3º ENCONTRO ANUAL DA AACE

6/11/15-7/11/15

São Paulo, Brasil

Extension of Time (EOT) Claims:

Successful Navigation Through a Legal and

Technical Battlefield

Dr. Anamaria Popescu, PE, PSP, PMP

FTI Consulting, Inc. – Construction Solutions

About

Dr. Anamaria I. Popescu is a Senior Director in the FTI Consulting Forensic and Litigation Practice based in Denver, Colorado.

She is a construction arbitrator and licensed Professional Engineer with more than 20 years of experience in construction claims, schedule delay analysis, project controls, and contract management.

Dr. Popescu's projects include power plants, natural gas drilling, pipelines, petrochemical and process plants, oil and gas production platforms, mining, water treatment plants,airports, and telecom in Australia, North & South America, Gulf of Mexico, South Africa, and China.

Dr. Popescu provided program/project management and project control services for projects ranging from $500,000 to $50 billion.

As an Expert Witness, she gave expert testimony in delay analysis and disruption claims disputes for projects up to $500 million.

Dr. Popescu's specialized computer software skills include Microsoft Project, Primavera Project Planner (P3), Primavera P6 Project Management Enterprise, Primavera Risk Analysis, and Acumen FUSE.

She speaks fluent Romanian and intermediate Spanish.

• Denver, Colorado

• +1 856-448-3464

• Anamaria.Popescu@fticonsulting.com

Bio - Dr. Anamaria Popescu, PE, PSP, PMP

3

EDUCATION

Ph.D., Civil Engineering, University of Texas at Austin M.S., Civil Engineering, University of Texas at Austin B.S., Civil Engineering, University of Texas at Austin CERTIFICATIONS

Professional Engineer (PE), Texas

Project Scheduling Professional (PSP)

Project Management Professional (PMP)

AAA Construction Arbitrator PROFESSIONAL AFFILIATIONS

Project Management Institute (PMI)

Association for the Advancement of Cost Engineering International (AACEI)

Representative Projects

FPSO-Brazil

Paper Mill-Brazil

Power Plant-Colombia

Eastman Chemical-PET Plants,Argentina

Maple-Ethanol Plant, Peru

Shaw-CFB Power Plant,New Orleans

KBR-TLP’s Gulf of Mexico

Shell-Coal Seam Gas and LNG Upstream Production Facilities,Australia

BP-Holestein Spar, GoM

Ingenia-Polymer Production Facility-Texas

Senior Director- FTI FLC, Construction Solutions

Presentation Objectives

• EOT Triggers & Provisions

• Contractual Completion Date(s)

• Notice and Reservation Language

• Primary Ingredients

• Schedule Integrity

• Documentation of Causation

• Legal Requirements

• Schedule Analysis

• Packaging and Presentation

• Conclusions

4

Introduction to EOT Requests

• Mechanism for Contractual Date “Movement” to:

– Grant Relief from LD’s

– Recover Delay Damages

– Maintain an Early Completion Bonus

• Translated to a Contract Variation if Successful

• Unsuccessful: Dilemma Occurs (3 Choices)

• Postponement of EOT Resolution

– Chance of Success Diminishes

– Cost of Settlement Increases

• Owners Miss the Point:

– Proactive Analysis Not a Forensic Exercise

– Entitlement vs. Actual Impact

5

EOT Triggers

1. An Event Occurred or Will Occur that Causes Delay

2. 3 Possible EOT Event Types

– Owner driven events – O’s risk (Time & Money)

– Neutral events – risk shared (Time only)

– Concurrent events – risk allocated (Time only)

3. Causes Delay to the CP 2 Possible Ways:

– Direct Delay to CP (Critical Delay)

– Float Erosion + Delay (NC + CP Delays)

………….But, Critical Path to What?

6

Contractual Completion Date(s)

• Dealt with in Contract 2 ways:

– By stating a date

– By stating a works period

• Types of Contractual Completion Dates:

– Date for ‘Practical Completion’

– Date for ‘Substantial Completion’

– Date for ‘Mechanical Completion’

– Date for ‘First Oil’

– Date for ‘Separable Portion Completion’

• May apply to a Section, or the Entire Project

– Each Section is treated separately

– LD’s may be tied to multiple dates and scope “triggers”

……..However, one thing typically is overlooked…

7

Notice and Reservation of Rights • Notice

– Comply with Contract Provisions-take it seriously!

– Create a “Notice Template Form”

– No such thing as “excessive notice”..so when in doubt…

• Reservation of Rights in EOT Claims and Change Orders

– Contractors (typically) do not have psychic abilities…

– Ongoing impact events impossible to fully quantify

– Cumulative Impact Claims will be void without this

– Example:

“This change proposal covers only the direct costs associated with the

change order work described above. We reserve the right to assess the impact of this change order at a later date and to submit these costs and

time impacts as they become known”.- MCAA

8

Primary Ingredients

9

Contractual Entitlement • Notice Provisions

• Time Extension Clause Exists? What Does it Say?

• Recovery for Various Delay Categories:Time and $$$ – Owner Responsible Delays (e.g. Access, Housing, Permits)

– Change Orders (Variations)

– Force Majeure Delays

– Weather (Not Just Rain)

– Concurrent Delays

• Schedule Analysis Requirements

• Each Contract is Different…Boilerplate Language Can Change

10

Understand Your Limitations Under the Contract

Before You Prepare Your EOT Claim

Schedule Integrity

11

Schedule Characteristics for Credible Analysis: ■No Open Ends ■Limited Constraints (FNLT on Contractual Dates Only) ■Majority of Tie Types: FS ■No Large Lags: “Float Hoarding” or “Missing Activity” ■No Negative Lags: Muddies the Water ■Critical Path Continuous and Makes Sense ■“Longest Path” Filter Confirmation Diligence Must not Stop after Baseline is Accepted Schedule Updates Are Contractual Too! Obligation of BOTH the Owner and Contractor

Schedule is the Key Mechanism in Time Recovery

Claims: Don’t Ignore It!!!

Schedule Integrity: How do you know? • Owner has the right to ask for the electronic version • Run a Schedule Diagnostic on Baseline & Updates

– Primavera: “Schedule Log” and “Claim Digger” – Other Tools: “Acumen Fuse”, “Schedule Analyser Pro”

• Also look for.. – Added and/or Deleted Activities – RD different than OD (Activities without Progress) – RD=0 (Activities not 100% Complete) – Lag Values Changed (negative lags inserted) – Logic ties broken or shifted (FS to FF) – Calendar Changes – Schedule Calculation Changes – Etc…

12

Sophisticated Owners will check….you lose

credibility if schedule turns out to be “manipulated”

Schedule Integrity: Example of Diagnostic Tools

13

P6: Schedule Log

Schedule Integrity: Example of Diagnostic Tools- “Claim Digger”

14

Schedule Integrity: Examples of Diagnostic Tools- Acumen Fuse

15

Documentation..or Lack of It!!

16

Documentation of Causation

• The Need for Evidence: “He who Asserts Must Prove”

• 1st: Demonstrate Cause (Documentation)

• 2nd: Demonstrate Effect (Schedule Analysis)

• The 3 ‘R’s – Records, Records, and Records

• Record Type Important but Record Content Key!

17

Documentation of Causation: Record Types

Letters and Emails

RFI’s and SI’s

Hold Register (Date Placed and Removed)

Procurement Status Reports

Progress photographs (Date Stamped!!)

Variation Notices

Daily Field Reports

Monthly Progress Reports

Meeting Minutes

Drawing Revision Logs

18

Documentation of Causation: Record Content

• Instructions given & received

• Conflicts in plans/specifications

• Weather conditions: Not Just Rain!

• Work Stoppage: Time Stopped and Why

• Number of Workers by Trade, Crew and Area

• Subcontractor Activities

• Equipment Type Utilized and Count

• Hours Worked per Day by Worker

• Location (e.g. Station Number, Sub-Area, System, Building)

• Delays Encountered (Correlate to Activity or WBS Element )

19

Create a Standardised Daily Report Form

Documentation of Causation: Delay Examples

20

Weather

Documentation of Causation: Delay Examples

Design Issues

Environmental

HSSE Issues

22

Documentation of Causation: Bottom Line

23

Schedule Analysis: Choose Your Weapon Wisely

24

Legal Requirements and Precedence

• “Who cares?, We are not going to court!”…Dangerous last words

• First Question: “What does the contract say?”

– Courts approach…

– Arbitrators approach…

– Dispute Review Boards approach…

• A perfect but brutal example…Australian DRB example

• Burden of Proof is on the Contractor

• Cause and Effect Nexus

• Contemporaneous Records

• “Preferred” Schedule Analysis Technique

– Slippery Slope-Nomenclature and Taxonomy Highly Variable

25

Legal Requirements and Precedence: Society of Construction Law

27

SCL:Delay and Disruption Protocol- Time Impact Analysis (TIA)

■“The best technique for determining the amount of EOT that a Contractor should have been granted at the time an Employer Risk Event occurred.”

■“Uses the Updated Programme to establish the status of the works at

that time.”

■“Amount of EOT may not precisely reflect actual delay”

■“Generates results showing entitlement not need”

Time Impact Analysis (TIA) As Defined by AACEI: 29R-03 (Retrospective) 52R-06 (Prospective)

• Insertion of impact activities into a baseline or update schedule

• Integrated into the network logic before, in-between, or after the activity it affected (IAP)

• Additive model that simulates the possible effect of actual or potential delay events to the schedule completion date

• Comparison of IAP schedule to baseline or update to determine time extension

• Comparison of IAP schedule to succeeding update to determine possible acceleration or non-excusable delays

28

TIA: Graphical Depiction

29

Planned 1/3/07 Schedule

Milestone #2 Planned Completion: 3/31/08

Baseline Data Date: 1/3/07

53 Day EOT

Legend

Original Activity.

Excusable Impact

Milestone

Impacted 1/3/07 Schedule

Milestone #2 Impacted Completion (IC) : 5/23/08

Impact #1:power/permit/dirty agg issues (30 cds)

Impact #2 :Qty overrun on Monolith 1 lower (12 cds)

Impact #3:Quantity overrun in RCC Monolith 4 Lower (11cds)

Packaging an EOT Claim

30

Packaging

• Executive Summary

• Relevant Contractual Clauses

• Delay Event Description – Time of Event with Key Dates

– Duration of Impact

– Activities Affected

• Schedule Analysis (graphical representation): – Critical Path and Near Critical Path (if relevant) prior to impact

– Impacted Critical or Near Critical Path with delay event inserted

– Concurrent Delay Period vs. Non-Concurrent Delay Period

– Non-Compensable vs. Compensable Delay

• Cost Impact: Direct Costs, Indirect Costs, Productivity Loss

• Attach Source Documentation (schedules and records)

• Submit Once Impact Event Is Known (avoid time bars)

• Submit Again Once Full Impact Understood

31

Packaging: TIA Graphics (Pre-Impact)

32

Contractual Date to Determine Delay on CP

Packaging: TIA Graphics (Post-Impact)

33

Delay Inserted Before

Successor Affected

PC Impact:

39 Calendar Days

Packaging: TIA Graphics Float Erosion/Delay Apportionment Example

34

Packaging: Summarizing Multiple EOTs Graphically

36

Closing Remarks

37

Early Identification of Potential and Actual Impact Events

Timely Contract Notification

Documentation is Key: Keep Detailed Contemporaneous Records

Schedules Must Be Sound and Accurate

Schedule Analysis Critical ■ Establish Cause and Effect

■ Critical Path Delay

Resolution Inversely Proportional to Submittal Time ■ Don’t Allow EOT “Claim Hoarding”

■ Consider Using a DRB to Evaluate EOT Requests

Don’t Throw Everything into the Claim ■ A legitimate claim is now weakened for “a few extra dollars”

■ Lose Credibility

Final Closing Remarks

38