DELAY AND TIME EXTENSION ANALYSIS: CONTRACT REQUIREMENTS Vv. THE REAL WORLD SESSION 313 17TH ANNUAL CONSTRUCTION SUPERCONFERENCE PRESENTED BY: EVANS M. BARBA, PE. NAVIGANT CONSULTING, INC. AND JUDAH LIFSCHITZ, ESQUIRE SHAPIRO, LIFSCHITZ AND SCHRAM, PC. Copyright 2002 by Evans M. Barba, Navigant Consulting Inc. AIL Rights Reserved17" Annual Construction Superconference December 12-13, 2002 ‘The Sheraton Place Hotel San Francisco Session 313 Delay And Time Extension Analysis: Contract Requirements v. The Real World This session will focus on a crucial schedule delay analysis methodology issue; namely, the challenges, difficulties and issues associated with Contract Provisions that require the use of fragnets and schedule updates to analyze delay during the course of the work on a project, or in an after-the-fact "claim situation," versus the utilization of "As-Planned" to "As-Built” critical path delay analysis techniques in evaluating delay. Whether you're involved in asserting or defending against a delay claim during the course of the work on a project or afterwards, the selection of the method of analysis you use can "make or break" your position. Today, many construction contracts contain critical path scheduling requirements that mandate certain specified procedures for evaluating time impact due to changes or delays in the work; procedures which require you to utilize fragnets and "...the schedule update in effect at the time the change is issued or the delay incurred," or clauses which require that a "current schedule update" be utilized for evaluating time impact. The application of such procedures in the real world, however, presents significant challenges to the parties to a contract — especially when, as is so often the case, the schedule updates were not or could not be maintained in the manner contemplated by the contract. While contracts may stipulate critical path scheduling requirements and procedures to be utilized in establishing entitlement to an extension of the contract time, in many (if not most) instances the parties to the contract fail to adhere to such requirements. As a result, the schedule updates prepared during the course of work are fundamentally nothing more than a "payment vehicle" for purposes of generating monthly progress payments, while the fundamental "utility" of the schedule updates as a management tool, for purposes of forecasting the contractor's planned sequence of work to project completion becomes increasingly obfuscated by ongoing changes and delays that are not timely — if ever ~ resolved by the parties. In such situations the updates are inherently compromised, placing the parties in the position of having to utilize an alternative, more accurate, means of analysis in order to evaluate the effects of changes and delays in the work, So what do you do??? Enter: "As-Planned v. As-Built" critical path delay analysis techniques, This session will include a discussion of time impact analysis techniques and their delay analysis “utility” both during and after construction of a given project, and will also address "what constitutes an accurate and complete schedule update" for purposes of enabling updates to be i Copyright 2002 by Evans M, Barba, Navigant Consulting AU RightsReservedutilized for their intended purpose, Various cases and decisions, which provide seemingly contradictory guidance with respect to the utilization of "Contract Provisions" versus "As- Planned to As-Built" schedule delay analysis methodologies will be discussed. Key concerns and objectives from both the attorney's and the consultant's analytic standpoints will also be reviewed and the speakers will present recommendations for your consideration of factors to be considered in determining the appropriate method for performing a schedule delay analysis in a given situation, ii Copyrigh 2002 by Evans M. Barba, Navigara Consulting (AU Rights ReservedPresentation Outline Introduction Delay and Time Extension Analysis Methodology * Use Schedule Updates? * Use As-Planned vs. As-Built Analysis? = Prospective and Retrospective Analysis The “As-Built” Critical Path = What it is + Why it’s important Schedule Updates * The Good, the Bad; and the Ugly Time Impact Analysis Provisions = “Intent” vs. Real World “Utility” Project Schedule Revision Clauses * Can they hurt you? Significant Case Decisions Recommendations if (Copyrigh 2002 by Evans M. Barba, Neigont Consulting AU Rights ReservedTable of Contents To facilitate the discussion and presentation of the subject topic, the presenters have enclosed a series of “Discussion Papers” which contain information relevant to the subject matter. These Papers, which follow, are: Page No. 1 Discussion Paper No. 1 - CPM Fundamentals. Discussion Paper No. 2 — Change Orders: Pricing and Evaluation Discussion Paper No. 3 — Prospective vs. Retrospective Delay Analysis: An Overview. Discussion Paper No. 4 — Sample Time Impact Analysis Schedule Provision: Discussion Paper No. 5 ~ Sample Project Schedule Revision Provisions. Discussion Paper No. 6 ~ Relevant Case Law.. Addendum ~ Biographies of Speakers. Evans M. Barba Judah Lifschitz Copyright 2002 by Evans M, Borbo, Navigant Consulting All RightsReservedDiscussion Paper No. 1 CPM Fundamentals Development In 1957, the U.S. Engineering Department of E.1. duPont de Nemours, Ine., along with Remmington Rand, undertook a study which culminated in the development of a new system for developing and coordinating information relative to the planning and scheduling of an engineering project. Their goal was to attempt to optimize time and money. The net result of this study was the development of the technique that has become known as the Critical Path Method (CPM). CPM can be basically described as a graphic presentation of a planned sequence of activities which illustrate the inter-relationships and inter-dependencies that exist between the elements which comprise a project. ‘The development of a project schedule using the critical path method includes two phases (or steps) — the planning phase and the scheduling phase. The planning phase involves breaking a project down into its component parts and developing a listing of all activities anticipated to be performed and arranging those activities in their logical sequence with respect to execution. This step is best accomplished by having the scheduler meet with the project team personnel in order to review the project contract documents and procedures to be utilized by the parties to the contract in administering the construction, Based upon this review (and discussion with project personnel), the project can be broken down into discrete work areas, or sub- project categories. These categories or tasks can similarly be broken down into sub-tasks to provide a greater level of detail, and activity listing can then be accomplished. Page (Copyright 2002 by Evans M, Borba, Nevigan Consling AI RightsReserved‘The activities so identified are then used to construct the logic diagram or “arrow diagram.” [Note: CPM schedules can be prepared utilizing either the “arrow” (activity on arrow) or “precedence” (activity on node) method of scheduling. For purposes of this, discussion, reference will be made to utilizing the arrow diagramming method] When one constructs a bar chart schedule, the functions of planning and scheduling have to be considered together because of the time-scale characteristics of the chart. In developing a CPM logic diagram, however, these functions are treated separately. It is said “first plan and then schedule,” which represents a radical departure from bar chart schedule preparation thinking, In effect, we first consider the work as a series of items assembled strictly on the basis of logic of assembly. No consideration need be given to time when planning. A wall, for example, cannot be built until the foundation is installed. Time has nothing to do with the sequence. You cannot plaster masonry walls until the masonry walls are erected. Here again, time has nothing to do with the logical sequence of the work. This point is emphasized because it is one of the single most important aspects of CPM schedule planning and development. Once activity listing is complete, the logic diagram is constructed, There are three basic considerations which must be employed in order to assemble a logic (or network) diagram. CPM planning is an interrogation-type technique wherein one is asked the following questions with respect to each of the activities set forth on the activity listing: 1. What other activity(s) must be completed before this activity can start? 2. What other activity(s) can be going on while this activity is underway? 3. What activity(s) cannot start until after this activity is completed or at least underway? Page 2 Copyright 2002 by Evens M, Barba, Nevigont Consulting “Al Rights Reserved‘As a result of answering these questions, the logic diagram, which illustrates the interrelationships and interdependencies between the activities required to complete the project, is established ‘The development of the logic diagram marks the completion of the planning phase. ‘The next phase, the scheduling phase, involves determining a time duration for each of the activities (except dummies) set forth in the logic diagram and thereafter computing the event times for each of the activities in the network. The assignment of durations of time for the various activities is obviously a key element of schedule development and must be carefully undertaken by a contractor. Activity durations are a function of numerous factors including, among others, the quantity of work to be performed relative to a given activity, the size and make-up of the crew(s) to be utilized by the contractor in performing the work, the productivity anticipated to be realized by the contractor in performing its work, the time of year and geographic location of the work in question, etc. Once the schedule logic and activity durations are established, the critical path may then be determined. In this regard, the basic computations in CPM to determine a time schedule consist of simple addition and subtraction. These computations are known as the forward pass and backward pass. These two computations establish the time boundaries for each activity within the network (these “time boundaries” are referred to as an acti ‘boundaries are set can a schedule be established. ity's early start, early finish, late start and late finish). Only after these time Page 3 Copyright 2002 by Evans M. Barba, Navigant Consulting Ma Rigs ReservedQ The Forward Pass Starting at “time zero” a forward pass through the network is made wherein an activity’s duration is added to its starting time to determine its completion. This process is continued sequentially through the entire network. When this pass is completed, all early start and early finish times are established. When there are multiple predecessors, the predecessor with the largest finish time is the one selected to establish the starting time of the follower. Only numbers are used at this point and the numerical assignment of days is referred to as “project time.” Since zero is assumed to be the beginning of the first day, the tail of the first arrow in the network is at zero. The duration of the first activity is then added to its early start of zero to produce its early finish. If only one activity follows the initial activity, then the early start of the second activity is equal to the early finish of the first arrow. This process of adding the activity duration to its early start time (to ‘compute its early finish time) and the comparison of this time (at merge events) to determine the early start time of the follower is repeated through the balance of the network. The result of the calculation is the early start and completion time for all activities within the network, as well as the establishment of the total project, duration. Q The Backward Pass ‘The backward pass reversed the above process, starting from the final event of the network using the calculated total project duration as the starting point. This calculation is made to determine the late start and late completion time for each activity. Starting at the last activity in the network, the late finish time of the final activity is set equal to its early finish time. The final activity’s duration is Page 4 Copyright 2002 by Evans M, Barb, Nevgant Consting “Il RightsReservedthen subtracted from its late finish time to determine its late start time. This same process is repeated from the back end of the network to the front (or beginning) of the network. By making a forward pass and a backward pass through the network, early start and late start time, early finish and late finish time, and the critical path are established. Each can be defined as follows: © Early Start Time — the highest lapsed time cumulative count of all the pass of activities converging at an event on a forward pass © Early Finish Time — the early start time plus the duration of that activity © Late Finish Time — the lowest lapsed time cumulative count of all the pass activities converging at an event on a backward pass © Late Start Time — the late finish less the duration of that activity © Critical Path — a group of necessarily related schedule activities which together create the longest duration through the schedule to project completion (necessarily related by construction logic or resource allocation). Critical Path, In the above sample network, there is a continuous path of activities and events wherein the early start time is equal to the late start time. This is one further check on your arithmetic. There must be at least one path through the network where the early start time equals the late start time. ‘This is the so-called “Critical Path” (as indicated by the striped line). It is the longest path through the network and it is the path which determines the project duration. All activities which are not on the critical path are said to have “float.” Page 5 Copyright 2002 by Brant M Barbe, Naigant Coating Ma highs Reserved‘Types of Float By completing the forward and backward passes, event times are established which define the time limits within which an activity must start if the project duration is to be realized. These limits, or boundaries, are the early start and late finish of an activity. ‘The difference between the maximum time available within which to perform an activity and the duration of an activity is known as total float. It is important to recognize that float exists by virtue of the contractor's planned approach to the performance of its work. It is as a result of the contractor’s activity definition and breakdown, logic development (including the establishment of the interrelationships and interdependencies that exist between the various activities) and duration development, that activity event times are established. In essence, float is contingency time associated with a path or chain of activities, and represents the amount of time by which the early finish date of an activity may be delayed without impacting upon the critical path and thereby delaying overall completion of a project. In the first instance, float represents a resource to the contractor in that it provides some degree of flexibility in terms of resolving problems and assigning resources. There are several types of float which are recognized: total float, free float, independent float and interfering float. The differences between these types of float is the manner in which they affect other activities in the network. A definition of each of these terms is as follows: Total Float: the time by which an activity may be delayed or lengthened without impacting the project completion date, 0 Free Float: the time by which an activity may be lengthened or delayed without impacting upon the early start date of any following activity in the chain. © Independent Float: the time by which an activity may be lengthened or delayed without impacting upon the early start date of any following activity in the chain nor affecting the latest start time of any preceding activity in the chain. Page 6 Copyright 2002 by Evans M, Barba, Nevigant Consulting All RightsReservedFloat; the time that, if used, would decrease the float available to follow- ies in the chain; thus, the difference between total float and free float. Total float is the most commonly used and recognized type of schedule float. Free float, independent float and interfering float are rarely used in practice. O Procedures for Monitoring and Updating Need for Monitoring. A contractor may have developed the best possible schedule with input on activity content, sequencing, duration and manning estimates provided by all project participants. But unless the project’s performance is measured against this schedule, you will not truly know where “the project is,” or “where it is going.” To this end, it becomes necessary to track actual progress against planned progress. This can best be accomplished through. status reporting by all participants, by those who best know the real status of each project element and the problems being encountered. Monitoring allows project participants to exercise greater control over a project. It enables the Contractor to utilize its men and equipment in the best possible manner, and most importantly, permits/enables project participants to act, to avoid or reduce potential conflicts and problems as opposed to the typical “finger pointing” so often found at the end of many construction projects. How to Monitor: Monitoring of the work on a project entails systematically tracking and recording daily work progress, by schedule activity, throughout the performance of the work on a given job. Such information is invaluable in terms of facilitating the accurate, periodic updating of the project schedule, and likewise facilitates the development of Time Impact Analyses and the development of a project As-Built Schedule. Page 7 Copyright 2002 by Evans M. Barba, Neigent Consuing AI Rights Reserved‘Need for Updating: The dynamic nature of a construction project causes change from the unexpected as well as the expected. Some of the primary factors which influence such changes include added or deleted work, delays, strikes, weather problems, changes in sequence, unanticipated subsurface conditions and acceleration in the work, among others. To be a viable tool, the project schedule must reflect these changes in the work and the effect of same on the contract end date on a current basis. Updating involves the periodic review of the project schedule and progress to provide a complete and accurate report of actual versus planned progress. It also serves as a basis for allowing the parties to schedule their remaining work in order to achieve the overall schedule objectives. Preparing for Updates: Scheduling specifications or projects typically indicate the frequency with which the project schedule is to be updated. Typically, monthly updates are sufficient; however, project circumstances may dictate a longer or shorter duration between updates. The scheduling specification should also indicate the parties responsible for organizing, preparing material, and the party responsible for physically updating the network diagram and the computer printout. All involved parties then participate in a joint meeting to review the progress information, changes that must be incorporated into the work, and delays during the time from the last update. This information must be validated and incorporated into the schedule updating process. The pertinent information to be gathered and analyzed during each update period includes the following: * Commencement and completion dates for all activities commenced and/or completed during the update report period; Page 8 Copyright 2002 by Evans M. Berb, Nevigant Consulting “AI Rights Reserved* Current progress of activities which commenced in prior update periods, indicating actual completion dates or, if still in progress, the remaining time duration; * The determination of what activities need to be resequenced, added, deleted or modified to clarify or reflect a change in plan or operation which to maintain requires schedule detail for proper monitoring and controlling; and = Fragnets that have been incorporated into the network diagram to reflect delays and/or changes. Page 9 Copyright 2002 by Evans M. Barba, Navigant Consulting “al Right ResrvedDiscussion Paper No. 2 Change Orders: Pricing and Evaluation This discussion paper deals with the central question of the proper technique(s) to be used in re-pricing work affected by change orders. In addition, it will discuss the specific types of costs which are properly chargeable to such re-pricing. ‘The “Changes” clause contained in the United States Goverment Standard Form 23A, which is utilized in all formally advertised construction projects, requires an “equitable adjustment” in the contract amount and performance time. However, this clause does not provide any additional guidance with respect to defining the meaning of “equitable adjustment.” As a result, the meaning of the “equitable adjustment” has been refined through a long course of litigation in the Courts and Boards of Contract Appeals. Although all of the questions have not yet been answered, much can be leamed by examination and analysis of these decisions. In Bruce Construction Corp. v. U.S., 163 Ct. Cl. 97, 324 F2d 516 (1963), 5 G.C. 1554, the Court of Claims said that the basic purpose of an equitable adjustment is “to keep the contractor whole when the Government modifies a contract.” This statement has been widely quoted as stating the basic theory of equitable adjustment. However, it should be recognized that the theory is two-fold in that it is geared to maintaining the “contractor's position,” as well as to preserving the owner's pricing position in the part of the work that is not affected by the change. The author of a law review article most aptly described the theory of equitable adjustment as the “leave them where you found them” theory [Duncan, Equitable Adjustments on Fixed Price Contracts, 22 Fed. B. J. 307 (1962)]. This statement was derived in the case of Montag-Halverston-Cascade-Austin, Eng. C&A 1075 (1958) which Page 10 Copyright 2002 by Evans M. Barb, Navigant Consulting ‘AI Rights Reservednoted that the purpose of the equitable adjustment: is to leave the parties in the same position cost-wise and profit-wise as they would have occupied had there been no change, preserving them each as nearly as possible the advantages and disadvantages of their bargain. ‘The pricing of change orders can best be understood if broken into three component parts: a, The calculation of costs attributable to work added to the contract. b. The calculation of costs attributable to work deducted by change order form the contract. ¢. The application of overhead and profit to additive and deductive changes. Each of these elements will be discussed in the following section of this chapter. 1 Added Work Work added to the contract by change order is usually priced at the reasonable cost of performance to the contractor. In situations where the price of the change order is negotiated prior to the performance of the work, the rule consistently followed by Appeals Boards recognizes that estimated costs are properly useable, provided that they constitute the most accurate cost information available at the time of the pricing. In instances where, for one reason or another, the work is accomplished prior to negotiating a price, the actual costs incurred are available and are presumed reasonable. Bruce Construction Corp. v. U.S., 163 Ct. Cl. 97, 101 324 F.2d 516, 518 (1963), 5 G.C. 9554; Canon Construction Corp., ASBCA No. 15208, 71-1 BCA 8780. Page 11 Conright 2002 by Evans M, Barbs, Navigant Consulng AU Right Reserved‘There are two ways of determining the reasonableness of a cost: Using the first method, one determines the cost based on allowability, ie., interest expenses, advertising costs, etc. The second method looks at the reasonableness of the costs with respect to the method(s) utilized by the contractor in performing the work. Actual costs need not be equivalent to those which could have been incurred by the most efficient contractor in order for those costs to be deemed reasonable. Methods which are efficient and economical within the framework of the contractor’s procedures will be accepted. In order to refute the methods of operation the owner must identify very specific procedural deficiencies in order to show that the contractor’s costs are unreasonable. In dealing with changes that add work to contracts, contractors often request monies for “impact” costs resulting from a change. In this situation, the contractor should identify the nature of the alleged “impact costs” and the time frame in which they were incurred. A failure to advise the owner of the claimed costs at the time of acceptance of a lump sum payment for the performance of specific changed work may prevent the contractor from recovering additional costs. Tri-Messine Construction Co., Inc., GSBCA No. 5165, 82-1 BCA 15, 735. Therefore, the contractor’s failure to specifically reserve the right to claim additional costs in an initial contract modification may act as a waiver of its right to later assert a claim, However, in some cases the contractor may be awarded additional expenses even when he failed to explicitly reserve the right to claim additional costs. 2. Deleted Work When a change order deletes work from the contract that has not yet been performed, and there is no other separate payment stipulated in the contract (such as a Page 12 Copyright 2002 by Evans M. Barba, Navigant Consulting “ll igh Reserved‘unit price), the owner is entitled to a downward adjustment in price equal to the cost the contractor would have incurred had the work not been deleted. Thus, the cost information utilized in measuring the deletion is the cost information current at the time the change was ordered, The amount of the adjustment should not be based on the contractor's original estimate of the work. Note, in this situation, actual costs are not at issue since the work in question has not been performed. Therefore, the parties must deal with estimating the amount that would have been incurred had performance been required, ‘Where the contractor may have incurred a loss from performing the deleted work, because of his own inefficiencies or because his original work estimate was low, the would-have-cost rule will force him to bear the loss which he would have experienced if the work was not deleted. Conversely, if the contractor is able to demonstrate that he would have been able to:perform the work for less than the amount of his original estimate, the would-have-cost rule will permit him to retain the excess amount in pricing the change. ‘The central issue in pricing deleted work is the reasonableness of the estimated cost. In this regard, there are various sources of information to which the owner can look in order to evaluate the reasonableness of the amount of the deletion offered by the contractor. These include: ‘The contractor's original estimate and experience in performing similar work. ‘The owner’s estimate and prior experience in performing similar work. Bids of other contractors. ‘Subcontractor quotations. ‘Vendor quotations. Time and motion studies of similar type work. en ‘Various manuals and estimating services. Page 13 Conyrght 2002 by Evans M. Bare, Nevgant Consuing “al ighs Resened‘When the owner deletes work from the contract that is a separately priced item (ic., a unit price), it has been held that the measure of the deletion is the stated price. If the contractor had been in a position to make a high profit on the given item, he would be deprived of that profit. On the other hand, if the contractor stood to lose money on a given item, the deletion would relieve him of that loss. This rule can have a significant impact on contractors who intentionally unbalance their bids; these contractors run the risk of having underpriced items substantially increased in quantity, while overpriced items may be deleted or reduced in quantity. 3. Substitutions A contract change which involves substitutions generally requires computing the difference between the reasonable costs of performing the added and deleted work. Globe Const. Co., ASBCA No. 21069, 78-2 BCA $13,337. In addition, the cost of undoing previously performed work is usually credited to the amount owed the contractor. If labor and material costs have changed substantially in the period between bidding and the time of the change, pricing of the substituted work should be based on the cost of performance at the time the change order was made. In addition, when a contract change is issued that substitutes one piece of equipment (or material) for another, the re-pricing should take into account whether the proposed substitute equipment or material was originally priced under another item in the contract. 4. Overhead and Profit Contractors are entitled to an adjustment in overhead and profit as part of an equitable adjustment which increases the cost of contract performance. Conversely, it Page 14 Conpright 2002 by Evans M. Baro, NavgontConsling “Al RightsReservedseems that the owner should reduce the overhead and profit figures in changes which decrease the costs of the contract, However, this latter issue is not free from controversy, and requires detailed analysis in order to arrive at a clear perception of the applicable rules. (a) Overhead The standard accounting practice is to adjust indirect costs as a percentage rate of direct costs which reflect the contractor's experience over a period of time; itis, therefore, expected that any direct costs in an equitable adjustment will bear their standard amount of overhead. This practice has been applied whether direct costs have increased or decreased. ‘With “small” changes, this practice provides a convenient method for the calculation of an equitable adjustment, since it does not require a complete analysis of the contractor’s overhead accounts. Typically, the rate(s) utilized in these computations are (a) the rate provided for in the contract; or (b) the contractor's historical or standard overhead rate on original contract work already completed. However, when a change or changes have a drastic impact on the contractor, or significantly alter the contract work, the indirect cost impact is far different from the amount that would be applied by the use of a current (or standard) overhead rate. In this instance, the parties should negotiate a specific rate that is reflective of the actual cost impact of the change. This can be accomplished by re-analyzing the contractor's overhead accounts or by pulling certain cost elements out of overhead and treating them as direct costs. In Kenmore Garment Co., ASBCA No. 14142, 71-1 BCA 98768, the Board held that the overhead rate to be applied in computing an equitable adjustment for changed Page 15 Copyright 2002 by Evans M. Barba, Novigant Consling AU Righs Reservedwork should be based on historical costs for performing other than changed work for an appropriate time period. ‘The Board refused to allow the overhead rate to be calculated based on changed work costs. In the Board’s opinion, overhead cost should not vary “as one claim is allowed, another disallowed, and one increased, while another is decreased.” ‘A contractor may be denied compensation because of failure to demonstrate that overhead rates were increased. Lucarelli & Co., ASBCA No. 8768, 65-1 BCA 44655. In any event, the purpose of using such a procedure is to arrive at an overhead rate that is fair, and reflective of the actual cost of the change. ‘There is a good deal of flexibility in this area if the contractor can present sufficient facts to show that extreme alterations in overhead have occurred as a result of a change. This flexibility is, however, generally limited to those situations where a contractor is working on a firm, fixed-price contract, When dealing with cost reimbursement or incentive contracts, the only fair way to add or deduct overhead is at the historical rate which the contractor has incurred. (®) Profit Profit on the costs incurred in the performance of changed work is a normal part of any equitable adjustment. However, there is some controversy over whether it is proper to reduce the contractor's profit in a “deduct” situation; as well as over how to determine the amount of profit that should be added as part of an “additive” change. Determining the amount of profit to be added or deleted is a difficult problem when no provisions have been included in the contract for its handling, Page 16 (Copyright 2002 by Evans M, Barba, Nevgant Consuling AU Rights ReservedIf no provisions are contained in the contract, a standard rate (usually 5% -10%) can be applied to small changes, or the parties can use the profit rate used on the original contract in order to keep negotiations simple. In Keco Industries, Inc,, ASBCA No. 15184, 72-2 BCA 49576, one issue which was resolved by the Board was the amount of profit a contractor is entitled to as a result of changes in the fixed-price air conditioner supply contract. The Government argued that the contractor was not entitled to any profit because his original bid was allegedly based on not making a profit. The Board did not accept the argument that the contractor bid on the job with no profit. The Board further stated that even if the contractor had bid on the job without a profit, it would not follow that work required by the changes which increased the contractor's costs should therefore be performed without a profit. The Board held that the contractor is entitled to a reasonable profit for the work occasioned by the change. In situations involving more substantial changes, the rule is that the parties should negotiate a percentage of profit that reflects the impact of the change. If the change involves work that is more difficult than that originally specified, the percentage should be higher; conversely, if the work is less difficult than that originally specified, the rate should be lower than the original contract rate. Cimmaron Construction Co., ENGBCA No. 2862, 69-2 BCA 48003. Additional factors which should be considered in arriving at a reasonable rate of profit to be applied in a given change situation include: the complexity of the work; the risk assumed by the contractor; the amount of capital employed in the changed work; and the contractor's historical rate of profit in performing similar work. Page 17 Copyright 2002 by Evans M, Barbs, Navigon Consuling Al Rigs Reserved5. Subcontract Changes The pricing of changes which affect the work of subcontractors and sub- subcontractors is difficult. It should be noted that making changes to work being done primarily by subs and sub-subcontractors also raises the issue of how far down a change can/should be traced through the contract chain; recognizing that at some point the change ceases to remain within the general scope of the contract. ‘The principle to be followed in pricing subcontractor changes, is that changes should be traced down through the subcontract tiers to the extent information is available. (itis noted that in order for this trading to occur, the prime contractor should make sure that the subcontracts contain a “Changes” clause.) When the available information used to analyze the adjustment becomes vague and unclear, the matter should be settled by negotiation. 6. Time Considerations Most contracts provide time limitation provisions. These provisions specify the time limit in which a contractor must advise the owner of his intention to assert a claim for additional costs due to changed work. Most often these “time limitation provisions,” which are commonly referred to as notice provisions, are found in “Changes” clauses; “Differing Conditions” type clauses; “Suspension of Work” clauses; “Delay” clauses; ete. Most standard form contracts utilized in the United States contain specific time limitation provisions, Under government contracts the contractor has 30 days within which to furnish notice for formal changes; and a “reasonable time” period is indicated for constructive changes. However, any costs incurred by the contractor more than 20 days prior to notification of a constructive claim are not recoverable. Therefore, if the contractor desires to recover all costs related to a specific constructive change, he must Page 18 —_ Copyright 2002 by Evans M. Barb, NavigantConsing Al Rights Reseredadvise the owner/engineer of the costs within 20 days. (In order to be considered, the notice may never be later than the date of final payment under the contract, unless the owner “should have known” that a claim for additional compensation was pending at the time of payment.) Most jurisdictions will allow a claim if it is deemed that the owner, in fact, had actual or imputed knowledge of the change, and, consequently, anticipated a claim (or the possibility of a claim, Thus, American courts have utilized the theory of “constructive notice” in order to avoid denial of a valid claim (where entitlement is clearly evident) on the basis of merely not having complied with a technical requirement of the contract. However, the burden of proof is on the contractor to show that the owner was, in fact, aware of the change in question. Detailed cost data and analysis supporting a request for a time extension should be sent as soon as they are calculated and determined. Specific Limitations on Recovery Contracts contain specific limitations on the amount of compensation a contractor can recover in certain instances. For example, the “suspension of work” clause forbids recovery of profit in computing and adjusting the contract price; and other provisions limit the period of time for which increased costs may be allowed. In reviewing any request for adjustment in contract price, the owner should make certain that the pricing is consistent with the requirements contained in the contract provisions under which the contractor is claiming. With respect to pricing change orders, the computation of the price will depend upon the specific requirements set forth in the contract. Page 19 Copyright 2002 by Bvens M. Barba, Navigant Consulting All Rights ReservedWith respect to pricing change orders, the computation of the price will depend upon the specific requirements set forth in the contract. The allowable methods of pricing may vary from one jurisdiction to another, and from one job to another, depending upon the particular circumstances surrounding the change order. “Impact of change orders” is one last matter that warrants discussion. A change order on a fixed price contract almost always affects costs and time considerations, two parameters which are inextricably tied together. In recent years, the construction industry has come to recognize two components of a change order — “Direct effects” and “indirect effects.” The latter term is commonly referred to as impact or ripple effect, on the unchanged work. The direct effects of a change order are time and cost considerations, which are directly attributable to, and capable of being isolated from, the project as a whole. These “effects” are easily estimated utilizing contract prices and standard estimating procedures on the premise that the change is to be priced as if the work were being performed in a vacuum, The “direct effects” include direct labor, direct material costs, direct equipment costs, overhead, taxes, insurance and bond costs, profit, and any other agreed to costs which are incident to processing the change. ‘These costs should be considered for the most efficient method and should be estimated as if the work were to be performed completely isolated from the rest of the project. ‘The indirect (or impact) effects of the change relate to the current position of the contractor relative to incorporating a given change order into the project schedule. The problem in this regard involves the incorporation of the work into the “unchanged portion” of the work schedule such that an examination of the “total” effect the change has on the schedule, at a particular point in time, can be made. A “change order schedule Page 20 Copyright 2002 by Evens M. Barba Nevigant Contulng “A Rights Reseredanalysis” will enable the parties to ascertain whether or not project performance time is affected. Changes in project performance time (either increased or decreased) could affect the indirect costs of overhead; taxes; insurance; bonding; and cash flow. In addition, an altered sequence of construction may be required to incorporate the changed work Changing the sequence of as-planned activities can affect contractor costs with respect to: loss of efficiency, idle (standby) time, etc. Changing the project schedule can create additional work for the contractor in terms of temporary heating requirements; storage of materials, working in harsher weather conditions, etc. One should recognize that the impact costs associated with changed work can be, and are most often, more extensive and expensive than the “direct cost” of performing the changed work. In construction today, parties often negotiate and execute change orders to only include the “direct costs” involved in performing the work — leaving the question of impact costs somewhat “in the air.” In this instance, contractors typically “reserve their rights” to later recover impact costs at such time as these costs become determinable. Lakeside Bridge & Steel Co. v. Mountain State Construction Co., 446 F.Supp. 1163 (ED.Wis. 1978). ‘When the contractor presents a claim for impact costs due to previously executed change orders, an owner may allege that if a change order is accepted without protest, then it should be considered a final mutual agreement (an “accord and satisfaction”) as to the equitable adjustment and time extension stated, and is thus a “release” of the owner from any further liability to the contractor. The owner may further allege that an intention to reserve any times for a future claim must be fully and clearly expressed. Page 21 Copyright 2002 by Evans M. Barba, Neigont Consuling “A RightsReservedGenerally, acceptance of a written change order binds both parties and operates as a final mutual agreement (the final “accord and satisfaction” mentioned above) and a bar to any further claim by the contractor. For this reason, a contractor will often refuse to execute a contract modification when he believes it is not feasible to calculate and include the full costs resulting from the modification until a later date. There is no absolute requirement that a contractor affirmatively reserve his claim, Roberts Construction Co., GSBCA No. 5724, 81-1 BCA 15,104, However, to avoid the possibility of waiver of the right to claim additional costs, the intention to preserve a claim should be expressed, U.S. Optics Corp., ASBCA No. 18972, 75-2 BCA 11,603; Chantilly Construction Corporation, ASBCA No, 24138, 81-1 BCA 414,863. ‘An accord and satisfaction covers only those claims which are or should be genuine issues in dispute at the time the change order is issued. Stated differently, a change order does not constitute an accord and satisfaction when it is clear that it was not intended to encompass the problems experienced by the Contractor after preparation of the change order. Requirements and rules of interpretation for a valid accord and satisfaction have been set forth in various decisions. There can be no accord and satisfaction without the change order being equivalent to a new contract additional to the contract at the heart of the dispute claim. The essentials of a contract must be present: appropriate subject matter, competent parties, a meeting of the minds, and support of the agreement by sufficient consideration. See S. Leo Harmonay, Inc. v. Binks Manufacturing Co., 597 F.Supp. 1014 (SDNY. 1984). Regarding the owner allegation that a change order accepted without protest should be a final mutual agreement; the burden is on the owner to establish the “release” and also to show the applicability of the release to the subject matter in dispute. Brubaker Page 22 Conright 2002 by Evans M. Barb, Navigat Consaling “Al Rights Reservedv. United States, 342 F.2d 655 (7th Cir. 1965); Chantilly Construction Corporation, supra, While a claim for impact costs can survive change orders under some circumstances, they must be proven to have arisen out of the changes, Pittman Construction Company, GSBCA Nos. 4897, 4923, 81-1 BCA 14,849, and the change orders must not have been in final settlement of claims for all costs arising from and related to the changes. It may be found that a change order did not constitute an accord and satisfaction when it was clear that it was never intended to encompass the problems experienced by the contractor after the preparation of the change order. For example, in Blake Construction Company, Inc., GSBCA No. 4742, 80-2 BCA 414,756, a change order intended to compensate a contractor for additional work did not encompass impact costs he incurred as a result of extended performance necessitated by extraordinary changes. ‘Therefore, there was not an accord and satisfaction except to his direct costs. Although the change order authorized an equitable adjustment, it made no mention of impact costs and did not operate to bar the contractor’s claim for impact costs. Thus, the change order did not constitute an accord and satisfaction, and did not discharge the present impact cost claim. Also, see Mann Construction Company. Inc., supra. ‘When the contractor presents a claim for impact costs due to previously executed contract modifications, the Government may allege that an intention to reserve any items for a fature claim must be fully and clearly expressed. Although there is not an absolute requirement that a contractor affirmatively reserve his claim, it is incumbent upon the contractor to expressly reserve his rights to avoid a waiver. ‘The contractor should also be careful of the language of his reservation. If the contractor reserves his right for a claim of extension of time only, he will be precluded Page 23 Copyright 2002 by Evons M. Barba, Nevigant Consuing A Rghs Reservedfrom seeking monetary recovery. Najjar Industries, Inc. v. City of New York, 445 N.Y.S. 2d 302 (1982). If the contractor first protests but then unconditionally accepts a change order, he also abandons his right to claim for indirect costs. J.J. Fritch General Contractor, Inc., ASBCA No. 5253, 1962 BCA 43298; B.W. Horn Company, ASBCA No. 11517, 67-2 BCA 6583. 8 Time Impact Analysis Refer to Discussion Paper Nos. 3 and 4, Page 24 Copyright 2002 by Evans M. Barb, Navgent Consung “AI Rights ReservedDiscussion Paper No. 3 Prospective vs. Retrospective Delay Analysis: An Overview 1, The As-Planned Schedule: The Starting Point A contractor's as-planned (baseline) schedule typically represents the contractor's plan for performing the contract work as-bid. The project’s duration and the contractor’s/sub-contractor’s planned sequences, means and methods with respect to performing the work form the basis upon which the as-planned schedule is developed. In developing a planned schedule a contractor uses its experience and expertise to “ink” ond interrelate construction activities in a manner which forms a sequence of construction. This “necessarily related” sequence of construction activities is typically based on either physical constraints (relationships) or resource allocation (equipment/manpower) restraints which limit when work on various activities can be performed. Ultimately, only a limited number of schedule activities dictate project completion. This “limited number” or group of activities which controV/dictate project completion forms a trackable path from beginning to end of the project. This path is known as the critical path, which is a sequence of necessarily related activities through which develops the longest duration to project completion. Activities which are not on the critical path have — relative to the critical path — float, which is the time available for completion of an activity before it “tums critical” and impacts the completion date of the project. Typically, project float is for the use of either the Contractor or the Owner and delays to project completion occur only when all of the float for an impacted non-critical activity has been consumed. Page 25 Copyright 2002 by Evens M, Barba, Novant Consulting AU Rights ReservedIn essence, a change, problem, etc. which results in “extending” the time of performance of any scheduled activity can only result in a delay to project completion if that activity is, in the first instance, on the project’s critical path, or if the “extended” time of performance of an initially non-critical activity exceeds the float available to it at the time. Delay to a project’s completion date and resultant damages can be evaluated “prospectively” or “retrospectively” during construction, or retrospectively after work on a project is completed. 2. Prospectively During Construction: Using Updates and the “Projected” Critical Path To Completion “Changes” are a part of reality on nearly every major lump sum construction contract undertaken in the world today. ‘The impact of these changes on a contractor’s bid price and schedule is directly related to the timing and scope of the change. In some cases the specific scope of work related to changes to the original contract work are known in advance of the changed work being performed, and in such cases forward pricing/schedule time impact calculations can be prepared. Under a forward pricing schedule impact scenario, the contractor and owner “estimate,” or “predict,” the impact of the change on the contractor’s work with respect to cost and time, and reach an agreement prospectively. In this regard, the contractor's request for additional time and compensation is typically based on an analysis of the current (updated) schedule with respect to the “forecasted impact” a given change is anticipated to have on the project's “projected/as-planned” critical path to project completion. To the extent the owner and contractor reach agreement regarding such an analysis, the analysis typically translates into a revised required contract completion date (if it can be demonstrated that the change impacted the original contract completion date). Page 26 Copyright 2002 by Evans M. Barbe Nvigant Consing Mall Rights ReservedIn practice, however, relatively few contract changes involving contract time extensions are resolved prospectively due primarily to notice and timing of the changes and the negotiation process. In cases where prospective analyses are not performed and/or mutually agreed to, “retrospective” analyses must be performed. 3. Retrospectively During Construction: Using Update Data and the “Actual/As- Built” Critical Path to Completion Consistent with the submission of a monthly pay application, contractors are typically required to “status” and “update” the project schedule at the end of each month using the actual events which occurred during the prior month. Project Schedule updates are typically required on major construction projects. Monthly schedule updates are relatively straightforward to prepare. A complete monthly schedule update should identify actual/as-built start and finish dates for completed activities, partially complete activities (start date, % complete and remaining duration), remaining (as-planned) activities, and logic changes. Fragnets related to changes and delays in the work should also be submitted, A properly updated schedule will reveal the actual/as-built critical path and the impact of changes made during the prior month on the contract completion date. A complete schedule update embodies the impact of changes to the as-built critical path, which will cause the as- planned completion date to be extended. The identification of the as-built critical path and the calculation of actual time impacts are typically recognized by contractors as being the most equitable method of calculating project delays. This type of analysis is akin to performing changed work on a time and material basis when actual incurred costs are identifiable and recovered. The accumulation of complete monthly updated schedules and delay analyses becomes the overall project as-built schedule, which identifies the as-built critical path and embodies a Page 27 Copyright 2002 by Evans M. Barbe, Neigent Consuling AAI Rights Reserveddelay analysis based on those changes, problems, etc. which actually impacted the project’s completion date. 4. After_Construction Is Completed: Utilizing the “As-Built Critical Path” to Completion In situations where, for whatever reason(s), a contractor has not prepared complete monthly schedule updates (as discussed above) during the performance of its work on a project, constructing an as-built schedule which is compiled from project daily records and information is the proper method to determine the project’s actual/as built critical path. Using detailed, day-by-day as-built information and actual logic relationships as the basis for a delay analysis avoids the problems associated with incomplete schedule updates and “summary” activity pitfalls inherent in scheduling software packages. Detailed as-built data correlates to the contractor’s as-planned activities and identifies non-work periods, in contrast to summary level scheduling data. The identification of non-work periods in conjunction with the identification of actual logic changes in the work facilitates the identification of the as-built critical path, and subsequently facilitates the analysis of weather, stop work orders, non-work periods, changes, responses to questions (RFI’s), or any other “administrative-type” actions which may have caused an impact to the work. Retrospective as-built critical path delay analysis is a compilation of exactly that which should have been provided for through proper monthly updating of the project schedule. Retrospective/after construction analyses utilize the contractor’s originally envisioned activity relationships and actual work sequences/logic to identify the as-built critical path in the same manner as if properly prepared, complete updates were employed. In situations where complete monthly schedule updates are not prepared during construction, the use of retrospective analysis (after construction) is the only means available to identify the actual/as-built critical path and accurately evaluate delays. Page 28 Copyright 202 by vans M, Barb, NevigantConsling “Al highs ReservedOnce the as-built critical path has been established and project delays calculated, a determination of who is responsible for such delays is made. Typically, the Contract Documents in conjunction with an analysis of project documentation such as correspondence, RFI logs, Extra Work Reports, Cost Proposals, Stop Work Orders and Contract Modifications provide information regarding the calculation of delays and the basis of liability, therefore. In this regard it is noted that a contractor's failure to maintain accurate records related to the performance and impact of changes typically requires an interpretation of available project records in order to quantify impact related to alleged delay. 5. “Non-Critical Activity Delays” In its ultimate form, a schedule delay analysis focuses only on the as-built critical path, while recognizing that there are many non-critical activities which may have been affected by changes in the work. By definition, and in actuality, however, none of these “non-critical” activity changes caused the project completion date to be extended, although some may have caused specific non-critical activity durations to be increased. ‘An increase in a non-critical activity duration will not create “project delay” or result in “extended overhead costs,” but may result in additional direct costs related to labor inefficiency. Such costs are oftentimes addressed in contract change proposals. If a contractor seeks to recover “activity impact costs” outside of a contract change proposal, detailed records establishing those costs and definitizing liability are required. Contractors who do not establish or present any type of cause and effect/oss of productivity analysis with respect to disruption type claims should not be entitled to recover damages for same. Such analyses and damages calculations must be presented by the contractor in order to substantiate the contractor's claim position and enable the owner to assess the extent to which contractor bid errors, inefficiencies or other contractor problems may have contributed to the contractor’s claimed loss of productivity. Page 29 Copyright 2002 by Evans M. Barbe, Nevigant Consuting “Al RightsReservedIt is common industry practice in preparing and analyzing delay claims (retrospectively) to deal with “critical delay” only. It is of import to note that a project can only “lose time” or “gain time” along the actual critical path to completion of work on the project. Thus, only those modifications, problems, ete. which affect activities of work on the actual critical path to completion warrant evaluation in the context of determining the amount of delay to the project attributable to a given modification, problem or delay. In the context of performing a retrospective schedule delay analysis, modifications, problems, etc. which impact “non-critical” work activities do not need to be evaluated. The reason these items do not need to be evaluated is that regardless of the effect a given modification or problem might have in terms of extending the time of performance of a non-critical element of work, such an extended period of performance (on the non-critical activity) could not have any effect whatsoever in terms of critically delaying the overall completion of the project. With respect to “non-critical path” schedule impacts, an evaluation of said impacts — from a “schedule” standpoint — is only meaningful in the context of performing a disruption/loss-of-productivity analysis, which is separate and distinct from the performance of a delay analysis. Such an analysis has nothing whatsoever to do with the determination of overall delay in the work and the apportionment of responsibility between the parties for same. The analysis of “non-critical path delays” is only ‘meaningful in the context of a disruption/loss-of-productivity analysis in which a given party will endeavor to determine the cost of labor and equipment disruption related to those elements of work allegedly affected by modifications, problems and delays for which that party is not responsible. Page 30 Copyright 2002 by Evans M. Barba, Nevigent Conuling AI Rights ReservedDiscussion Paper No. 4 Sample Time Impact Analysis Provisions Sample Clauses Set forth below are examples of CPM time impact analysis provisions from several recent public and government contracts, As an initial matter, it should be noted that the Federal Acquisition Regulations (FAR) § 52.236-15, “Schedules for Construction Contracts,” is quite general and provides as follows: (a) The Contractor shall, within five days after the work commences on the contract or another period of time determined by the Contracting Officer, prepare and submit to the contracting Officer for approval three copies of a practicable schedule showing the order in which the Contractor proposes to perform the work, and the dates on which the Contractor contemplates starting and completing the several salient features of the work (including acquiring materials, plant, and equipment). The schedule shail be in the form of a progress chart of suitable scale to indicate appropriately the percentage of work scheduled for completion by any given date during the period. If the Contractor fails to ‘submit a schedule within the time prescribed, the Contracting Officer may withhold approval of progress payments until the Contractor submits the required schedule, (®) The Contractor shall enter the actual progress on the chart as directed by the Contracting Officer, and upon doing so shall immediately deliver three copies of the annotated schedule to the Contracting Officer. If, in the opinion of the Contracting Officer, the Contractor falls behind the approved schedule, the Contractor shall take steps necessary 10 improve its progress, including those that may be required by the Contracting Officer, without additional cost to the Government. In this circumstance, the Contracting Officer may require the contractor to increase the number of shifis, overtime operations, days of work, and/or the amount of construction plant, and to submit for approval any supplementary schedule or schedules in chart form as the Contracting Officer deems necessary to demonstrate how the approved rate of progress will be regained, Page 31 Copyright 2002 by Evans M. Barbs, NavigantConsulng AM Rights Reserved() Failure of the Contractor to comply with the requirements of the Contracting Officer under this clause shall be grounds for a determination by the Contracting Officer that the Contractor is not prosecuting the work with sufficient diligence to ensure completion within the time specified in the contract. Upon making this determination, the Contracting Officer may terminate the Contractor's right to proceed with the work, or any separable part of it, in accordance with the default terms of this contract. Additional clauses which will be discussed during the course of the presentation include the following: Federal Bureau of Prisons Provision @ Time Impact Analysis for Change Modifications, Delays, and Contractor Requests: 1. When change modifications are indicated, delays are experienced, or the Contractor desires to revise the Project Schedule, the Contractor shall submit to the Contracting Officer a written Time Impact Analysis illustrating the influence of each modification, delay, or Contractor request on the contract time. The preparation of Time Impact Analyses is considered part of the construction process and will be performed at no additional cost to the Government, Each Time Impact Analysis shall include a Fragmentary Network (Network analysis) demonstrating how the Contractor proposes to incorporate the modification, delay or Contractor request into the Project Schedule. The Time Impact Analysis shall demonstrate the time impact based on the date the modification is given to the Contractor or the date the delay occurred; the status of construction at that point in time; and the event time computation of all affected activities. The event times used in the Time Impact Analysis shall be those included in the latest project Schedule Update or as adjusted by ‘mutual agreement. 2. Activity delays shall not automatically mean that an extension of the Contract time is warranted or due the Contractor. It is possible that a modification or delay will not affect existing critical activities or cause non-critical activities 10 become critical. A modification or delay may result in only absorbing a part of the available total float that may exist within an activity chain of the Network, thereby not causing any effect on the Contract time. Page 32 Cogright 2002 by Evans M, Barb, Nevigant Consting “a igh ReservedFloat is not for the exclusive use or benefit of either the Government or the Contractor. Extension of the Contract time will be granted only to the extent the equitable time adjustments to the activity or activities affected by the modification or delay, exceeds the total float of an activity; and ‘forces the activity onto the critical path; and extends the contract time set forth in Contract Clause 52.212-3, “Commencement, Prosecution and Completion of the Work,” and Contract Clause 52.212-5 “Liquidated Damages.” Four (4) copies of each Time Impact Analysis shall be submitted as follows: a. Along with the proposal for any requested change. b. Within seven (7) calendar days after receipt of a written ‘modification under Contract Clause 52.243.4, “Changes,” paragraph (a). c. Within seven (7) calendar days after the furnishing of a written notice by the Contracting Officer as set forth under Contract Clause 52.243-4, paragraph (b). 4. Within seven (7) calendar days from the beginning of a delay from unforeseeable causes as set forth in Contract Clause 42,249.10, “Default,” paragraph (b-2), provided the Contractor complies with Contract Clause 52.249-10, paragraph (b-2). Jn cases where the Contractor does not submit a Time Impact Analysis within the time stated above in paragraph 14, it is mutually agreed that the particular modification, delay or Contractor request does not require an extension of the contract time. Approval or rejection of each Time Impact Analysis by the Contracting Officer shall be made after receipt of each Time Impact Analysis, unless subsequent meetings and negotiations are necessary. Upon approval, a copy of the Time Impact Analysis signed by the Contracting Officer shall be returned to the Contractor, and incorporated into the Project Schedule «at the next monthly Schedule Update. Time Impact Analysis related to an extension of the Contract time and/or change modification work shall be incorporated into and attached to the applicable change modification(s). Page 33 CCopyrigh 2002 by Evans M. Barb, Navigan Consuling (AM Rights ReservedU.S. Bureau of Reclamation Clause H.10 Oo Time impact evaluation. () Time impact evaluation shall be used by the Contracting Officer in determining if a time extension or reduction to the contract milestone dates is justified, The Contractor shall provide a time impact evaluation 10 the Contracting Officer for any contract change, e.g., a change order, proposed modification, or value engineering proposal. The Contractor shall also provide a time impact evaluation to the Contracting Officer for any delay to support its request or claim for an equitable adjustment to the contract. (2) A time impact evaluation is applicable whether the Contractor's current scheduled milestone dates are the same as, earlier, or later than those required under the contract. Changes, additions, or deletions to activities; activity durations; or activity time frames shall not ‘automatically mean that an extension or reduction of contract time is warranted or due the Contractor. Time extensions for performance shall be considered only to the extent that the Contractor's current scheduled milestone dates exceed the contract milestone dates. Float is not for the exclusive use by or benefit of either the Government or the Contractor. (3) Time impact evaluations shall be performed using the data available in the current detailed logic diagram(s) and schedule, The summary logic diagram and 120 calendar-day fragnets shall not be utilized for time impact evaluations. () Each time impact evaluation shall include a fragnet(s) which demonstrates where the Contractor proposes to incorporate the change or delay in the current detailed logic diagram(s). The fragnet(s) shall show (A) the current activity logic relationship for all activities directly affected by the change or delay and (B) the proposed activity logic relationships due to the change or delay highlighting the added, changed, and deleted activities. For all activities directly affected by the change or delay, the current and proposed (A) activity description; (B) type and quantities of major pieces of equipment, principle manpower, pacing material; (C) duration; and (D) earnings shall be shown on the fragnet(s). A narrative shall be provided containing the rationale used in developing the proposed logic relationships and activity data. Page 34 Copyright 2002 by Evan M, Barb, Navigant Consulting “All igh Reserved(ii) Each time impact evaluation shall include a table comparing the results of two mathematical analyses; one using the current activity logic and data, and one using the proposed activity logic and data. The comparison shall include all contract milestones and all activities whose periods of performance have shifted as a result of any change which affects production and/or manufacture schedules, material orders, construction seasons, and labor and/or equipment utilization. The mathematical analyses shall be based on the status of work and the available float at the time the Contracting Officer directs or proposes a change to the work, the Contractor submits a value engineering proposal, or when a delay occurs. (4) Following the Contractor's receipt of an executed contract modification, the activity date and logic relationships stipulated in the modification shall be incorporated into the current detailed logic diagram(s) and schedule during the next scheduled progress update. Washington Metropolitan Area Transit Authority Appendix F 4. Float time is not time for the exclusive use or benefit of either the ‘Authority or the Contractor. Extensions of time for Contract performance as specified in the General Provisions will be granted only to the extent that equitable time adjustments to the affected activity or activities exceed the total float time along the affected paths of the approved computer printout report in effect at the instant of one of the following: a. NIP with a change. b. Order of suspension or possession. c. Detection of a subsequently acknowledged differing site condition or excusable delay. After all Contract activities are complete; the Contractor shall submit an ‘as-built computer printout report and a time-scaled as-built graphic arrow diagram, The documents shall reflect all project as-built critical paths. The diagram shall be prepared in accordance with the requirements for Contract record drawings in the General Requirements and in Paragraph 3.b. above, except the following: Page 35 Copyright 2002 by Evans M. Barbe, Navigant Consulting “AU Rights Reserveda. All Contract activities, including all added activities, shall be shown, b, Activity durations shall be the actual number of separate workdays during which work was performed on the activity. Total man-days for an activity shall be the actual number of man- days that were required to complete the activity 4d. The I-node shall be plotted on the date the activity actually started and the J-node shall be plotted on the date the activity actually finished. Contract milestone completions shall be plotted on the dates of the Substantial Completion Reports. Legal status: The currently approved Network Analysis System documents shall be used by the contractor for planning, organizing and directing his work, for reporting progress, for requesting payment and for determining delay(s) in achieving milestone dates specified under the COMMENCEMENT, PROSECUTION AND COMPLETION OF WORK Article. The milestone dates shall be adjusted only upon modifications to the Contract. The Contractor acknowledges and agrees that actual slippage of activities shall not be the basis for time extension to this Contract unless such slipped activities are on the critical path of the currently approved computer print-out reports or cause one or more new critical paths, and result in a delay in achieving any milestone date specified under the COMMENCEMENT, PROSECUTION AND COMPLETION OF WORK Article or in achieving the Contract completion date, Further, although the foregoing is a necessary condition for a time extension, it is not a sufficient condition. Additional Sample Provision 1.7 TIME IMPACT ANALYSIS FOR CONTRACT MODIFICATIONS, CHANGES OR DELAYS A Requirements: When contract modifications or changes are initiated, or delays are experienced, the Contractor shall submit to the Engineer a written Time Impact Analysis illustrating the influence of each modification, change, delay, or Contractor request on the Contract Time. The Time Impact Analysis shall demonstrate the time impact based upon the date that the modification or change is issued to the Contractor or the date that the delay occurred; the status of construction at that point in Page 36 Copyright 2002 by Evans M. Barba, Navigant Consulting “All RightsReserved