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ACH 216 Lecture 09 (Issues During Project)


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ACH 216 Lecture 09 (Issues During Project)

  1. 1. Project Management & Control Project Funding (LECTURE 7) Scheduling (LECTURE 8) Issues During Construction (LECTURE 9) Materials Management and Quality Control (LECTURE 10)
  2. 2. Issues During Construction Time Extensions/Delay Claims Change Orders Changed Conditions Suspension, Delay or Interruption Liquidated Damages Progress Reporting
  3. 3. Issues During Construction <ul><li>The key to understanding project management is knowing and anticipating issues and problems arising during the construction process </li></ul><ul><li>The key to a successful project is knowing how to deal with issues and problems when they arise </li></ul><ul><li>or </li></ul><ul><li>Knowing how to possibly “head off” certain issues and problems before they arise </li></ul>
  4. 4. Time Extensions/Delay Claims <ul><li>The contractor requests a time extension to the contract completion date </li></ul><ul><ul><li>Based on delays out of the control of the contractor </li></ul></ul><ul><ul><ul><li>Delays caused by owner or architect </li></ul></ul></ul><ul><ul><ul><ul><li>Design problem </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Owner modification </li></ul></ul></ul></ul><ul><ul><ul><li>Acts of God </li></ul></ul></ul><ul><ul><ul><ul><li>Weather (“adverse weather conditions not reasonably anticipatable”) </li></ul></ul></ul></ul><ul><ul><ul><li>Labor & Materials </li></ul></ul></ul><ul><ul><ul><ul><li>Strike </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Late material delivery </li></ul></ul></ul></ul>
  5. 5. Time Extensions/Delay Claims <ul><li>Time extensions are added to the original duration as stated in the contract </li></ul><ul><ul><li>Example: 62 day extension added to an original duration of 1050 days = project must be completed in 1112 calendar days </li></ul></ul><ul><li>The Date of Substantial Completion of the Work or designated portion thereof is the Date certified by the Owner’s representative when construction is sufficiently complete, in accordance with the Contract Documents, so the Owner can occupy or utilize the Work or designated portion thereof for the use for which it is intended. </li></ul>
  6. 6. Change Orders <ul><li>Any alteration to the documents constitutes a change to the contract. </li></ul><ul><ul><li>AKA: “Modification” to the contract </li></ul></ul><ul><li>A change order is considered a “mini-contract” </li></ul><ul><ul><li>Handled in the same way as a bid, but no competition </li></ul></ul><ul><ul><li>Scope of work and technical documents are forwarded to contractor </li></ul></ul><ul><ul><li>Contractor then submits a price quotation to complete the work </li></ul></ul><ul><ul><li>Owner will either accept or negotiate price on change order </li></ul></ul><ul><li>Contractor usually increases costs on CO due to job disruption and additional overhead to complete paperwork </li></ul>
  7. 7. Changed Conditions <ul><li>When subsurface and site topographical conditions are not as expected </li></ul><ul><ul><li>Even after soil boring reports and geotechnical tests </li></ul></ul><ul><li>Engineering reports give information: </li></ul><ul><ul><li>To the A/E to help design foundation for building/structure </li></ul></ul><ul><ul><li>To contractor in estimating work to excavate and move earth to satisfy the contract </li></ul></ul><ul><li>If the conditions are not representative of the reports, the contractor can claim a “changed condition” </li></ul><ul><li>Often called the “concealed condition” </li></ul><ul><li>If the Owner accepts the changed condition, the extended scope of work represented will be included in the contract as a change order. </li></ul>
  8. 8. Suspension, Delay or Interruption <ul><li>The Contracting officer may order the Contractor in writing to suspend, delay or interrupt all or any part of the work for such period of time he may determined be appropriate for the convenience of the Owner. </li></ul><ul><li>Owner has right (according to contract) to stop construction on project for whatever reason they deem necessary </li></ul><ul><li>Contractor has right to be compensated for demobilization-remobilization cycle or inflated costs on material and labor at time of restart </li></ul><ul><ul><li>Amount of adjustment is typically contested by contractor and often leads to arbitration/litigation to resolve the issue </li></ul></ul>
  9. 9. Liquidated Damages <ul><li>Projects have completion dates for a reason!! </li></ul><ul><ul><li>The project is intended to serve a purpose or function </li></ul></ul><ul><ul><li>The date of completion is tied to the date the project is needed for occupancy and utilization </li></ul></ul><ul><li>If contractor does not meet project completion date (or milestones), then contractor pays owner damages as a result of a beech of contract </li></ul><ul><ul><li>Damages (monetary amount) are determined in contract: </li></ul></ul><ul><ul><ul><li>Dollar amount per day is paid for each day past the completion date (stipulated sum) - $50 to $50,000 per day </li></ul></ul></ul><ul><ul><ul><li>Usually found in the Special Conditions of the Contract </li></ul></ul></ul><ul><ul><li>Owner must show proof of actual damage </li></ul></ul><ul><ul><ul><li>Cannot specify an arbitrary amount ($20k per day) to scare the contractor into completing the work on time </li></ul></ul></ul>
  10. 10. Liquidated Damages <ul><li>Example: </li></ul><ul><ul><li>Project: Strip Shopping Center </li></ul></ul><ul><ul><li>Projected monthly rental value: $30,000 </li></ul></ul><ul><ul><li>Contract date of completion: October 1 </li></ul></ul><ul><ul><li>Actual date of completion: October 15 </li></ul></ul><ul><ul><li>The owner has lost $15k in potential rental moneys and therefore is “damaged” by the contractor. Legally, the owner can sue the contractor for the damaged amount, but the contract was written with a Liquidated Damage clause, which allows for more immediate recourse for recovering lost revenue. </li></ul></ul>
  11. 11. Progress Reporting <ul><li>Contracts require that general contractor must submit a schedule of activity and periodic updates to the schedule to reflect ACTUAL PROGRESS. </li></ul><ul><li>Contractors satisfy this requirement by completing: </li></ul><ul><ul><li>Progress meetings and minutes </li></ul></ul><ul><ul><li>Daily reports </li></ul></ul><ul><ul><li>Diaries </li></ul></ul><ul><ul><li>Progress photos </li></ul></ul><ul><ul><li>Monthly reports </li></ul></ul>
  12. 12. Progress Reporting <ul><li>Progress Meetings and Minutes </li></ul><ul><ul><li>A means of face-to-face communication concerning project progress </li></ul></ul><ul><ul><li>Meetings are held weekly or biweekly </li></ul></ul><ul><ul><li>Usually present at the meeting: </li></ul></ul><ul><ul><ul><li>GC project manager </li></ul></ul></ul><ul><ul><ul><li>Owner’s rep (architect or construction manager) </li></ul></ul></ul><ul><ul><ul><li>Top trades/subcontractor’s rep (project manager or foreman) </li></ul></ul></ul><ul><ul><li>Opportunity to confront immediate issues and concerns </li></ul></ul><ul><ul><li>Schedule coordination between GC and trades </li></ul></ul><ul><ul><li>Has a formal agenda, structure and leader </li></ul></ul><ul><li>Meeting Minutes </li></ul><ul><ul><li>Must be detailed and organized </li></ul></ul><ul><ul><li>Typically contractor is responsible for documenting minutes </li></ul></ul><ul><ul><li>Notes should be distributed to all that are concerned with the issues </li></ul></ul>Page 312 in book for example of minutes
  13. 13. Progress Reporting <ul><li>Daily Reports </li></ul><ul><ul><li>Report that is kept by superintendent </li></ul></ul><ul><ul><li>Documents day-to-day activities and conditions on the job site </li></ul></ul><ul><ul><li>Uses a pre-printed form that details: </li></ul></ul><ul><ul><ul><li>Date and sequential report numbering (each report gets a number) </li></ul></ul></ul><ul><ul><ul><li>Project name and number </li></ul></ul></ul><ul><ul><ul><li>Name of superintendent (or other filing report) </li></ul></ul></ul><ul><ul><ul><li>Weather conditions including temperature </li></ul></ul></ul><ul><ul><ul><li>Descriptions of activities </li></ul></ul></ul><ul><ul><ul><ul><li>Deliveries </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Visitors </li></ul></ul></ul></ul><ul><ul><ul><ul><li>What trades/subcontractors were present on site </li></ul></ul></ul></ul><ul><ul><ul><li>Large equipment present on site </li></ul></ul></ul><ul><ul><li>Report is used internally to document progress and update schedule </li></ul></ul><ul><ul><ul><li>Can be used in dispute resolution </li></ul></ul></ul>
  14. 14. Progress Reporting <ul><li>Dairies </li></ul><ul><ul><li>Like a daily report, but contains more information and detail regarding a particular activity or task </li></ul></ul><ul><ul><ul><li>Offers more opinion and attitudes on the job </li></ul></ul></ul><ul><ul><li>Usually kept in a spiral bound notebook </li></ul></ul><ul><ul><ul><li>Information is handwritten with accompanying signature and date </li></ul></ul></ul><ul><ul><li>Items usually found in diary: </li></ul></ul><ul><ul><ul><li>Phone conversation notes </li></ul></ul></ul><ul><ul><ul><li>Problems and issues that arise on site </li></ul></ul></ul><ul><ul><ul><li>Personal conversations with anyone involved with the project </li></ul></ul></ul><ul><ul><ul><li>Any other pertinent information </li></ul></ul></ul><ul><ul><li>Can be used in dispute resolution; dairies are public record in the project </li></ul></ul>
  15. 15. Progress Reporting <ul><li>Progress Photos </li></ul><ul><ul><li>Photos or videos taken at various levels of the project as a means of documentation for the project </li></ul></ul><ul><ul><ul><li>Time-lapse photography included capturing construction methods and process </li></ul></ul></ul><ul><ul><li>Adds information regarding the project that reports and written summaries can not document </li></ul></ul><ul><ul><ul><li>Conditions of site </li></ul></ul></ul><ul><ul><ul><li>Quality of installation </li></ul></ul></ul><ul><ul><ul><li>Progress over time </li></ul></ul></ul><ul><ul><ul><li>Critical activity sequences (following critical path) </li></ul></ul></ul><ul><ul><li>Progress Photography has become a normal occurrence on jobsite </li></ul></ul><ul><ul><ul><li>Use of digital cameras is key to sharing information electronically </li></ul></ul></ul><ul><ul><ul><li>Can also be used to resolve issues with design team rapidly without having A/E making site visit </li></ul></ul></ul>
  16. 16. Progress Reporting <ul><li>Monthly Reports </li></ul><ul><ul><li>Report that is submitted to owner and architect documenting project progress over the preceding month </li></ul></ul><ul><ul><li>Typically submitted with monthly requisition </li></ul></ul><ul><ul><li>Used for distribution to owner’s “upper management” for comments and discussion </li></ul></ul><ul><ul><li>No set format (unlike daily report form) </li></ul></ul><ul><ul><ul><li>Owner and contractor discuss format submission during pre-construction planning stage </li></ul></ul></ul>
  17. 17. Progress Reporting <ul><li>Monthly Reports </li></ul><ul><ul><li>Report includes: </li></ul></ul><ul><ul><ul><li>Narrative of project progress to date </li></ul></ul></ul><ul><ul><ul><li>List of subcontractors and trades </li></ul></ul></ul><ul><ul><ul><li>Cash flow actuals and projected </li></ul></ul></ul><ul><ul><ul><li>Updated schedule (with all activity information from daily reports) detailing critical path </li></ul></ul></ul><ul><ul><ul><li>Safety report </li></ul></ul></ul><ul><ul><ul><ul><li>including accidents documented and visits from OSHA </li></ul></ul></ul></ul><ul><ul><ul><li>Contract modifications log </li></ul></ul></ul><ul><ul><ul><ul><li>Construction change requests </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Change orders pending and approved for previous month </li></ul></ul></ul></ul><ul><ul><ul><li>Submittal and shop drawing log </li></ul></ul></ul>
  18. 18. NEXT LECTURE LECTURE 10 Materials Management and Quality Control