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The following is an excerpt from an Interface Consulting work product issued for use in litigation, arbitration, or mediation (dispute resolution). Names, dates, and other information has been modified for client confidentiality purposes.

 

Metro Engineering, Ltd. v. Law & Huntington Engineering Co. Arbitration

I. Introduction

Davis Nash Aeronautics Company (Davis Nash) contracted with Law & Huntington Engineering Company, Ltd. (L&H), to provide design-build services under a guaranteed maximum price (GMP) contract for the Component Finish Facility (CFF) and West Chiller Plant (WCP) at its Wayward, Nevada, facility. The CFF and WCP are part of a Davis Nash project to assemble F-35 joint strike fighter jets for the United States military as well as various international military forces.... The following drawing outlines the CFF and the placement of certain mechanical equipment.

 

CFF Layout

 

…L&H entered into several subcontracts to perform the construction of the CFF and WCP, including a subcontract with Metro Engineering, Ltd. (Metro), for the mechanical and plumbing scope of the CFF.

…Metro was awarded the contract for the CFF mechanical and plumbing work based on Metro’s August 28, 2003, proposal. Metro then subcontracted the plumbing work to United Mechanical Contractors (United); the sheet metal installation to Lanes & Barrett; the insulation work to Rapid Insulation Services, Inc.; the equipment setting to Chivas Crane Works (Chivas); and various other work items to additional subcontractors. The following graphic illustrates the various parties’ relationships on the CFF project.

 

Relationship Between the Parties

 

L&H’s scope of work included providing design-build services to Davis Nash, coordinating all of the subcontractors on-site, and procuring and delivering certain equipment....

During the construction of the CFF, L&H significantly increased Metro’s scope of work. L&H increased Metro’s scope of work by over $754,167 in contract change orders and an additional $1,026,807 in unpaid, L&H directed changes. In addition, L&H failed to perform its duties which subsequently delayed and disrupted Metro’s work progress. The progress of Metro’s work was dependent upon the completion of other trades’ work, such as the roofing contractor, concrete contractor, and structural steel contractor. Metro’s work progress also depended upon....

…The illustration below provides an outline of the planned versus actual time frames for Metro’s work scope.


Metro Planned v. Actual CFF Project Duration Timeline

 

…But for Metro’s acceleration efforts, Metro would have completed its work significantly later than the contractual deadlines. Metro expended significantly more man-hours with additional manpower loading, overtime, and night shifts. To date, Metro has not been fully compensated for L&H’s scope changes and labor impacts due to L&H disruptions and delays to Metro’s work....

 

II. Summary of Opinions

This section summarizes Interface Consulting’s opinions relative to the issues surrounding Metro’s involvement with the CFF project. In summary, L&H failed to perform its contractual scope of work as follows:

  • L&H failed to manage and control the overall project schedule, resulting in delays in critical activities...:

o ....

  • L&H maintained a schedule-driven project. Metro experienced unanticipated trade interference and site congestion due to L&H’s delays and L&H’s constructive acceleration of....

  • L&H supplied late and defective equipment. L&H was significantly late with providing....

  • L&H failed to provide sufficient temporary power to the job site, which caused.... 

  • L&H significantly increased Metro’s scope of work....

Despite L&H’s failure to perform and the resultant delays and disruptions that Metro incurred, L&H maintained a schedule-driven project and constructively accelerated Metro’s workforce to meet…:

Metro expended additional unplanned labor to offset the labor productivity losses resulting from L&H’s failure to perform. These labor losses occurred due to performing out-of-sequence work, working in a congested site, overcoming delays due to work stoppages, reassigning manpower due to scope changes and other delays, and working excessive overtime and a second shift.

Metro is entitled to....

 

III. Discussion of Opinions

The following sections provide....

III.A. L&H’s Failure to Perform and the Negative Impacts to Metro’s Work

L&H, as the design-build contractor, failed to perform....

…As a result, Metro accelerated its work and expended significantly more man-hours due to increased manpower loading, scope growth, and labor productivity losses. Metro’s actual man-hours increased from a planned 11,758 man-hours to 49,074 man-hours, an increase of over four (4) times. The following graphic illustrates Metro’s planned and actual man-hour expenditure.

 

Metro Planned v. Actual Field Labor Hours

III.A.1. Late Completion of L&H Predecessor Work

...Metro’s bid proposal relied upon this data and specifically excluded overtime caused by other trades not keeping up with the construction schedule, as shown below.

…This 3-month delay in completing the roof is illustrated in the following timeline.

 

L&H’s Late Completion of Roof

 

...

Late L&H Completion of Concrete Work

L&H was late....

…The following graphic illustrates the planned and actual durations of L&H’s concrete work.

 

L&H’s Late Completion of Concrete Work

 

Late L&H Completion of Structural Steel

L&H was also late with completing its....The graphic below illustrates the planned and actual completion dates for setting the structural steel.


L&H’s Late Completion of Structural Steel

 

...

III.A.2. Trade Interference and Site Congestion

As discussed above, L&H’s failure to complete predecessor work according to the contract schedule and its constructive acceleration of the work caused trade interference and site congestion to Metro and its subcontractors. Metro’s manpower, as well as the manpower of Metro’s subcontractors, was increased due to L&H’s constructive acceleration and L&H’s continual pressure to meet the project completion dates despite the increased scope of work and other project delays and disruptions. In addition to the trade interference and site....

As shown in the following diagram, Metro was originally able to access the building through an opening on the northwest side of the facility. The other building access that all of the subcontractors used was at the crane bay entrance on the north central side.

 

Access Points in CFF Facility

 

To get to the west mezzanine work area, a small wall section was left open in the west mezzanine as shown on the previous and following diagrams. As shown below, the small wall section that was left open to provide access to the west mezzanine was approximately 30 feet above grade, which made site access more challenging.

 

Changed Site Access Point - Interior West Wall Elevation

...

III.A.3. Late and Defective L&H Supplied Equipment

...

Late, Out-of-Sequence L&H-Supplied Equipment

L&H was responsible for providing approximately 60 pieces of HVAC equipment in a timely manner and in accordance with the contract schedule. Metro planned its work based upon receiving these items of equipment on the planned delivery dates and in the planned sequence. However....The following graphic illustrates L&H’s failure to provide the equipment in a timely, sequential manner.

 

Late and Out-of-Sequence L&H Supplied Equipment

 

Defective and Incomplete L&H-Supplied Equipment

III.A.4. L&H’s Failure to Provide Sufficient Temporary Power 

...

III.A.5. Excessive Scope Changes

During the project, L&H increased Metro’s scope of work by over....

These paid change orders and unpaid L&H-directed change orders, at a baseline labor productivity factor that excludes L&H-caused productivity losses due to L&H’s failure to perform, represent…as illustrated in the following graphic.

 

Metro Field Labor Hours for L&H Scope Changes

 

This work scope growth primarily occurred during....

L&H was constantly reminding Metro that they had to complete the work.... The following chart illustrates the late timing of L&H’s scope changes to Metro’s work. The dates of the scope changes are based on the date the change proposals were sent to L&H.

 

Timing of Metro’s Scope Change Field Labor Hours

...

III.A.6. L&H Constructively Accelerated Metro, Resulting in Metro Working Overtime and Shift Work

To overcome L&H’s failure to perform, Metro accelerated its work progress by adding manpower and working overtime. The following graphic illustrates Metro’s planned and actual manpower and overtime effort for field labor.

 

Metro Overtime Expenditure

...

III.B. L&H Productivity Impacts Increased Metro’s Labor Costs

…The root cause of Metro’s increased labor man-hours and costs was L&H’s failure to perform. L&H’s failures manifested themselves in the following areas:

  • Working in adverse weather conditions (e.g., rain and mud)

  • Trade interference and site congestion

  • Late L&H-supplied equipment impacts

  • Lack of adequate temporary power impacts

  • Scope change impacts

  • Excessive overtime and shift work

...

III.B.1. Working in Adverse Weather Conditions

...

III. B. 2. Trade Interference and Site Congestion

...

III. B. 3. Late L&H-Supplied Equipment Impacts

...

III. B. 4. Lack of Adequate Temporary Power Impacts

...

III. B. 5. Scope Change Impacts

...

III. B. 6. Excessive Overtime and Shift Work

...

III.C. Outstanding Metro Change Proposals

...

III.D. Metro’s Base Scope Labor Productivity Loss due to L&H’s Failures to Perform

...

Metro experienced a cumulative impact of labor productivity losses on its base scope man-hours ranging from 5% to 65%. These losses occurred due to performing out-of-sequence work, working in a congested site, overcoming delays due to work stoppages, reassigning manpower due to scope changes and other delays, and working excessive overtime resulting from delays and an accelerated work schedule. The following graphic illustrates the labor productivity effect of these impacts.

 

Quantification of Metro’s and United’s Labor Productivity Losses

 

III.E. Amount due Metro for Overtime Premium

III.F. Total Damages Due Metro

 

IV. Conclusion

In conclusion....

 

V. Signature

 

VI. Exhibits