Project Management Experts and Construction Claims: Part 3

This is the third blog post in a three-part series that discusses the role of a project management expert in preparing or opposing claims during mediations, arbitrations, and court cases associated with Design-Build (D-B) projects or Engineering, Procurement, and Construction (EPC) projects.

The first post discussed life-cycle phases of D-B and EPC projects, and the second post discussed the importance of sound project management practices and project management requirements typically stated in a contract. This third post identifies support that a project management expert can provide during the evaluation of delay, disruption, change order, and cost overrun claims associated with D-B and EPC projects.

Project management experts can be of vital assistance to an owner’s or contractor’s lawyer in preparing or opposing such claims. These experts may perform the following tasks:

1. Review Project Documents

– Contracts, scope of work, and technical specifications
– For process and power plant projects: Process Flow Diagrams (PFDs), Piping and Instrumentation Diagrams (P&IDs), and equipment data sheets
– For buildings and infrastructure projects: civil, structural, mechanical, electrical, and instrumentation drawings
– Baseline and updated schedules in native format
– The original project cost estimate tied to the original contract price, monthly cost and labor work hour reports, and daily construction reports
– Vendor submittals, material delivery schedules, and Quality Assurance/Quality Control (QA/QC) documentation
– Project correspondence (letters and emails), meeting minutes, progress reports, requests for information, and change orders with technical clarifications

2. Clarify Project Management Principles
Explain to judges, arbitrators, or lawyers (who may not be technical specialists) how project management processes such as planning, scheduling, engineering management, procurement management, construction management, quality management, resource management, communications management, stakeholder management, risk management, change control, and cost management are supposed to work.

3. Evaluate Standard of Care

– Determine whether the owner’s and contractor’s project managers acted with reasonable skill and diligence and according to standard industry practice.
– Compare actual practices against international standards (PMI, AACEI, FIDIC, AIA, etc.) to establish if negligence or mismanagement occurred.

4. Technical Validation and Reporting

– Assist engineers from other disciplines in assessing the technical reasonableness of construction installation methodology.
– Validate vendor lead times and procurement schedules against industry benchmarks.
– Prepare detailed reports with clear graphical schedules to demonstrate delay, milestone impact charts, and cost and labor breakdowns showing overruns specific to cost accounts.
– Highlight cause-and-effect relationships between engineering, procurement, and construction delays.

5. Assess Entitlement to Change Orders

– Identify whether an alleged scope change is work that is typically included in design development and, therefore, not a scope change.
– Evaluate whether the contractor provided adequate notice of an alleged scope change to give the owner an opportunity to mitigate any associated schedule delays and cost increases.
– Evaluate whether alleged scope changes associated with changes in construction means and methods are valid.
– Evaluate changes associated with differing site conditions.
– Evaluate changes associated with technical specifications (may require the involvement of engineering specialists).

6. Schedule Delay Analysis

– On D-B projects, evaluate the evolution of the preliminary schedules into detailed engineering and procurement schedules and then detailed construction schedules.
– On EPC projects, confirm the integration of engineering, procurement, and construction schedules, highlighting dependencies.
– Determine whether delays were:

• Excusable but non-compensable (e.g., weather, force majeure)
• Compensable (e.g., owner-caused changes, late approvals)
• Contractor-responsible (e.g., poor performance, mismanagement)

– Analyze the critical path, focusing on long-lead equipment procurement; engineering approvals; construction sequences; and pre-commissioning, commissioning, and startup activities.

• Assist the schedule delay expert in performing detailed delay analyses using the baseline CPM schedule and schedule updates with emphasis on milestones (e.g., mechanical completion, system turnover, project completion).
• Identify schedule activities associated with engineering scope changes, owner’s late responses to RFIs, equipment delivery delays, field change orders, weather delays, rework, safety, quality, or regulatory compliance issues, and other impacts.
• On process and power plant projects, recognize the potential that the schedule may change from equipment and materials installation activities to a systems completion schedule and assist the schedule delay expert in comparing these types of schedules.
• Assist the schedule delay expert in performing the appropriate schedule delay analysis methodologies, depending on the type of claim. Time Impact Analysis determines entitlement to extensions of time, and Compensable Delay Analysis considers concurrent delays caused by the contractor, unusually severe weather, and force majeure events (e.g., supply chain disruption).

7. Cost Overrun Analysis

– Assist the quantum expert in evaluating completeness of the original project cost estimate and how the contractor evaluated contingency based on completeness of the project design at contract award.
– Evaluate whether additional costs are linked to design development, design errors, engineering redesigns, scope changes, procurement delays, acceleration, inefficiency, force majeure, bid error, or other issues.
– Review project cost control reports including cost breakdowns by engineering and construction disciplines.
– Assist the quantum expert in quantifying:

• Extended site overhead and home office overhead
• Rework due to design changes or non-conformance
• Acceleration measures to mitigate delay
• Specialty labor and equipment costs
• Productivity losses caused by congested site conditions, coordination issues among multiple contractors, and cumulative impact of multiple changes

8. Assessment of Risk Management

– Identify the agreed-on risk register and risk allocations.
– Evaluate updates to the risk register and how these new risks were managed.
– Identify risk mitigation measures implemented by the owner and contractor, and the cost of these mitigations.

9. Legal Collaboration

– Work with the attorney to interpret complex contractual terms that may be unique to the project. For example, on process plant projects: “pre-commissioning, commissioning, and startup,” “performance tests and guarantees,” and “warranty provisions.”
– Assist in assembling a comprehensive narrative demonstrating how delays in engineering or procurement cascaded to construction delays and cost overruns.
– Identify failures in project management duties under the contract that led to delay and disruption of engineering, procurement, and construction activities.

10. Review and Rebuttal Preparation

– Verify that all claim analyses comply with industry-recommended practices (e.g., AACE Forensic Schedule Analysis 29R-03, Society of Construction Law Delay and Disruption Protocol recommendations, etc.).
– Prepare for common opposing-party arguments such as “no impact” claims on critical path, concurrent delay, or over-claimed costs.
– Support the attorney in cross-examination preparation for opposing experts.

11. Claim Presentation and Expert Testimony

– Develop clear presentations showing project complexity and cause-effect of delays and cost overruns.
– Use visuals tailored to plant execution (e.g., equipment fabrication timelines, mechanical completion sequences, system commissioning).
– Testify whether the methods of project management, scheduling, cost control, progress reporting, or risk management met the reasonable professional standard.
– Provide expert witness testimony on schedule delay and cost analysis.

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