Using Issue Analysis Procedures

in
Preparing and Defending Construction Claims

Lunch and Learn Presented By: Thomas Driscoll FCMAA

September 8, 2017 Principal
HKA

© 2019 HKA Global, Inc. All Rights Reserved

1
 Thomas J. Driscoll (FCMAA)
Principal – HKA
■ 40+ Years of PM/CM Experience; 18 with Hill / HKA
■ Pioneer in Construction Management, CPM, Time Impact
Analysis, Windows Analysis
■ First President of Hill PM/CM Group 1983
■ President MDC / Day& Zimmerann - 9 years
■ American Society of Civil Engineer’s Construction
Management Award 2013

■ A Founding Director, Past President, Fellow

of CMAA. Past Chairman of CM Certification Board
of Governors
■ Extensive Claims and Testimony Experience
■ Who’s Who Legal – Construction – Lawyers & Expert
Witnesses Law Business Research LTD. London 2016
■ Cover Story, Engineering News Record, August 1973
■ Co Author of Construction Management – Law And Practice; Co-Author of
Construction Scheduling – Liability, Proof and Claims; Contributing author
Contractor Management Handbook Not to be Reproduced Without Permission of HKA Global, Inc.
This Material is Intended for Educational Purposes Only and Does Not Constitute Professional Advice
APPROACH FOR ASSESSING OF A CONTRACTOR GLOBAL CLAIM
FOR DELAY, IMPACTS, DISRUPTIONS AND CUMULATIVE IMPACT

• There is no standard approach for assessing a major global claim

of a Contractor.
• There are too many variables (delay, damages, acceleration, Loss
of productivity, reservation of rights, waivers, termination,
weather, etc.).
• There are some basic steps to follow in quickly getting an
understanding of a claim and what needs to be done to consider
any merit or the basis for any rejection.
• A good start begins with the identification of the theories relied
upon, supporting issues, facts, proofs offered versus proofs
required, and the underlying legal support. Not to be Reproduced Without Permission of HKA Global, Inc.
This Material is Intended for Educational Purposes Only and Does Not Constitute Professional Advice 3
EXAMPLES OF COMMON CLAIM THEORIES RELIED UPON

• Defective Plans and Specs.

• Constructive changes
• Differing site conditions
• Delay, disruption, and acceleration
• Right to finish early and schedule impossibility
• Loss of productivity
• Impact on unchanged work and cumulative impact
• Waiver of the time of essence,
• Waiver of the Contract Completion Date
• Maladministration
• Standard of care
• Unacceptable performance
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FAMILIARIZATION WITH THE PROJECT AND THE BASIS FOR CLAIM

• In preparing or defending a construction claim or assessing a specific issue, it is

necessary to first become familiar with a project, the Contract Documents, the
roles and responsibilities of key project participants, claim theories and issues
involved, and the change and disputes resolution processes.
• This familiarization can best be achieved by an initial meeting of one or two
days to achieve a quick historical overview of the project, the problems, delays
encountered, key changes, issues, time extensions granted, pending or denied,
and the project control systems in place that will allow sampling of the
availability and content of various contemporaneous performance records that
will be needed.
• After the initial meeting, one or more follow up meetings may be necessary to
get more into detail. With regard to issues involved, using a brain storm
technique can be most useful. Experience has shown that 80% or more of the
key claim issues will be identified. Not to be Reproduced Without Permission of HKA Global, Inc.
This Material is Intended for Educational Purposes Only and Does Not Constitute Professional Advice 5
ASSESSING A CONTRACTOR GLOBAL CLAIM FOR DELAY AND
IMPACTS – THE ISSUES SUPPORTING EACH THEORY

• The second key step is the identification of the issues offered by

the Claimant to support each claimed theory.
 List and prioritize issues for each theory to be assessed for merit.
Priority for assessment should be based on criticality (timing,
delay involved, cost involved), ease of proof and return on
investment expected for assessment (Brain Storm can be useful.
Use an A,B, or C technique to prioritize issues).
• Identify and review the factual presentation and documentation
offered (or required) for each claim issue. Determine the
elements of proof required versus proofs offered by the
Claimant to support each claim issue.
• Identify the client staff and consultants who are most
knowledgeable about the facts, actual performance, and the
alleged problems that were encountered. Not to be Reproduced Without Permission of HKA Global, Inc.
This Material is Intended for Educational Purposes Only and Does Not Constitute Professional Advice 6
THE NEED TO TIMELY ADDRESS CHANGES

• The third key step involves using issue analysis procedures as an

effective method of inquiry for preparing a timely and
independent assessment of a change, delay, or claim issue.
• This includes issues that the adversary party failed to address
which could be a defense in determining any claimed
entitlement or quantum.
• Identify the legal theory and the remedy granting clause relied
upon for relief
• The objective is to establish clear, concise, and persuasive
positions to be taken on each issue. In addition, to identify a
plan of action to timely resolve the issue if the project is still on-
going. Not to be Reproduced Without Permission of HKA Global, Inc.
This Material is Intended for Educational Purposes Only and Does Not Constitute Professional Advice 7
INVESTIGATION AND FACT-FINDING OF SPECIFIC ISSUES

• The following step-by-step procedure is proposed for

accomplishing the detailed analysis of an issue. The steps are
logically arranged to establish an understanding of the issue,
the facts upon which it is based, and the findings or
conclusions reached progressively.
• For issues that are considered to have merit, a determination
should be made regarding the contract pricing, schedule and
documentation necessary to support the relief requested.
• Establish a clear and timely basis for rejection as well. Also,
not all issues may be strong A’s and B’s as you thought.
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ISSUE ANALYSIS – THE PROCESS

• The need to establish the contractual and legal basis for

responsibility. This requires:
 Review and analyze the contract requirements,
drawings and specs. Determine any deviation from
specified requirements, added work, non-
compliance, etc.
 Conduct factual investigation and fact-finding for
each issue.
 Identifying the factual proofs required versus the
proofs offered for each issue.
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ISSUE ANALYSIS – THE PROCESS CONTINUED

 Determine responsibility and the timing for each issue

 If delay is involved, Prepare a Time Impact Analysis (chronologically)
 Prepare and maintain a Master Summary Entitlement Analysis
 Prepare a write-up for each issue
 Summary, Factual basis for entitlement and quantum based on
contract requirements, standards, code, etc.
 Prepare a chronology of all supporting documentation.
 Assemble an Appendix of supporting documentation
 Follow-up needed to obtain more facts.

Not to be Reproduced Without Permission of HKA Global, Inc.

This Material is Intended for Educational Purposes Only and Does Not Constitute Professional Advice 10
MERIT OR LACK OF MERIT

• In situations where the lack of merit is clear, the

Owner should notify the contractor of its findings at
the earliest opportunity.
• Where such findings are based on lack of proof,
consideration should be given to denying merit, but
leaving the issue open for the contractor to provide
any additional information and materials that
would further support the factual basis for the
contractor’s claim.

Not to be Reproduced Without Permission of HKA Global, Inc.

This Material is Intended for Educational Purposes Only and Does Not Constitute Professional Advice 11
ASSESSMENT OF A CONTRACTOR GLOBAL CLAIM FOR DELAY AND
IMPACTS – ISSUES AND DELAY

• Review the TIA and delay methodology used by the Claimant in presenting
any schedule and delay analysis (contemporaneous updates, longest path,
plan + impacts, total time, and collapsed as-built, As-Plan vs. As-Built,).
 Baseline Schedule (approved, conditional approval, never approved, revised, created after)
 Use of contemporaneous schedules (Windows Analysis?)
 Time extension requirements (TIA, Other,) considered?
 Use of Windows
 As Built information (total or partial)
 Any acceleration (directed or constructive involved)?
 Delay methodology relied on by the claimant
 Determinations of excusable, non-excusable, compensable, and non-compensable, and any
concurrent delay.
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ASSESSMENT OF A CONTRACTOR GLOBAL CLAIM FOR DELAY AND
IMPACTS

• Follow the basic principles of delay analysis? Key in utilizing or discrediting

any delay methodology is whether an analyst has followed certain key
principles of delay analysis. These include:

 Chronology of delay.
 Responsibility for delay.
 Duration of delay.
 Methodology used to incorporate delay / causation into the schedule.
 Understand float.
 Understand concurrent delay, how it occurs.
 Offsetting delay
 Delay must affect the critical path for an extension.
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ASSESSMENT OF A CONTRACTOR GLOBAL CLAIM OR AN ISSUE
FOR DELAY AND IMPACTS

• Other factors to consider include:

 Contract Administration compliance.

 A sense of fairness.

 Legal precedence.

 Equitable Adjustment.

 Consistency in application.

Not to be Reproduced Without Permission of HKA Global, Inc.

This Material is Intended for Educational Purposes Only and Does Not Constitute Professional Advice 14
ASSESSMENT OF A CONTRACTOR GLOBAL CLAIM FOR DELAY AND
IMPACTS

• Determine if any delay is acknowledged by the Claimant as his

responsibility and how are those delays treated by the Claimant
with regard to any alleged compensable delay?
• Identify what Claimant caused delays the Claimant ignored that
would be key to the analysis and influence the determination
of any excusable or compensable delay claimed by the
Claimant?
• What is the position taken by the Claimant on the use and
availability of float? What does the Contract (Scheduling Spec.)
say about float?
• Check identification and treatment of concurrent and offsetting
delay situations by the Claimant.
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ASSESSMENT OF A CONTRACTOR GLOBAL CLAIM FOR DELAY AND
IMPACTS

• Review and assess the timeliness of RFI’s and changes. Check Claimant
compliance with the notice, time extension and claim documentation
requirements of the contract. Check the status of each change (i.e.
bilateral settlement, unresolved, disputed, reserved, etc.). Check
records of changes for any time extension requested, denied, granted
(total or partial), or still pending or not acted upon.

• Address any alleged inefficiency claimed by the Claimant. Does the

methodology relied on by the contractor have merit based on legal
precedence? Does contractor rely on industry studies, measured mile,
earned value, actual costs, total or modified total costs, or some other
method? Assess proofs offered versus proofs required. Method used
is not a basis for acceptance.
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ASSESSMENT OF A CONTRACTOR GLOBAL CLAIM FOR DELAY AND
IMPACTS

• Any acceleration (directed, constructive, voluntary?

• What are the type of damages being sought by the
contractor and what are the proofs offered versus those
required? Consider the need for an audit. Is the claimed
damages certified by the contractor? Required?
• Any use of reservation of rights for impact and/or
acceleration being relied on by the Claimant as damages?
• Any early finish or waiver of completion issues?
• Any payments withheld? LD’s assessed?
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SUMMARY CONTEMPORANEOUS ENTITLEMENT ANALYSIS
(in days)
AMOUNT OF NET AMOUNT
TOTAL
ITEM CONCURRENT DELAY CLAIMED
AREA OF DELAY DELAY BY COMMENTS
NO. DELAY WITH ON OVERALL
ITEM
OTHER ITEMS PROJECT
1 Schedule Omissions 75 0 75

2 Late Boiler Drum 54 49 5 Concurrent partially with Delay No. 1

3 Suspension Winter 2009 -2010 126 0 126

4 OSHA Suspension 23 0 23 No Time Impact Included for Remobilization

5 Front Standard Interference 100 23 77 Parially Concurrent With Delay No. 4

6 H.P. Shell T-Off / T-On Wire 20 0 20

7 L.P. Final Assembly 71 61 10 Concurrent With Item No. 5 & 6.

Lack of Heat Winter 2011 -
8 122 0 122 Work Continued During this Period
2012
9 Main & Reheat Piping to H.P. 103 0 103

10 High Pressure Final 23 0 23

11 Install BFPT, BFP & Booster 73 68 5 Concurrent With Delay No. 6, 7, 8 & 9

12 Condenser Test/Leaks 137 0 137 Condenser Accepted Pending Vacuum Test

13 BFPT Flush 69 69 0
Delay Depends on Boiler Not Being
14 Lube Oil Flush 22 0 22
Controlling Factor
15 EHC Flush 119 68 51 Concurrent With Delay 12, 13, 14

GRAND TOTAL 338 799

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 WINDOW No. 1 SUMMARY ANALYSIS OF DELAYS
(IN WORK DAYS)
Net Delay Revised
Delay Amount Amount of Controlling
Description Completion Comments
Number of Delay Concurrency
Owner Contractor Date

Excusable delay, concurrent

1 Sheet Pile Delay 25 22 25 0 03/14/95
with delays No. 2 & 4

2 Weather/High River 22 22 0 0 03/14/95 Concurrent with delay No. 1.

Partially concurrent with

3 Mussel Monitoring 7 4 3 0 03/20/95
delay No. 1.

Allow Contractor time for

3A Cell “A” Activation 2 0 2 0 03/23/95 excavation of Cell “A” after
delay No. 3
Contractor delay in start
of driving sheet pile for Contractor is -8 work days
Cell “A due to late behind schedule after
4 38 30 0 38 03/23/95
submittals, mobilization, adjustment for excusable
building equipment & delays No. 1, 3 and 3A
late start of excavation.

Contractor is –11 work days

Delay in Finish of Cell behind schedule after
5 3 0 0 3 03/23/95
“A” adjustment for excusable
delays No. 1, 3 and 3A

TOTAL 30 41 Not to be Reproduced Without Permission of HKA Global, Inc.

This Material is Intended for Educational Purposes Only and Does Not Constitute Professional Advice
LESSONS LEARNED – ESTABLISHING PRIORITIES FOR CONDUCTING
ISSUE ANALYSIS ON A 4,000 TON /PER DAY

• 4,000 Ton/Day Cement Plant.

• Owner CM
• International A/E
• Multi-prime Subs
• Hundreds of Changes, major delays and cost
overruns
• Differing arbitration clauses, various contracts -
Serial arbitration
• Owner wanted to use own staff in preparing and
defending 6 major claims and pursuing a claim
with A/E.
• Brainstorm Not to be Reproduced Without Permission of HKA Global, Inc.
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PLANT / AREA/ ISSUE PRIORITY APPROACH
Key Areas of a Cement Plant
PRIORITY AREA CONTRACT
1 Pre-Heater Tower M-1 &M-2
2 Raw Mill Building M-2
3 Raw Mills M-1
4 General All
5 Raw Feed Bins and Dust Collectors M-2
6 Clinker Handling, “G” Cooler, Clinker M-2
Cooler
7 Kiln M-1
8 Coal Building M-2
9 Pre Blend and Sample Tower M-1 & M-2
10 Grate Cooler M-1
11 Burner Building M-2
12 Homo Silos M-2 Not to be Reproduced Without Permission of HKA Global, Inc.
This Material is Intended for Educational Purposes Only and Does Not Constitute Professional Advice 21
CLAIM ISSUE RANKING

• Claim issues should be ranked as either Type A, Type B,

or Type C. Such ranking would be within each contract
and by order of contracts to be arbitrated.

• For example, Type A would be the strongest or best, and

possibly defined as:
 Having better than a 50 percent merit on legal
entitlement
 Involving 14 or more days of delay time
 Worth more than $200,000 or more of each work
cost
 A counterclaim Not to be Reproduced Without Permission of HKA Global, Inc.
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CLAIM ISSUE RANKING CONTINUED

• Type C claims would be defined as those:

 With legal entitlement unknown at this time
 Less than $25,000 of extra work costs
 Less than 5 days delay
• Type B claims would be those that do not meet
the criteria for Type A and Type C

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 ISSUE PRIORITY

The Raw Mill Building Issues

PRIORITY ISSUE DESCRIPTION – INVESTIGATION AND RANKING
FACT-FINDING
1 Additional Steel and Alignment A
2 Hot Air Ducts A
3 Air Separators A
4 Box Belt Conveyors B
5 Air slides B
6 Bucket Elevators B
7 I.D. fans C
8 IKVS Pump C
9 Material Chutes C
10 Decking Material C

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 ISSUE PRIORITY

Pre-Heater Tower Issues

PRIORITY ISSUE DESCRIPTION – INVESTIGATION AND RANKING

FACT-FINDING

1 Additional Structural Platforms A

2 Embed Plates A
3 Down Comer Duct A
4 PHT Draft Fans A
5 Elevator Shaft Fans B
6 Concrete Floor Slabs B
7 Recoup Duct C
8 CRANE Pipe Prob. C
9 I.D. Fans C
10 Meal Pipe C
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ISSUE STATUS REPORT
AREA ISSUE DESCRIPTION RECEIVED AUTHOR COMPL. SENT
NO. OF ISSUE BY JMD CORRECTS DATE TO
M&M
PHT 1 Additional Structural 11/30/16 12/14/16
Platforms
PHT 2 Embed Plates. 11/5/16 11/12/16 3/11/17 3/14/17

PHT 3 Down Comer Duct 12/28/16 2/10/17 2/22/17 3/14/17

PHT 4 PHT Draft Fans 10/11/16 10/22/16 12/20/1 12/22/16

6
RMB 1 Additional steel & Alignment 12/1/17 1/17/17 2/1/17 2/5/17

RMB 2 Hot Air Ducts 11/14/16 12/5/16 1/5/17 1/8/17

RMB 3 Air separators 12/15/16 12/28/16 1/15/17 1/27/17

RMB 4 Box belt Conveyors 1/25/17 2/10/17 2/23/17 1/29/17

PHT 5 Elevator Shaft & 3/04/17 3/8/17 3/9/17 3/14/17

Interferences
PHT 6 Concrete Floor Slabs 1/23/17 2/5/17 2/20/17 2/22/17
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QUESTIONS

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