The Problem with Recognizing Problems
Construction claims are pretty rare. That’s the good news. Unfortunately, it also means that many owners’ representatives and construction professionals have trouble recognizing the subtle indications that construction claims are developing. Small delays and cost overruns are waived off as temporary anomalies. Everything is fine. But the construction schedule continues to slip and the cost overruns increase.
“The human mind is not good at understanding low-probability events.” 
The biggest mistake in construction claims is not realizing that mistakes are being made. In very simple terms a contractor needs to achieve a day of progress against the critical path every day that he is working. When this does not happen something is wrong. Re-sequencing the logic or reducing durations on tasks that have not started yet should only be considered after the cause of the construction delay is investigated.
Likewise, adding more workers or increasing the number of hours worked will not resolve poor productivity on a construction project. It will probably have the opposite effect. The bottlenecks and conflicts will still be there. This is why so many construction projects that have allegedly been “accelerated” wind up finishing behind schedule anyway. Everyone is looking for a solution when they should be looking for a problem.
Problem-solving requires experience, and nothing really builds the right experience as working as a construction claims consultant. Unlike a project manager who may be attached to a few projects over the course of a year, consultants often work on a dozen or more projects during the same time frame. Perhaps more important, these are typically projects in pretty bad shape. The irony is that the worst projects can be the best teachers.
Bill Pepoon, Managing Partner of Construction Science, has completed more than 600 consulting engagements. His extensive experience with troubled construction projects ensure that only the best practices for construction claims are utilized. Some strategies are only appropriate under certain conditions. The contract documents may dictate a certain approach. The dispute resolution process may favor certain strategies over others.
Mr. Pepoon’s experience with preparation of construction claims spans 30 years. His extensive knowledge of cost accounting, scheduling, project controls and construction management provides the background for resolving nearly any type of construction claim. Mr. Pepoon has testified as an expert witness in California, Connecticut, Delaware, Kansas, New York and Pennsylvania.
The biggest challenge in construction claims is to build a strong correlation between causes and effects. Losing money on a project is not proof of any wrongdoing by other parties, but all too often it is treated as being self-evident. The “death by a thousand cuts” strategy sounds great but is rarely successful in construction claims. As construction consultants and expert witnesses, Construction Science know the right approach to every situation.
Our construction claims services include the following tasks:
- Forensic and contemporaneous delay analyses
- Surety bond and SubguardR claims
- Labor loss of productivity analyses
- Equipment loss of productivity analyses
- Earned Value (EV) analyses
- Six Sigma analyses
- Calculation of deferred contract performance costs
- Calculation of extended contract performance costs
- Extended home office overhead calculations
- Extended field office overhead calculations
The first step is to make a realistic assessment of the potential damages that may be recovered or incurred and develop an appropriate action plan. Along with this plan Construction Science will develop a budget for the work. Discussing a budget upfront is very important in construction claims. Due to the Law of Diminishing Returns, the costs associated with full recovery of time and money in construction claims are disproportionate to the costs associated with partial recovery. While our goal is always full recovery, it is important to understand how this might impact the budget.
No matter what the assignment, our promise to you is that we will complete the work on-time and to your complete satisfaction. We will discount the final fee by 10% if either of these goals is not achieved due to circumstances within our control. And we are confident that no other consulting firm can offer a similar guarantee. Since 1983 we have successfully completed more than 600 consulting assignments with one simple strategy: improve what we do every day.
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 Dr. Erwann Michel-Kerjan, Head of the Risk Management and Decision Processes Center, The Wharton School]