Contract Management

Change Orders: Maximizing Benefits for Owners

Ronald F. Parisi, P.E.
Former MDC Systems^® Project Director

Owners involved in ongoing construction projects are virtually unanimous in recognizing the need to minimize the number and amount of change orders as a way to keep the project costs within budget. In viewing change orders with only this in mind, however, owners may tend to overlook the benefits that the change order process offers to owners. The primary benefits afforded by the change order process are that it allows owners the flexibility to respond quickly, to capitalize upon opportunities and to mitigate problems — both of which frequently arise during the course of construction.

Shipyard Contracts: New Construction vs. Ship Repair

Contracts for the construction of new ships have many key differences from contracts for ship repair. The most obvious difference concerns the type of work (new versus repair) but other important differences exist concerning the nature and extent of changes, scheduling, engineering and contract claims. Attorneys and others involved in contract administration and dispute resolution need to understand these important differences.

Why is there a Labor Overrun?

On a large multi-million dollar project, it shows up in the cost reports. On a smaller project, the schedule may start to show specific activity schedule slippage. The same estimator developed the bid, the project scope has not changed and your most trusted foreman says he has excellent crews. You might be experiencing labor inefficiencies and probably don’t know it. The cost reports and schedules might tell you that it occurred, but it will require additional data / analysis to determine why it has occurred and who has caused it to prove entitlement and to calculate your recovery costs.

More Than Just Counting Rainy Days: Documenting Weather Delays

by Michelle N. Delehanty, PE, PMP
MDC Systems^® Consultant

According to the farmer’s almanac, this upcoming winter is predicted to be more severe than last year, which already seems as if it were one for the record books. For many regions throughout the United States, that means a multitude of storms, extreme cold, and potential closings to schools, offices, and, most problematic, construction sites. These closings of construction projects can lead to schedule delays, change order requests, and ultimately claims. In order for a contractor to justify to the owner that there is indeed a weather-related construction delay, they must demonstrate four specific things: (1) that the delay is within the terms of the contract (2) that the activity delayed had a direct effect on the project end date (was on the critical path), (3) the weather event occurred in excess of the “normal” weather for the season, and (4) there is documentation of which specific activities were delayed on each weather occurrence.

No Damage For Delay

A no-damage-for-delay clause attempts to contractually bar recovery by a contractor or subcontractor in the event project delays result in damages or extra costs.

Home Office Overhead (HOOH)

Most of those working in the construction contract claims business are familiar with 1960 decision by the Armed Services Board of Contract Appeals (ASBCA) in the Eichleay Corporation Case which recognized a contractor’s right to recover unabsorbed home office overhead for owner caused delays and work stoppages.

Shipyards: Dealing with Disruption Claims

Shipyards that are building or repairing ships operate in a very complicated marketplace where costs are carefully monitored. Often claims are submitted requesting additional costs above the stated contract amount because problems beyond the shipyard’s control resulted in disruption of their as-planned flow of work. All too often, the alleged problems follow a pattern that becomes apparent when analyzing such claims. Common allegations of disruption include excessive owner changes, delays in approving changes, late responses to inquiries and problems, defective design, late or defective information or equipment supplied by the owner, and over-inspection. Such allegations form the basis for requests for equitable adjustments, claims, and lawsuits. However, many claims overlook problems that may be the responsibility of the shipyard such as underbidding the costs, rework due to poor performance, management and planning inadequacies, detail design errors, procurement problems and labor difficulties.

“No Damage for Delay” Clauses – An Update

“No damage for delay” clauses continue to divide the country and the courts on their application and interpretation. Although owners and prime contractors insist on enforceability, the net result typically shifts the risk onto the party least likely to negotiate fair limits, to control events on the jobsite and absorb the ultimate cost. Nevertheless, these clauses are found in most construction contracts in some form or another.

The Importance of Critical Path Method in Project Management

Project management can sometimes seem a bit overwhelming in its complexity, but there are systems in place to make it easier to navigate and simpler to estimate. Since deadlines are so important, and duration directly impacts budget, it’s important to have an accurate and reliable way to map out your timeline. Therein lies the importance of the critical path method in project management. To learn more, continue reading below.

Common Documentation Problems

James M. McKay, AIA, P.E.
Former MDC Systems^® Project Manager

Construction is, to a great extent, a paper business. In addition to a completed building project, an end result of the construction process is reams of documents. From initial project concept through completion, an extensive paper trail is generated.

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