Owner and Contractor Review to Reduce Claims

The owner's role and responsibility for design and review are examined. The scope of the owner's review is outlined, together with his options for executing the review. A novel approach is suggested in using the contractor to review the design after award. Legal implications are explored.     

Concurrent Delays and Apportionment of Damages

This paper focuses on the subject of concurrent delay from a general contractor (GC)-subcontractor perspective. When there is a concurrent delay by multiple subcontractors, or between the GC and other subcontractor(s), there has not been a uniform approach as to how the liquidated damages are apportioned. Previous research seems to ignore this issue. This paper first reviews some relevant court cases. Using a warehouse project as a case study, it then examines different practices that the GC could take in apportioning damages of concurrent delays to both himself/herself as well as to the responsible subcontractors. Results are very inconsistent between and within the apportionment practices. This supports an alternative hypothesis that apportionment is an important issue. Practitioners should specify which apportionment practice will be used and under what circumstances it will be applied in their subcontracts. Researchers may develop a more consistent and reliable approach for this type of apportionment.     

Decision Tree Approach to Classify and Quantify Cumulative Impact of Change Orders on Productivity

Multiple or unusual change orders often cause productivity losses through a “ripple effect” or “cumulative impact” of changes. Many courts and administrative boards recognize that there is cumulative impact above and beyond the change itself. However, determination of the impact and its cost is difficult due to the interconnected nature of construction work and the difficulty in isolating causal factors and their effects. As a result, it is very difficult for owners and contractors to agree on equitable adjustments for the cumulative impact. What is needed is a reliable method (model) to identify and quantify the loss of productivity caused by the cumulative impact of change orders. A number of studies have attempted to quantify the impact of change orders on the project costs and schedule. Many of these attempted to develop regression models to quantify the loss. However, traditional regression analysis has shortcomings in dealing with highly correlated multivariable data. Moreover, regression analysis has shown limited success when dealing with many qualitative or noisy input factors. Classification and regression tree methods have the ability to deal with these complex multifactor modeling problems. This study develops decision tree models to classify and quantify the labor productivity losses that are caused by the cumulative impact of change orders for electrical and mechanical projects. The results show that decision tree models give significantly improved results for classification and quantification compared to traditional statistical methods in the field of construction productivity data analysis, which is characterized by noisiness and uncertainty.     

Reconciliation of Owner and Contractor Views in Heavy Construction Projects

Delay and loss of productivity are the two main types of damage experienced by the contractor when the owner issues a change order. Courts have recognized critical path method schedule analysis as the preferred method of identifying and quantifying critical delays. As for the inefficiency damages, there is no direct way of measuring inefficiency due to its qualitative nature and the difficulty of linking the cause of the productivity loss to the damage. Most of the scholarly work published in this area was based on data supplied by the contractors; and that explains why there are discrepancies between what the contractor asks for and what the owner believes the contractor is entitled to. This study addresses the need for a statistical model to quantify the productivity loss from verifiable site data such as owner’s daily reports, change orders, drawings, and specifications, rather than rely solely on contractor surveys. A model is developed and validated to quantify the productivity loss in pipe work in roadway projects due to the change orders. The productivity loss study analyzed two sets of data that include: (1) variables that predict which of the two parties, the owner and the contractor, contributed to the productivity loss; and (2) variables that predict, from the legal viewpoint, productivity losses which only the owner is responsible for. The study showed the difference between what the contractor asked for and what he/she is actually entitled to. This model can be used by both the owner and the contractor to quantify the productivity loss due to change orders, and to offer an objective approach to reconcile their differences. This study concludes with an example to demonstrate the use of the model.     

Change Orders Impact on Labor Productivity

This paper describes a study conducted to investigate the impact of change orders on construction productivity and introduces a new neural network model for quantifying this impact. The study is based on a comprehensive literature review and a field investigation of projects constructed in Canada and the USA. The field investigation was carried out over a 6-month period and encompassed 33 actual cases of work packages and contracts. Factors contributing to the adverse effects of change orders on labor productivity are identified and a model presented earlier is expanded to account primarily for the timing of change orders, among other factors. The developed model, as well as four models developed by others, have been incorporated in a prototype software system to estimate the loss of labor productivity due to change orders. A numerical example is presented to demonstrate the use of the developed model, and illustrate its capabilities.     

Impact of Shift Work on Labor Productivity for Labor Intensive Contractor

Generally, a contractor has three options in accelerating a construction schedule: working longer hours, increasing the number of workers, or creating an additional shift of workers. There has been a significant amount of research conducted on scheduled overtime on construction labor productivity. However, little information has been found in the literature addressing the labor inefficiency associated with working a second shift. This paper has qualitative and quantitative components. The qualitative part details why and how shift work affects labor productivity, and then addresses the appropriate use of shift work. The quantitative component determines the relationship between the length of shift work and labor efficiency. The results of the research show that shift work has the potential to be both beneficial and detrimental to the productivity of construction labor. Small amounts of well-organized shift work can serve as a very effective response to schedule compression. The productivity loss, obtained from the quantification model developed through this study, ranges from ?11 to 17% depending on the amount of shift work used.     

Baseline Determination in Construction Labor Productivity-Loss Claims

Various ways of quantifying damages have been applied to productivity loss claims in construction. All of the ways attempt to be as objective as possible based on the extent of information available in a particular case. The measured mile, a widely accepted method, is employed when an unimpacted baseline period of production can be identified. Although that approach is considered to be the most objective method available in such cases, the method is limited and does not directly account for variation in individual productivity values about a normal or natural level of productivity. A gap exists between the use of existing methods and the availability of an appropriate methodology that specifically addresses variation in productivity. The key lies in the way baseline productivity is measured, which is inherently statistical, yet no truly statistical methods are used to establish such a baseline. Using the measured mile as a backdrop, this article provides an objective, measurement-based approach that can be used to establish a productivity baseline applied to construction productivity loss claims, based on the application of statistical methods aided by a process control chart. The focus is on providing the basic principles and concepts underlying the approach presented.     

Quantifying the Impact of Schedule Compression on Labor Productivity for Mechanical and Sheet Metal Contractor

In a typical construction project, a contractor may often find that the time originally allotted to perform the work has been severely reduced. The reduction of time available to complete a project is commonly known throughout the construction industry as schedule compression. Schedule compression negatively impacts labor productivity and consequently becomes a source of dispute between owners and contractors. This paper examines how schedule compression affects construction labor productivity and provides a model quantifying the impact of schedule compression on labor productivity based on data collected from 66 mechanical and 37 sheet metal projects across the United States. The model can be used in a proactive manner to reduce productivity losses by managing the factors affecting productivity under the situation of schedule compression. Another useful application of the model is its use as a litigation avoidance tool after the completion of a project.     

Analytical Model for Analyzing Construction Claims and Opportunistic Bidding

Construction claims are considered by many project participants to be one of the most disruptive and unpleasant events of a project. Construction claims occur for various reasons. There is a need to understand the dynamic nature between construction claims and opportunistic bidding. An analytical model, the Claims Decision Model (CDM), based on “game theory,” was developed to study opportunistic bidding and construction claims. This model explains (1) how people behave during a potential or existing claiming situation, (2) how different claiming situations are related to opportunistic bidding behavior, and (3) what situations encourage or discourage opportunistic behavior. The results of this pilot study indicate that the equilibrium solution of a construction claim is to negotiate and settle, which concurs with most of the claim cases in the industry. The possible range of a negotiation settlement is obtained in this paper. The model provides the rationale for recent innovations to manage disputes. The model can also help project owners identify the possibility of opportunistic bidding, and can assist the project participants in analyzing construction claims.     

Avoiding and Mitigating Delay and Disruption Claims Conflict: Role of Precontract Negotiation

Delay and disruption claims often generate conflict and contract dispute in the delivery of building and civil engineering projects. If construction delay claims conflict can be avoided or mitigated, there could be substantial financial savings on projects. This study explores the effect of precontract negotiation as a means of avoiding or mitigating delay and disruption claims conflict. The data collection instrument was a structured questionnaire administered face to face on 41 contractors’ personnel on 41 completed projects in Singapore. The data were analyzed using structural modeling with partial least squares estimation approach. The results indicate that when the contractors received an unfavorable outcome from the contract administrator’s decision on their claims for delay, the intensity of conflict was lower when there was precontract negotiation and precontract agreement regarding the rules for quantifying and assessing the impact of anticipated delays than when there was none. It was also discovered that the higher the level of precontract negotiation and precontract agreement on the rules for quantifying and assessing delays, the higher the contractors perceived the quality of the decision-making process for delay claims during the construction phase. Further, the higher the contractors perceived the quality of the decision-making process for delay claims, the lower the intensity of conflict. At the time of entering into contracts, owners and their project management team need to pay more attention to precontract negotiation and agreement with their contractor to clarify and agree on the rules for quantifying and assessing the impact of anticipated delay and disruption. Aspects that require precontract negotiation, agreement, and clarification include: the rules of evidence for claims, the record requirements for claims and the procedure for keeping the records, form of construction program including the software for the preparation of the program and the procedure updating the program, the methodology for analyzing delay claims, formula for quantifying unabsorbed head office overhead component of prolongation cost, the method for quantifying disruption cost, the handling of concurrent delays, profit—whether claimable and the rate of profit to be paid, acceleration—circumstances under which it will be compensated and basis of compensation, and the question of who owns the float. These are, typically, not adequately covered by most standard forms of contracts. The agreements on these matters may be incorporated as part of partnering agreement or as a supplement to the contract agreement. Precontract negotiation, clarity, and agreements could produce instrumental and noninstrumental (social psychological) effects, which could facilitate delay and disruption claims assessment and their resolution. It could mitigate conflict even when the outcomes are unfavorable to a party.     

Duties and Responsibilities of Construction Managers: Perceptions of Parties Involved in Construction

This paper reports the findings of a study conducted by researchers at Illinois Institute of Technology under the direction and supervision of the ASCE Committee on Management Practices in Construction to investigate the expectations of the parties involved in the construction process, including designers, owners, general contractors, subcontractors, construction managers, and educators, relative to construction managers’ duties. The findings suggest that while there is some consensus among parties to a construction project relative to CM duties particularly in the construction phase, there is also some disagreement, most of which appear to be between contractors and designers. Most disagreements are related to CM duties performed in the bidding and postconstruction phases of projects.     

Guarantees for Contractor’s Performance and Owner’s Payment in China

This paper first analyzes the problem of default risk that contractors and owners often face in China, then stresses that establishing a construction contract guarantee system is a necessary and effective measure for solving this problem. Policy choice for establishing a construction contract guarantee system in China is presented in this paper by using the experience of developed countries for reference and taking Chinese domestic circumstances into account. Further discussion is included about how to protect contractors from default of payment of owners by exercising the right of legal mortgage in accordance with Chinese contract law.     

Work Flow Variation and Labor Productivity: Case Study

Different types of flow variation and how they affect construction project performance have been studied by previous researchers. One aspect that has not been well researched is how work flow variation and labor productivity are related in construction practice. To study that issue, 134?weeks of project production data were collected and analyzed to explore this relationship. Labor productivity was found to be positively correlated with Percent Plan Complete (PPC), a measure of work flow variation. The relationship between productivity and the ratio of total task completion to planned tasks, weekly workload, weekly work output, and weekly work hours was also studied, and no significant correlation was found. The results suggest that productivity is not improved by completing as many tasks as possible regardless of the plan, nor from increasing workload, work output, or the number of work hours expended. In contrast, productivity does improve when work flow is made more predictable. These findings can help project managers focus on actual drivers of productivity. It can also help consulting companies pinpoint responsibility for productivity losses in claims.     

Impact of Overmanning on Mechanical and Sheet Metal Labor Productivity

This paper details the impacts of overmanning on labor productivity for labor-intensive trades, namely mechanical and sheet metal contractors. Overmanning, as used in the following research, is defined as an increase of the peak number of workers of the same trade over the actual average manpower used throughout the project. The paper begins by reviewing literature on the effects of overmanning on labor productivity. Via a survey to various contractors, data were collected from 54 mechanical and sheet metal projects located across the United States. Various statistical analysis techniques are then performed to determine quantitative relationship between overmanning and labor productivity. These techniques include the stepwise method, T-test, P-value tests, analysis of variance, and multiple regression analysis. The results indicate a 0–41% loss of productivity depending on the level of overmanning and the peak project manpower. Cross-validation is performed to validate the final model. Finally, a case study is provided to demonstrate the application of the model.     

Characteristics of Contractor’s Liabilities for Defects and Defective Work in Korean Public Projects

Modern buildings and civil structures are complex undertakings and involve the use of a great variety of engineering methods and processes. Therefore most projects face the possibility of defects and defective work, which generally result in structures that cannot perform their originally intended roles. The characteristics of the contractor’s liabilities for defects are very controversial in Korea. There are two conflicting theories and one compromise between the two, concerning defect liabilities. One is liability in terms of the law, and the other is that in terms of the contract. These two kinds of liability are significantly different, varying in definition, scope of responsibility, period of responsibility, and other aspects. The purpose of this study is to suggest how to resolve potential disputes which might result from these differences through the analysis of current laws and their interpretation.     

Procurement Routes in Public Building and Construction Projects

This paper deals with procurement routes in public building and construction projects in Norway. Seen from a practical point of view, as well as from a theoretical one, it is important to improve methods for selection of procurement procedure, contract model, and compensation formats. The paper objective is to find out if public owners select a procurement route according to recommended practice. The sources are literature, support material for two software tools for selection of the procurement route, and documentation from 22 public building and construction projects in Norway. According to the literature and the support material for the two software tools, the answer to what is the proper procurement route will depend on the characteristics of each project. The documentation study implies that public owners continue to select the same procurement route as they are in the habit of. They do not consider what procurement route suits each single project, and therefore they do not select the route according to recommended practice. The paper calls for innovation and better supported selection of the procurement route in public building and construction projects.     

Quantification of Losses of Labor Efficiencies: Innovations in and Improvements to the Measured Mile

This paper describes a rigorous procedure for quantifying damages arising from loss of labor inefficiency. Throughout, deficiencies with the measured mile concept are cited. Perhaps one of the least recognized deficiencies is that the measured mile is a concept, not a procedure. Thus, every analyst is left to conduct the study as he/she pleases. This paper defines a step-by-step process for doing a damage study, and cites rules to follow when performing the study. Following the procedure and rules will lead to more rigorous and defensible analyses. A baseline analysis is described and presented as a way of adhering to the measured mile concept. The principle difference is in how best performance is defined. In a baseline study, the focus is on periods of high output (production), not good productivity. The baseline periods need not be continuous. Also, the analysis is performed on combined data (one account), not many accounts. The calculations used to perform a baseline study are illustrated using a simple case study project. Reasons for recovering damages because of losses of labor efficiency are also cited.     

Analysis of Factors Influencing Productivity Using Craftsmen Questionnaires: Case Study in a Chilean Construction Company

Improvement of productivity in construction has been a major industry challenge, given its high impact on project results. It has received increased attention from construction researchers promoting different enhancement actions, since analyzing factors affecting labor productivity is an instrumental part in this process. This paper focuses on identifying and understanding the productivity factors affecting projects in a Chilean construction company on the basis of questionnaires administered to both direct workers and midlevel employees. Analysis of the questionnaire results helped to determine organizational and managerial weaknesses and facilitated comparison of the findings with previous productivity studies. The results proved to be useful in developing recommendations for productivity improvements. The main findings indicate that the critical areas affecting construction productivity were related to materials, tools, rework, equipment, truck availability, and the workers’ motivational dynamics. These results are similar to those obtained in previous studies in the United States and in Chile. Salary expectations were found to be the main reason for turnover in the studied company, which was an aspect not mentioned in previous studies. Finally, additional analyses seem to show that some factors affecting productivity are common to construction projects across boundaries, therefore validating data aggregation and the possibility of learning from experiences in different locations and even separated in time of occurrence.     

Labor Productivity Drivers and Opportunities in the Construction Industry

The study of labor productivity in the construction industry is gaining increasing attention as the industry faces multiple problems related to its workforce. This paper presents the results of a survey instrument applied to determine the relative level of relevance of construction labor productivity drivers and opportunities. Owners, general contractors, electrical contractors, mechanical contractors, consultants, and others participated in this survey. Management skills and manpower issues were identified as the two areas with the greatest potential to affect productivity according to survey respondents. Surprisingly, external factors, which are often cited as a major cause for reduced productivity in the construction industry, were considered to be one of the least relevant productivity drivers. These results suggest that respondents consider the improvement of labor productivity within their reach and control rather than determined by external conditions.     

Construction Claims and Disputes and the Business Culture of Construction in Japan

Increasing attention is today being focused on the issue of dispute resolution in the Japanese construction sector. Disputes were infrequent under the traditional contract agreement system. However, against the background of a shrinking construction market, owners, contractors, builders, engineers, subcontractors, and suppliers are seeking higher profits and are increasingly asserting their rights, resulting in the creation of an adversarial environment in the industry. It is not generally known outside Japan that the term “claim” has traditionally been used in the nation’s construction industry with an entirely different meaning to its use in other countries. This paper discusses unique characteristics of the implementation of construction work in Japan that are representative of this different use of terminology. These unique characteristics are considered as the result of a business culture that has developed through a combination of historical circumstance and the specific characteristics of Japan’s construction market. The paper also examines the mechanism of dispute resolution, and considers specific details and changing trends in construction disputes using relevant statistical data.