Two new and related posting on our website:
Negotiating in the midst of uncertainty. This article takes a proactive look at what’s needed to come through a crisis in the best possible shape. It suggests the negotiating approach needed is very different from ‘business as usual’. Click to download the PDF.
Contact Termination. This new White Paper looks at the risks and challenges associated with terminating a contract when all else fails. It helps explain why in 40 years I have never seen a lawyer proactively seek to terminate a contract! Click to download the PDF.
Our PMKI library contains over 300 papers and articles in an indexed hierarchy. To explore more see: https://mosaicprojects.com.au/PMKI.php
In preparation for the IAMA National conference later this week I have just finished developing and updating a short series of papers focused on addressing schedule delay and disruption.
- Assessing Delay and Disruption – an overview of the accepted methods of forensic schedule analysis [ view the paper ]
- Prolongation, Disruption and Acceleration Costs – an overview of the options for calculating costs associated with approved delays and acceleration [ view the paper ]
- The complexities around concurrent and parallel delays are discussed on Mosaic’s White Paper WP1064 Concurrent and Parallel Delays
Any comments are welcome.
Posted in Scheduling
Tagged claims, Construction, Construction Management, Contractual Claims, CPM, CPM Delay, Delay Analysis, EOT Claims, IAMA, Project, Project Controls, Project Governance, Project Management, Project Planning, project scheduling, Schedule, Schedule Analysis, Schedule Claims, Scheduling
One of the more difficult management decisions is how hard to pursue a contract claim. The claim will inevitably have a deleterious impact on a key stakeholder relationship and any significant claim will have proportionally high costs associated with legal and other expenses. Balancing the inevitable costs against the possible gains is a difficult but necessary decision before moving forward. Usually, the potential yield of a claim is given as a subjective assessment based on experience.
Dr. John Lancaster of Hill International has recently published a paper that seeks to remove the subjectivity from the assessment of which claims are worth pursuing (see 1 below). Lancaster proposes using a risk assessment approach to determine the likely range of outcomes and which claims contribute the most to the likely settlement. He suggests using the following factors:
- Entitlement confidence:
- The strength of the contractual argument for entitlement; and
- Contractually compliant notices.
- Magnitude confidence:
- The quality and quantity of supporting records;
- The quality of the project schedules (and any necessary corrections and/or repairs), cost records, etc; and
- The certainty with which the effect/s of each event is known.
Applying a percentage weighting to these factors and using Monte Carlo analysis the likely range of cost and time outcomes can be assessed and the key claims identified.
It is important that the right people complete this assessment: the entitlement confidence categories should be assessed by counsel and the magnitude confidence categories assessed by the domain experts with input from the project staff.
The results of this analysis will identify:
- The likely outcomes under the prevailing entitlement and magnitude confidence ratings;
- The probabilities of securing different outcomes; and
- Identifying the claims that are the most important to the overall claim and which ones require more work.
Based on this assessment and after factoring in the costs and consequences of making the claim, pragmatic decisions can be made on:
- whether or not to pursue a claim;
- where to set negotiation limits (see 2 below); and
- which of the claims, with more work on establishing entitlement and/or substantiation, could contribute the most to a robust claim.
In an ideal world effective stakeholder relationship management would remove the need for contractual claims. When they become necessary, Dr. Lancaster’s ideas will help remove much of the unnecessary ‘heat’ from the assessment process and provide a pragmatic baseline for managing any claim in a professional and business like way.
- Lancaster, John, “The use of risk analysis techniques to evaluate potential delay claim outcomes,” Project Control Professional: The Journal of the Association of Cost Engineers, February 2010. The full article is available on request from email@example.com.
- For more on dispute management and negotiating see: http://www.mosaicprojects.com.au/WhitePapers/WP1049_Dispute_Management.pdf
Posted in Risk, Stakeholder Management
Tagged claims, complexity, Construction, Construction Management, Contractual Claims, EOT Claims, Project, Project Governance, Project Management, Risk, Risk Management, Scheduling, Stakeholder Management, Stakeholders