The document outlines a claim analysis for a mechanical contract for an upgrade to a mill plant that was delayed due to late equipment delivery, defective equipment, drawing revisions, and lack of access to work areas. It analyzes the causes of over 85 days of delay and over $2.8 million in damages from unpaid change orders, loss of profit, indirect costs, and loss of productivity. The contractor is submitting this claim against the engineer who terminated the $2.5 million lump sum contract with only $1.8 million in total payment.

1. Claim Analysis
1
Group 7:
Ali Zahedi Anaraki
Rabih Ataya
Rachid Tawil
Hossein Khodaverdipoursarbandi
Seyed Mohammadsadegh Tabatabaei

2. Project overview
Scope of work
Major problems
Delay analysis
Damage
quantification
Productivity
analysis
Claim summary
Conclusion
Questions
 Project overview
 Scope of work
 Major Problems
 Delay analysis
 Productivity analysis
 Damage Quantification
 Claim Summary
 Conclusion
 Questions
Outline
2

3. Project overview
Scope of work
Major problems
Delay analysis
Damage
quantification
Productivity
analysis
Claim summary
Conclusion
Questions
Project overview
3
 The project is an upgrade of an existing mill plant.
 Mechanical Contract: Erection of mechanical equipment and
installation of piping for the New SAG MILL.
 Mechanical Contract is Lump-sum with a total value of $2,549,130
 The Contractor selected based on:
 lowest bid
 Proposal technically acceptable
 Satisfied all terms of the Contract
 Key Dates and Events:
 April 30th 1990 Scheduled Start Date
 May 3rd, 1990 Actual Start Date
 August 31st 1990 Scheduled Finish Date
 December 19th 1990 Actual Finish Date

4. 4
Project overview
Scope of work
Major problems
Delay analysis
Damage
quantification
Productivity
analysis
Claim summary
Conclusion
Questions
Scope of work
4
 The contract identifies six main physical areas for the mechanical
equipment erection.
 Piping work which occurs in all of these areas, identified as a seventh
"area”.
 The areas, and the relative volume of the labor shown in the bar chart:
0
5
10
15
20
25
PersentageofLabor
Areas of Work

5. Project overview
Scope of work
Major problems
Delay analysis
Damage
quantification
Productivity
analysis
Claim summary
Conclusion
Questions
Scope of work
5
Work Included
 Unloading and Transportation of Equipment to installation site
 Installation of 107 Equipment in 6 Areas of the Project
 Including removal of old equipment to be replaced
 Supply and Installation of Piping in all Areas
 Miscellaneous Works and Installations for the completion and
commissioning of the Installed Equipment.
Work Excluded
 Supply of Mechanical Equipment.
 Civil and Structural works
 Equipment Installation Procedures and Engineering Plans

6. Project overview
Scope of work
Major problems
Delay analysis
Damage
quantification
Productivity
analysis
Claim summary
Conclusion
Questions
Major Problems
6
Equipment Delivery
 According to the project’s schedule:
 39 pieces on site at the beginning of work.
 24 units on site in May 1990.
 41 pieces on site in June 1190.
 3 pieces on site in early July 1990.
19.57%
26.09%
26.09%
14.13%
6.52%
2.17%
5.43%
Equipment Delivery - Months Late
1
2
3
4
5
6
7
 On average, equipment delivery
was 3 months later than the
agreed contractual delivery dates.
 The longest delay in equipment
delivery was for a component of
the Sag Mill at 194 days and the
Ball Mill Pinion Shaft at 193 days.

7. Project overview
Scope of work
Major problems
Delay analysis
Damage
quantification
Productivity
analysis
Claim summary
Conclusion
Questions
Major Problems
7
Defective Equipment
 Several equipment were supplied with deficiencies. Examples:
 Minor deficiency: faulty welds on Conveyor Assembly
 Major deficiency: Overcast discharge head sections in the Ball Mill
 Out of 107 delivered Equipment, 30 had some sort of deficiency.
 Civil & Structural Deficiencies:
 Works by others were delivered with construction errors on many
occasions, namely the Anchorages of the Sole Plates.
 Lost Time on the execution of the works:
 Identifying problems
 Coordinating solutions with the Engineer
 Executing the corrective actions

8. Project overview
Scope of work
Major problems
Delay analysis
Damage
quantification
Productivity
analysis
Claim summary
Conclusion
Questions
Major Problems
8
Drawing Revisions
 Out of 374 drawings issued to the Contractor:
 Only 93 were issued with final revision prior to start of the works
 75% of drawings were issued or revised after start of the works
 17% of drawings were issued to the Contractor in November 1990
 Effect on the work:
 Change Orders
 Rework
 Loss of Productivity – Works on hold or change in work method
Month March April May June July August September October November Unknown
Number of Dwgs Issued 93 0 185 44 29 15 24 5 17 55
Percentage of Total 24.87% 0.00% 49.47% 11.76% 7.75% 4.01% 6.42% 1.34% 4.55% 14.71%

9. Project overview
Scope of work
Major problems
Delay analysis
Damage
quantification
Productivity
analysis
Claim summary
Conclusion
Questions
Major Problems
9
Access
 Access to work area was not ready for the Mechanical Contractor on
many occasions, the most significant are summarized below:
 Civil and Structures contractors were late on delivering installation
areas or works required by the Mechanical Contractor.
 Delays were carried on by the Mechanical Contractor.
 Co-activity in work areas was not properly managed by the Engineer.
Area Planned Activity Planned Access Date Actual Access Date Access Delay
1 Conveyors July 7, 1990 September 5, 1990 60
3 Feeder June 13, 1990 June 22, 1990 9
4 Mill Shell July 9, 1990 July 12, 1990 3
5 Cone Crusher June 3, 1990 July 6, 1990 33

10. Project overview
Scope of work
Major problems
Delay analysis
Damage
quantification
Productivity
analysis
Claim summary
Conclusion
Questions
Delay analysis
10
Chosen method : Impacted As-Planned
Steps done in this method :
 Importing Primavera files for all areas and filter to Critical path
 Find actual start and finish dates of all critical activities from
daily log and Equipment delivery
 Inserting these dates into software month by month in order to
cover all parallel delays and their impacts
 Calculating the difference between As-planned finish date of
project and Impacted finish date of project by each activity in
critical path
 Finally, calculating all impacted days of delay

11. Project overview
Scope of work
Major problems
Delay analysis
Damage
quantification
Productivity
analysis
Claim summary
Conclusion
Questions
Delay analysis
11

12. Project overview
Scope of work
Major problems
Delay analysis
Damage
quantification
Productivity
analysis
Claim summary
Conclusion
Questions
Delay analysis
12

13. Project overview
Scope of work
Major problems
Delay analysis
Damage
quantification
Productivity
analysis
Claim summary
Conclusion
Questions
Delay analysis
13

14. Project overview
Scope of work
Major problems
Delay analysis
Damage
quantification
Productivity
analysis
Claim summary
Conclusion
Questions
Delay analysis
14

15. Project overview
Scope of work
Major problems
Delay analysis
Damage
quantification
Productivity
analysis
Claim summary
Conclusion
Questions
Delay analysis
15

16. Project overview
Scope of work
Major problems
Delay analysis
Damage
quantification
Productivity
analysis
Claim summary
Conclusion
Questions
Delay analysis
16
chronology of
delays
activity
delay
type duration delays
Impact
delays(working
days)
1
CHUTES DELIVERED FOR FEEDER #
6
EC 0 4
2 PEBBLE CONVEYOR DELIVERED EC 0 29
3 INSTALL PLATEWORK-SAG EC -59 22
4 REMOVE EXISTING CONVEYOR # 1 EC -5 9
5
MODIFY EXISTING MILL 3&4 (PART
2)
EC -21 12
6 DEMOBILIZATION . EC 0 3
Owner is responsible for 79 working days of delay -85 79
5%
37%
28%
11%
15%
4%
chronology of delays
CHUTES DELIVERED FOR FEEDER # 6
PEBBLE CONVEYOR DELIVERED
INSTALL PLATEWORK-SAG
REMOVE EXISTING CONVEYOR # 1
MODIFY EXISTING MILL 3&4 (PART 2)
DEMOBILIZATION .

17. Project overview
Scope of work
Major problems
Delay Analysis
Damage
Quantification
Productivity
analysis
Claim summary
Conclusion
Questions
Damage Quantification
17
Change Orders
 Approved-Unpaid Change Orders, totaling $504,662.00 :
 Unapproved-Unpaid Change Orders, totaling $1,528,412.00 :
Date Item Description Amount ($)
November 21,
1990
Change Order
No. 1
This work was carried out
during the month of November.
345,271
November 21,
1990
Change Order
No. 2
FWI's 1 to 7 inclusive, 9 to 17
inclusive and 19 to 22 inclusive.
4,049
December 6,
1990
Change Order
No. 3
FWI's 23, 29, 33, 34, 37, 39,
41, 42, 44 and 51.
155,342
Date Item Description Amount ($)
August 22, 1990
re-drawing
revisions
Additional costs for drawing
revisions and additional cost for
site overheads and equipment.
345,271
October 17, 1990
re-drawing
revisions
Verbal instruction to proceed with
the work and that CONTRACTOR
will receive compensation for this
additional work.
4,049
November 26, 1990
drawing
revisions
Costs associated with extended
contract schedule will be
addressed at a later date.
155,342
December 11, 1990
Vendor
Drawings
additional costs from BOLLIDEN-
ALLIS vendor drawings
568,407
December 21, 1990
signed
Change
Order No. 4
Re-drawing revisions and FWI's
58 and 59. This Change Order
was never signed by ENGINEER.
455,3423

18. Project overview
Scope of work
Major problems
Delay Analysis
Damage
Quantification
Productivity
analysis
Claim summary
Conclusion
Questions
Damage Quantification
18
Loss of Profit
 Original Contract value, including Contractor profit, is $2,549,130.
 Terminated Contract value is $1,814,598.
 According to Clause 6.3.3 of contract, the contractor has the right to
claim the loss of profit for the difference between the contract price
and the earned amount.
 For a profit of 5%
 Profit loss = 5% x ($2,549,130 – $1,814,598) = 5% x $734,532
 Claimable profit loss = $36,727

19. Project overview
Scope of work
Major problems
Delay analysis
Damage
quantification
Productivity
analysis
Claim summary
Conclusion
Questions
Productivity analysis
19
1. Total Cost Method
2. Modified Total Cost Method
3. Measured Mile
4. Industry Studies on change orders such as Leonard and Ibbs studies.
The total cost method
Claim amount = (incurred costs + Mark-up) - Received payment
Claim amount = [(64,506 hours x 1.05) – 29,917] x $40/hour ≈ $1,512,600

20. Measured Mile Method
Claimable hours = Total Manhours - Total Normal Hours – Hours claimed separately for changes
Claimable hours = 34,367 hours
Claimable amount = $1,374,680
Project overview
Scope of work
Major problems
Delay analysis
Damage
quantification
Productivity
analysis
Claim summary
Conclusion
Questions
Productivity analysis
20
Area
Duration
(days)
Earned
Man-hours
Spent
Man-hours
Productivity
Normal
Hours
0 216 120 3,324 27.70 121
1 120 1,368 2,687 1.96 1,378
2 212 2,972 7,475 2.51 2,994
3 176 1,405 3,084 2.19 1,415
4 199 2,804 15,936 5.68 2,825
5 174 3,715 6,513 1.75 3,743
6 139 1,004 1,808 1.80 1,011
7 157 16,529 16,652 1.01 16,652
9 226 - 18,672 - 0
Total 29,917 76,149 30,139
Table 1 : Loss of productivity estimation using measured mile method

21. Leonard Study
% Change orders =
Change order hours
Actual labour hours − change order hours
= 12%  37% loss of productivity
Productivity loss hours = 64,506 hours x 0.37 = 23,868 hours
Claimable amount = 23,868 hours x $40/hour = $954,720
Project overview
Scope of work
Major problems
Delay analysis
Damage
quantification
Productivity
analysis
Claim summary
Conclusion
Questions
Productivity analysis
21
Figure 1 : The effect of change orders on productivity for electrical and mechanical work by Charles A. Leonard

22. Leonard Study
12% change  construction productivity = 0.75  loss of productivity = 25%
Productivity loss hours = 64,506 hours x 0.25 = 16,127 hours
Claimable amount = 16,127 hours x $40/hour = $645,080
Project overview
Scope of work
Major problems
Delay analysis
Damage
quantification
Productivity
analysis
Claim summary
Conclusion
Questions
Productivity analysis
22
Figure 2 : The effect of change orders on productivity by William Ibbs

23. Project overview
Scope of work
Major problems
Delay analysis
Damage
quantification
Productivity
analysis
Claim summary
Conclusion
Questions
Productivity analysis
23
Method Total Cost Measured Mile Leonard study Ibbs adapted study
Claimable hours 37,815 34,367 23,868 16,127
Claimable
amount
$1,512,600 1,374,680 $954,720 $645,080
Productivity 1 1.01
37% loss of
productivity
25% loss of
productivity
Table 2 : Comparison of available methods to measure the loss of productivity

24. Project overview
Scope of work
Major problems
Delay analysis
Damage
quantification
Productivity
analysis
Claim summary
Conclusion
Questions
Claim summary
24
Summary of the claimed amounts for the contract dispute:
Description Amount ($)
Unpaid approved changes 504,662
Unpaid unapproved changes 1,528,412
Loss of profit 36,727
Indirect cost 133,065
Loss of productivity 645,080
Total 2,847,946

25. Project overview
Scope of work
Major problems
Delay analysis
Damage
quantification
Productivity
analysis
Claim summary
Conclusion
Questions
Conclusion
25
 A lump sum contract of $2,549,130 was awarded for the Sag mill
mechanical project.
 The Engineer terminated the contract with a total payment of
$1,814,598.
 The total claim amount of $2,847,946 is submitted by the Contractor.

26. Project overview
Scope of work
Major problems
Delay analysis
Damage
quantification
Productivity
analysis
Claim summary
Conclusion
Questions
Questions
26