understood that demonstrating the effects and damages of various impacts has to be connected to causation of the impacts. As mentioned earlier, we were fortunate enough to have a sophisticated client that maintained great documentation and data; but we also had access to some seriously damaging documentation from the opposition that was produced through discovery. This documentation helped put together a narrative explanation for how the project was essentially doomed from the beginning by a series of bad decisions made by the Owner based on advice from its construction manager and design team. Those decisions led directly to multiple and almost constant changes in the work flow, which was supported by the daily as-built schedule that was produced that was based on daily reports and timesheets.

Our client, its legal team, and VN Services worked together to demonstrate and connect cause, effect, added costs/damages, and entitlement. At the end of the day, our trip to court was cut short. The parties managed to work out a settlement in mediation that was massively favorable to our client.

Congratulations Tucker Elliott on 16 years at VN Services!

Monday, April 14th, 2014

Tucker Elliott attends 2011 Dispute Resolution Board Foundation (DRBF) Annual Conference

Wednesday, September 28th, 2011

Port of Seattle and Mount Rainier

Tucker  just returned from the 2011 annual conference for the Dispute Resolution Board Foundation (DRBF) in Seattle, Washington. Attendees came from a variety of countries, including the US, Canada, Australia, Germany, and Turkey. 

Dispute resolution boards (sometimes called dispute review boards or just DRBs) provide large projects with a means for resolving disputes during the life of the project rather than waiting until the end of the project, when problems are more pronounced and the parties’ positions are more entrenched.

Research shows that the success rates for resolving disputes and avoiding litigation in this way are phenomenal compared to more traditional methods.  In essence, using a DRB provides significant reduction in cost and schedule overruns and in many cases helps a project come in under budget and ahead of schedule. DRBs are similar to having a standing arbitration panel, except that they are much cheaper and more timely, because they are used during the project instead of after the project is completed.

If you would like to know more about DRB’s, please feel free to call or email Tucker. He is trained by the DRBF in this process, and can assist you if you believe that you are in need of a dispute review board member.

Avoiding Construction Claims 101

Wednesday, March 24th, 2010

There are many reasons construction disputes develop during projects, and almost as many reasons why those disputes can elevate into a construction claim situation. Regardless of how the dispute initially developed, the inability to resolve it amicably and without litigation can almost always be traced back to poor communication by at least one of the parties, and often all of the parties, involved. Too often we either don’t communicate at all, or ineffectively at best. We think a matter is not important enough to take a moment and explain it or we assume the information conveyed is received and understood as intended. Often it is not.

Here are a few communication methods that could help avoid a construction claim:

Be Proactive: Don’t wait for problems to arise in order to develop a way to resolve them.

Establish Ground Rules: Hold regular meetings and an open forum for increased communication between all the parties involved with the project.

Align expectations: Make sure everyone is on the page and knows what is expected and required.

Clearly Communicate: Convey what the project is, why it is important and how the project will move forward. This leads to a buy in of participants and increased understanding.

Address Uncertainties: Be direct, clear and concise with questions about issues and reservations.

Address Issues: Resolve issues and discrepancies as they arise before they impact the project.

Be Receptive: Listen to all the parties involved and leave your pride at the door. Consider alternative points of view.

  • For the full article Avoiding Construction Claims by Tom Williams, please visit this link.
  • For more articles about Construction Management, please visit this link.