CPM schedule updates and cases
It may be helpful to consider construction change order claims and their impact on CPM schedules. In Watson Electric Co., v. City of Winston Salem, 109 N.C. App. 194, 426 E. 2d 420 (1993), the prime electrical contractor sued the city and general contractor for breach of contract. The construction had to be completed within 24 months of the notice to proceed, but was ultimately completed five months late. The general contractor was responsible for coordinating the work schedule of the various prime contractors to assure compliance with the project CPM schedule, but after the notice to proceed was issued, the city changed the work order protocol and began using an independent contractor to provide and maintain the CPM schedule instead.
The plaintiff alleged the city’s change in work orders and its failure to coordinate and administer the project delayed the work of the general contractor, which in turn delayed the plaintiff and necessitated time extensions. This required the plaintiff to incur acceleration costs for additional resources and overtime. The court held the city’s refusal to grant time extensions could support a finding the contract had been breached.
Similarly, in Daley Construction, Inc. v. Garrett, 5 F. 3d (Fed. Cir. 1993), the contractor appealed the decision of the Board that denied its claims for a delay of 518 days, attributable to the government’s defective specifications. A CPM schedule analysis was provided, but was improperly conducted by the project manager, causing the court to affirm the denial of the claims. (Also see Westhold v. U.S., Fed. Cl. 172 [1993].)
Finally, in Arnold M. Diamond, Inc., v. Dalton, 25 F. 3d 1006 (Fed. Cir. 1994), the prime contractor was awarded a contract for renovations of a pier at a naval station, and a portion of the work was performed by a subcontractor. All contract parties used a CPM schedule to manage the project. Many delays were incurred and change orders were issued, but no time extensions were approved. The prime contractor was awarded damages.
Project risk and constraints
Human beings are a complex mixture of rationality and irrationality, but when it comes to making decisions and managing risk, we seem to favor thinking over feeling. Decision-making and risk management should be a structured process to reach a result that can be fully justified and defended, yet excluding the non-rational can deny us an important source of information, particularly when dealing with uncertainty. Is there a place for intuition in decision-making or risk management?
Risk management refers to the art of identifying, responding to, and controlling project risk in the manner that best achieves the objectives of all participants. This can be done by making a complete analysis before responding to any risk, and by fully critiquing all contract documents to define contractual liability.
Although the judicious project manager should manage project constraints and document their inherent risk, reviewing a plan to detect problems and make improvements generally ought to be a brief exercise done toward the end of initial planning. It should not involve obsessively applying every single project management practice in an endless quest for the flawless plan—a process sometimes called ‘analysis paralysis.’ The topic here is realistic, common-sense project analysis regarding constraints. The principal objective of reviewing the plan is to find defects and omissions, deal with unmet constraints, and quickly seek an improved plan using what is currently known about the project.
This begins with reviewing and examining all contract documents to determine where project risk is allocated. When most people think of risk, they tend to relate it only to highly hazardous things, but many risks are so commonplace they are easily overlooked. The project manager must critique all exculpatory clauses in the contract documents to evaluate who has the risk on a particular project.
Analysis is a risk management process step involving the quantification of the effect of all uncertainty on a project. This is usually done by first identifying risks, then quantifying each one’s probability of occurrence and potential severity of impact.
Risk analysis methods include:
- qualitative models, which are based on project characteristics and historical data;
- risk models, which assess the combination of risk assigned to the total project; and
- probabilistic models, which combine risks from various sources and events.
