Consult Your Doctor Before It Hurts

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The ABC’s of Delay Claims

Duncan W. Glaholt

“Consult Your Doctor Before it Hurts”

“Consult Your Doctor Before it Hurts”

Premise :

All Conflict is Bad ConflictWRONG!

Argument of this Section:

1. There will always be conflict; some good, some bad;

2. Conflict can be managed, not avoided;

3. Lawyers were advocates but are “conflict specialists”;

4. Conflict management is the key to good constructing

Argument 1: There Will Always be Conflict; Some Good, Some Bad

In Life:

If it Can Go Wrong, it Will!

Argument 2: Conflict is to be Managed, Not Avoided

This is not a new idea:

Bernard S. Mayer,

Beyond Neutrality: Confronting Crisis in Conflict Resolution

(Jossey-Bass, 2004)

Mayer #1:

“By automatically thinking in terms of resolution,

Mayer #1:

“By automatically thinking in terms of resolution, we inevitably drift toward a shallower and more behavioral definition of the issues,

Mayer #1:

“By automatically thinking in terms of resolution, we inevitably drift toward a shallower and more behavioral definition of the issues, because those are usually the most easily available to resolution process”

Mayer #2:

“Engaging in conflict means accepting the challenges of a conflict, whatever its type or stage of development may be,

Mayer #2:

“Engaging in conflict means accepting the challenges of a conflict, whatever its type or stage of development may be, […] without automatically assuming that resolution is an appropriate goal.”

Mayer #3:

“Effective engagement requires finding the right level of depth at which to engage”

Q: How Do You :

Engage decision makers?Define dispute?Confine dispute?While leaving the door open to settlement,

without “loss of face”?

A: Mayer #4:

Employ an advocate as “Conflict Specialist”

Mission statement required of an advocate:

“Our goal as advocates is to help people engage effectively and powerfully in conflict”

Mayer #5:Good advocates are skilled in conflict engagement:

raising conflict (i.e. defining/confining conflict)negotiating conflict (i.e. earning and

maintaining credibility)resolving conflict (i.e. subordinating ego to

outcome)

Roles

Your role as client: Change your assumptions about conflict

(Some conflict is good, some bad) Use conflict to test & mature your organization Change your approach to contracts to allow you

to engage effectively and powerfully in conflict (more about this later)

Use “process” rather than “position” Make conflict work for you, not against you

Roles

Your lawyer’s role: Be a conflict ally:

Advocate

Barrister’s Oath:

“You are called to the Degree of Barrister-at-law to protect and defend the rights and interest of such citizens as may employ you. You shall conduct all cases faithfully and to the best of your ability. You shall neglect no one's interest nor seek to destroy any one's property. You shall not be guilty of champerty or maintenance. You shall not refuse causes of complaint reasonably founded, nor shall you promote suits upon frivolous pretences. You shall not pervert the law to favour or prejudice any one, but in all things shall conduct yourself truly and with integrity. In fine, the Queen's interest and the interest of citizens you shall uphold and maintain according to the constitution and law of this Province. All this you do swear to observe and perform to the best of your knowledge and ability. So help you God.”

Roles

Your lawyer’s role: Be a conflict ally:

AdvocateOrganizerStrategistCoach

What Processes Best Define, Confine & Control “Good”

Conflict?

• Dispute Review Boards

• Adjudication

• Arbitration

• Litigation

Expert, non-binding, “project-driven”Summary, non-binding,

“commerce-driven”Due process, binding,

“outcome-driven”Due process, binding,

“society-driven”

1. The more one-sided your contract, the less likely it is to be enforced

2. Concentrate on: Notice as a pre-condition (it works) Evidentiary burdens (they work) Liquidating claims (they work) Process solutions (DRB, DAB, Adjudication,

Expert Determination, Arbitration (they work))

What Contractual Terms Best Manage Conflict?

Making Your Contract a Crystal Ball

+Predictability

ASCE

“Ten Commandments for Better Contracting -

A practical guide to adding value to an enterprise through more effective SMART contracting”

Francis T. Hartman, ASCE Press, 2003, as paraphrased by D. Glaholt

1. Stop, Look and Listen(be aware of your legal and working environment)

2. Do Not Mix Packages do not mix contract types (cost plus + mix

rate + lump sum, for example) do not mix scope (supply only + EPC, for

example)

3. Understand and Manage Expectationspuffery going in = misery going outsurprises = claimsnotice provisions are your friend,

not your enemy

4. Don’t Go CheapDelay & disruption claims are

easy to raise and devilishly hard to prove

Risk management at the front end is always cheaper than at the back end

5. Say what you mean, mean what you say

Do not make assumptionsConsistency is a virtueIf it can happen, it will! Provide for

it!

6. Share risks according to ability to deal with them

i.e. subsurface, permits, means and methods

Think “risk management”, not “risk avoidance”

7. Watch what the other side does, not what they say

Do they agree to take risks, but take no steps to manage them? There is a claim coming.

Do they promise schedule performance, but ignore it? There is a claim coming.

Do they object to minutes? There is a claim coming.

8. Amend the contract sparingly, and in writing

Waiving notice? Say so, and amend contract.

Waiving dispute resolution provision? Say so, and amend contract.

9. On changes and extras, remember: Your first loss is your best loss

Extras and changes cost $1 or more to resolve every $ in issue

Use the rule insurers and sureties do every day.

10. Make conflict work for you, not against you.

Summary

1. Stop, look and listen

2. Do not mix packages

3. Understand your customer’s expectations

4. Don’t go cheap

5. Say what you mean, mean what you say

6. Share risks according to ability to deal with them

7. Watch what they do, not that they say

8. Amend sparingly, and in writing

9. Neither a piker nor a fool be, on changes and extras

10. Embrace conflict, make it work for you

A,B,C’s of Delay and Disruption

A: Allocation of all risks which could cause delay and/or

disruption

Q: What Risks?

1. Legal Risk2. Design risk3. Buildability risk4. Procurement risk5. Construction risk6. Financial risk7. Political risk8. Insurable risk

Q: Legal Risk?

Who will interpret my contract? How will they interpret my contract with

nominated subcontractors? How does this jurisdiction deal with

waivers and exclusion clauses? Will this court award liquidated

damages? How does this jurisdiction deal with

contractual notice provisions?

Q: Design Risk?

Over 60% of delay and disruption claims have their basis in defective, deficient or misinterpreted drawings and specifications

(1993, Kellogg Corporation) The standard E&O limitation is the greater of

$250,000 or insurance covered. Are the design professionals really taking my

side?

Q: Buildability Risk?

Keep it simple! The greater the complexity, the greater

the potential for delay & disruption Complexity claims have their own

complexities

Q: Procurement Risk?

What procurement strategy: Design-Build or Build Only?

Lines of responsibility and communication are different in each case

Are you prepared to fulfill your role under the procurement model chosen?

Q: Construction Risk?

What does the project need v. what was expected?

“Foreseeability” Changes and extras

Q: Financial Risk?

Cost of money issues; inflation; cost of materials issues:

They change the stakes of the game as the game is being played

Who is benefited by delay or disruption?

Q: Political Risk?

Unions Out of province labour Permits, licenses, approvals How are these risks best allocated?

Q: Insurable Risk?

Is Builder’s Risk insurance enough to accommodate risk?

“Delayed opening and start-up insurance” – what is it and who pays?

B: Be Prepared!

Get your contract administrators to do their job: an ounce of prevention…!

Learn to use scheduling delay analysis software; Monitor all data points, forecast all delays Your first loss is your best loss! Buy your way out

of a claim at your very first opportunity Document all delay events, whether claimed or

not (this will help you with “concurrency”) Liquidate all claims including all economic loss,

loss of profit, loss of productivity claims

C: Causation

The Achilles Heel of All Claims

The Elements of Causation:

1. Your contract

2. As-Planned programme v. As-Built programme

3. Float

4. Concurrency

5. Mitigation

6. Law of damages

Can you claim that an event is a “cause” if you failed to give notice of it under the contract?

Something happened, but did it have an effect?

Who owns it, who gets to use it?Excusable or compensable

events mixed up in the causeand effect cycle?

Did the delay or disruption cause your loss, or did you?

Direct cost incurred, or only economic loss?

Listen Closely to Master Sandler!

The End !