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Airport Boiler Plant Construction Schedule Delay Analysis

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.

 

Air Mechanical Contractors v. The General Group Litigation

I. Introduction

On June 9, 2000, the City of Smytheville (the City) contracted with The General Group, Inc. (General), to provide mechanical upgrades to the Central Plant at International Airport (the 424B Project), located in Texas. General was one of the general contractors awarded a contract (the prime contract) with the City to provide various upgrades at the International Airport. The city engineer was the City of Smytheville, Department of Aviation and the designer was A.B. Architect & Associates (ABA). It appears that the City, through its city engineer, contracted with Super, Inc. (Super), to act as the City’s construction manager and provide the City with contract administration and other construction-management-related services.

General’s scope of work (the work) with the 424B Project included constructing building additions; incorporating site improvements; installing chilled water, condenser water, steam and steam return, high temperature water, natural gas, and plumbing systems; and installing fire protection handling units and fans and electrical power distribution systems....

General subcontracted with Air Mechanical Contractors, Inc. (hereafter Air), to perform the mechanical construction portion of the work involving the City. The General/Air lump sum contract (the subcontract) had a lump sum value of....The following diagram illustrates the various party relationships on this project.

 

Party Relationships

 

The 424B Project had a duration 580 calendar days with a June 19, 2000….The project duration and sequence of work did not proceed as planned, and the project was significantly delayed. General submitted a delay claim to the City, Claim for Additional Cost and Extension of Time….The City Engineer concluded the City was responsible for 652 days of delay out of a total of 1162 days of total project delay and approved various contract issues including welding testing and warranty costs for $135,763 in Air damages due to the “owner.”

After a brief period of discussions with General, Air filed a lawsuit on January 17, 2006, alleging that General had failed to pay Air $4,244,696, approximately the same amount that General had included in its claim with the City on Air’s behalf. On January 27, 2006, General responded to Air and indicated that any damages sustained by Air were caused entirely or in part by the conduct of third parties for which General was not responsible. On October 30, 2006, Air’s expert, Mr. Paul Sullivan of ABC, issued an Analysis of Delay and Loss of Productivity, and Mr. Walter Taylor, PE, issued an expert report on the issue regarding the effect of imposing radiographic examination on pipe welds. This Statement of Opinion addresses Air’s contractual entitlement and associated damages, and the two expert opinions that have been submitted by Air’s attorneys. 

 

II. Summary of Opinions

This section summarizes Interface Consulting’s opinions relative to Air’s lawsuit against General with Project 424B. We address Air’s contractual entitlement and corresponding alleged damages that it maintains it is due from General. We also discuss the two expert opinions that have been submitted by Air’s attorneys that are the basis of some of Air’s alleged damages.

II.A. Air's Position Relative to Damages from General

…The following table lists Air’s damages from both submissions.

 

Air’s Alleged Damages

 

II.B. Expert Opinions Submitted by Air's Attorneys

On October 30, 2006, Air’s attorneys submitted two (2) expert reports: ABC’s Analysis of Delay and Loss of Labor Productivity and Mr. Walter Taylor, PE’s, expert report regarding the effects of imposing radiographic examination on pipe welds….

II.B.1. ABC’s Report on Delay and Loss of Productivity Analysis

II.B.1.a. ABC’s Schedule Analysis

...A comparison of the controlling delays reflected in the General/Air schedule updates and ABC’s period evaluations is shown below.

 

General/Air Schedule Updates vs. ABC Period Evaluations
Controlling Critical Path Delays

 

The following graphic also summarizes ABC’s conclusions for its 10 analysis periods.

 

ABC’s Delay Analysis Conclusions

 

II.B.1.b. ABC’s Labor Productivity Analysis

ABC claims Air experienced 25,475 man-hours in lost productivity due to circumstances caused by others throughout the project. These man-hours are for HVAC pipe and equipment field labor, as shown below.

 

October 30, 2006
ABC’s Analysis of Delay and Loss of Labor Productivity
Page 113

 

ABC’s productivity loss calculation methodology is flawed for the following reasons….

 

III. Discussion of Opinions

III.A. Air’s Position Relative to Damages from General

III.A.1. Contractual Entitlement 

III.A.2 Air’s Alleged Damages

To date, Air has not submitted an independent expert report or testimony regarding the calculation of its alleged damages. Instead, it has relied upon ABC’s unreliable assertions of 938 compensable days, 1,046 excusable days, and 25,475 in lost productivity man-hours….

…Air has failed to substantiate its alleged costs other than its actual labor expenditure...

III.A.2.a. Air is Not Contractually Entitled to Additional Compensation from General

III.A.2.b. General is Not Responsible for the Causes of These Cost Increases

…Furthermore, Air’s January 2005 claim specifically identifies in the entitlement summary that the City, its representative, and its engineer caused the delays, as shown in the following excerpts.

 

AirMechanical Contractors International Airport– Central Plant Upgrade Claim
Air Claim Entitlement Summary
AIR13009

 

III.A.2.c. Air’s Calculation of Alleged Damages Is Erroneous

On December 11, 2006, Air revised its original damages….The following pie chart illustrates Air’s revised damages.


Air Damages per December 11, 2006, Response to General’s Interrogatories

1. Delay – Compensable

…ABC’s computation of 938 days of compensable delay is flawed and unreliable for the following reasons:

  • The ABC delay analysis was based on a General/Air “approved baseline” schedule and subsequent project schedule updates that do not accurately reflect the work plan utilized to construct the project.

  • ABC uses Air’s erroneous actual start and finish dates and erroneous manipulation of the activity progress data.

  • ABC improperly altered certain schedule activities in a manner that is not consistent with contemporaneous project records.

2. Total Unabsorbed Home Office Overhead

3. Loss of Productivity

…However, ABC’s productivity loss calculation methodology is flawed for the following reasons:

  • Fails to verify if Air’s contract estimate is correct in order to use it as a basis for calculation

  • Fails to recognize that the alleged causes of these productivity losses are the result of the City and the City’s representatives

  • Fails to analyze Air cost reports to verify productivity losses and associated time periods

  • Utilizes an inaccurate methodology to calculate productivity loss

  • Improperly utilizes a Mechanical Contractor’s Association of America (MCAA) guideline for computation of labor productivity loss

  • Fails to accurately account for Air actions that impacted labor productivity 

4. Direct Cost Change Order Claims

5. Air’s Inefficiency Costs

6. Markup

7. Profit

8. Bond Costs Entire Contract for Extension of Time

9. Bond Costs for Addition of Contract due to Claim

10. Finance Costs at Prime plus 1%

11. Past Due Retainage - $263,719.80

In conclusion, General is not contractually liable for Air’s alleged damages. The table below summarizes Interface Consulting’s position and analysis of Air’s damages.

 

Evaluation of Air’s Alleged Damages

 

 

III.B. ABC’s Report on Delay and Loss of Productivity Analysis

On October 30, 2006, ABC submitted its Analysis of Delay and Loss of Labor Productivity. It should be noted that ABC’s report fails to address....

III.B.1. General Comments to ABC’s Delay Analysis

III.B.1.a. ABC’s Assessment of Delay Liability
III.B.1 b. ABC’s Delay Analysis of the Project

1. ABC Based Its Analysis on an Unreliable Schedule

….

2. The ABC Delay Analysis used Air’s Schedule Data which was Incorrect as to Actual Start and Finish Dates, Progress Achieved, and Schedule Logic

…Some examples where ABC relied on incorrect information to make its analysis are as follows:

Example 1: The following discussion addresses one key element in General/Air’s baseline schedule which was used for ABC’s analysis. Air’s schedule information was used to prepare the “approved baseline” schedule and that schedule failed to include the high temperature hot water (hereafter HTHW) pump submittal preparation and submittal approval activities. Air corrected the omission in the General/Air September 2000 (Frame #1) schedule update. The two activities were entered as predecessor work prior to manufacturing and delivery of the HTHW pumps. Due to relationship links, these activities effectively added sixty (60) days of predecessor work prior to commencement of pump manufacturing and delivery, as illustrated in the following graphic.

 

Air’s Omission of HTHW Pump Activities


Although the addition of these activities in the General/Air September 2000 (Frame #1) schedule update corrected the previous omission, the progress data relative to the HTHW pump submittal preparation activity, which ABC relied on, was incorrect. The General/Air September 2000 (Frame #1) schedule update indicates that the HTHW pump submittal activity was 50% complete, despite the fact that this activity had not yet started. Subsequent updates confirm this as an erroneous entry of the 50% completion, as the schedule updates reflect an actual start of October 2, 2000.

The original duration of the HTHW pump submittal preparation activity is 30 days. However, by improperly altering the progress information to reflect the activity as 50% complete, the Primavera® scheduling software used calculates a remaining duration of only 15 calendar days. As such, the effective duration of the activity string beginning with HTHW pump submittal preparation is reduced by 15 calendar days. The following graphic illustrates the effect of the erroneous 50% entry by Air.


Erroneous HTHW Pump Progress Data

 

During this timeframe, Air identified design deficiencies relative to the HTHW pumps, which delayed Air’s submittal process. As indicated in the illustration above, the inaccurate progress information reduced the impact of delays associated with these design deficiencies. ABC’s analysis should have reflected a 60-calendar-day project delay due to issues with the HTHW pumps during ABC’s Period No. 1, but failed to do so. In its report, ABC admits that the delay to the HTHW pump submittal approval was the result of two (2) design issues.

Example 2. Actual start and/or finish dates provided by Air for the various schedule bases are inaccurate....

Example 3: Another example of erroneous schedule data....

Example 4: Another situation in which ABC used erroneous data for its analysis began with....

Example 5: A fifth example where ABC used erroneous data for its analysis started with....

3. ABC Improperly Altered Schedule Activities and Progress Information in a Manner that is Not Consistent with Contemporaneous Records

Example 1:
In its analysis, ABC erroneously altered....

The following graphic illustrates the improper alteration of schedule data to produce an artificial result relative to “Total Float.”


General/Air December 2000 Schedule Update
(Interface Consulting Work Product)

 

Example 2: As it did in Period No. 2, ABC improperly altered….

Example 3: A third example…

Example 4: Another example whereby ABC erroneously altered the controlling critical path….

III.B.2. Specific Comments Regarding ABC’s Delay Analysis Periods

ABC segregated the Project into 10 time periods as previously addressed. The following discussion addresses ABC’s delay quantification and assessment of delay responsibility for each of its delay time periods. The following graphic illustrates ABC’s conclusions for its 10 analysis periods.

 

ABC’s Delay Analysis Conclusions

 

....

III.B.2.a. ABC Period 1 Delays (June 19, 2000, to September 25, 2000)

1. ABC Failure to Link Delay Causation to General

2. ABC’s Schedule Analysis for Period No. 1

III.B.2.b. ABC Period No. 2 Delays (September 26, 2000, to December 30, 2000)

1. ABC’s Failure to Link Delay Causation to General

2. ABC’s Flawed Schedule Analysis for Period No. 2

III.B.2.c. ABC’s Period 3 Delays (December 31, 2000, to March 31, 2001)

1.  ABC’s Failure to Link Delay Causation to General

2. ABC’s Flawed Schedule Analysis for Period No. 3

III.B.2.d. ABC’s Period 4 Delays (April 1, 2001 to June 30, 2001)

1. ABC’s Failure to Link Delay Causation to General

2. ABC’s Flawed Schedule Analysis for Period No. 4

...

III.B.2.e. ABC Period No. 5 Delays (July 1, 2001, to September 30, 2001)

1. ABC’s Failure to Link Delay Causation to General

2. ABC’s Flawed Schedule Analysis for Period No. 5

III.B.2.f. ABC’s Period No. 6 Delays (October 1, 2001, to December 31, 2001)

1. ABC’s Failure to Link Delay Causation to General

2. ABC’s Flawed Schedule Analysis for Period No. 6

III.B.2.g. ABC’s Period No. 7 Delays (January 1, 2002, to March 31, 2002)

1. ABC’s Failure to Link Delay Causation to General

2. ABC’s Flawed Schedule Analysis for Period No. 7

III.B.2.h. ABC’s Period No. 8 Delays (April 1, 2002, to June 30, 2002)

1. ABC’s Failure to Link Delay Causation to General

2. ABC’s Flawed Schedule Analysis for Period No. 8

III.B.2.i. ABC’s Period No. 9 Delays (July 1, 2002, to June 30, 2003)

1. ABC’s Failure to Link Delay Causation to General

 

CPR 266 – Revised Air Piping Scope Changes

CPR 275 Condenser Water Pipe Demolition Scope Change

CPR 232 HTHW Demolition Scope Changes

CPR 283 Steam Flow Meter at Boiler No. 1

CPR 284 Steam Flow Meter at Boiler No. 2

...

CPR 285 Steam Flow Meter at Boiler No. 3

CPR 286 Steam Flow Meter at Boiler No. 4 

CPR 287 Steam Flow Meter at Boiler No. 5

CPRs 288290 Steam Flow Meter at Chiller No. 1

CPR 291 Steam Flow Meters at Chiller No. 6

CPR 292 Steam Flow Meters at Chiller No. 8

2. ABC’s Flawed Schedule Analysis for Period No. 9

III.B.2.j. ABC’s Period No. 10 Delays (July 1, 2003, to December 1, 2004)

1. ABC’s Failure to Link Delay Causation to General

2. ABC’s Flawed Schedule Analysis for Period No. 10

III.B.3. ABC’s Labor Productivity Analysis

ABC fails to link these alleged productivity losses to General and fails to show a cause-and-effect relationship between the events which it alleges caused an impact to Air’s labor productivity. ABC claims three (3) labor loss causations: late in-line control devices, additional weld inspection, and the City’s work scope changes. However, ABC’s labor loss productivity is based on....

…ABC selected the following six (6) productivity factors from these guidelines and assigned a percentage impact for each factor:

  • Learning curve – 5%

  • Stacking of trades – 10%

  • Reassignment of manpower – 10%

  • Beneficial occupancy – 15%

  • Crew size inefficiency – 10% - 20%

  • Dilution of supervision – 10% - 15%

III.C. Expert Report of Walter J. Taylor, PE


IV. Signature

 

V. Exhibits