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Power Plant Construction - Schedule Delay and Labor Productivity 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.

 

Pinoak Contracting and Savannah Electrical Arbitration

I. Introduction

I.A. Project Background

Pinoak Contracting and Leasing Company (Pinoak) executed a contract agreement with Savannah Electric Company (Savannah or SE) on January 27, 2006, for work associated with the A06 heat recovery steam generator (HRSG) erection scope of work at Savannah’s Highland Energy Center in Antigua, California. The Highland Energy Center project involved a 770 megawatt combined cycle power plant using SE’s frame 7H gas turbine. The H-System gas turbine is Savannah’s newest technology and is represented to be its most fuel-efficient combined cycle system available. The contract value was....

Pinoak’s scope of work generally consisted of the erection of two (2) HRSG units and assembly/installation of two (2) condensers (hereafter the Project). The HRSG units are heat exchangers that recover heat from turbine exhaust gas to produce steam that generates additional electricity via steam turbine. The purpose of….

The HRSGs are large and complex units, each over 150 feet long by 100 feet tall. Primary components associated with the HRSG units include the inlet duct; main casing, which is divided into various bays; internal modules and selective catalyst reduction (SCR); outlet stack; high pressure (HP), intermediate pressure (IP), and low-pressure (LP) drums; and interconnecting piping. The following diagram illustrates the various major components.

 

Diagram of Major HRSG Components

 

Highland Energy Center, LLC, was the owner of the Project. SE hired Roland Power Services (Roland) to manage site construction activities. Harvey, LLC (Harvey), was the HRSG engineer and material supplier….The following organization chart illustrates the relationship between the various parties involved in the Project.

 

Relationship between the Parties

 
 

I.B.      Pinoak’s Scope of Work

Pinoak’s scope of work was to provide the erection of two (2) HRSG units and the assembly and installation of two (2) steam surface condensers. Pinoak was also responsible for receiving, offloading, inspecting, and storing Savannah-supplied materials for the HRSG units and condensers.

The following chart summarizes Pinoak’s major scope of work items relative to the Project….

I.C.      Contract Overview

As stated in Section I.B., Pinoak’s Scope of Work, Pinoak was responsible for providing the construction labor to erect the HRSG units; assembling/installing the steam surface condensers; and receiving, offloading, inspecting, and storing Savannah-supplied materials for the HRSG units and condensers. In order to complete its work in accordance with the Contract Schedule, Pinoak depended....

The Contract specified milestone completion dates relative to the major portions of Pinoak’s work. Per the Contract, Pinoak was required to complete its work in accordance with these milestone dates. Milestone completion dates for hydrostatic testing of the two (2) HRSG units, as well as the hydrostatic testing for the two (2) condensers, are as follows:

  • HRSG Unit 1 – November 21, 2006

  • HRSG Unit 2 – February 16, 2007

  • Condenser Unit 1 – August 16, 2006

  • Condenser Unit 2 – September 7, 2006

I.D.      HRSG and Condenser Unit Project Schedules

I.E.       Project Execution

In accordance with the performance plan outlined in the Contract, Pinoak planned to commence work on February 3, 2006, and complete work in accordance with...The following timeline shows the Project’s key milestone dates.

 

Project Timeline

 

In addition to the delayed completion of the four (4) scopes of work illustrated above, Pinoak expended over three (3) times its budgeted labor hours for this Project….

 

II. Observations and Conclusions

The project was plagued with problems emanating from numerous Savannah actions and inactions relative to its performance, which include the following:

  • Savannah failed to provide materials in accordance with the Contract Schedule.

  • Savannah provided materials that were defective.

  • Savannah did not provide adequate means to identify material deliveries.

  • Savannah did not complete predecessor work necessary for Pinoak’s work.

  • Savannah did not provide adequate erection crane support.

  • Savannah did not provide adequate access to the HRSG units’ work site.

  • Savannah did not provide complete and accurate design information.

Savannah’s actions delayed the milestone completion dates as follows:

 

Summary of Delays to Milestone Completion

 

 

II.A.     HRSG Unit 1 Schedule Delay Analysis

Due to the complex nature of the HRSG Unit 1 schedule, Interface Consulting analyzed the HRSG Unit 1 schedule using several periods corresponding with the major critical path construction phases. Schedule impacts corresponding with each phase are discussed in the following sections.

HRSG Unit 1 Casing Erection

HRSG Unit 1 Module Installation

HRSG Unit 1 Piping Installation and Hydrostatic Testing

II.B.     HRSG Unit 2 Schedule Delay Analysis

As with HRSG Unit 1, Interface Consulting analyzed the HRSG Unit 2 schedule using several periods corresponding with the major critical path construction phases. Schedule impacts corresponding with each phase are discussed in the following sections.

HRSG Unit 2 Casing Erection

HRSG Unit 2 Module Installation

HRSG Unit 2 Piping Installation and Hydrostatic Testing

II.C.     Condenser Unit 1 Schedule Delay Analysis

The Baseline Schedule relative to Condenser Unit 1 contained a linear sequence of activities from beginning to end.... Interface Consulting analyzed impacts to the Condenser Unit 1 schedule using a single analysis period.

The Baseline Schedule contained six (6) calendar days of float compared to the August 16, 2006, milestone completion date mandated by the Contract. Thus, the total delay to the milestone completion date was....

Based on analysis of the project records, Savannah’s actions and/or inactions caused all 357 calendar days of critical path delay.


Condenser Unit 1 Critical Path Delay

 

Additionally....

 

II.D.     Condenser Unit 2 Schedule Delay Analysis

As with Condenser Unit 1, Interface Consulting analyzed impacts to the Condenser Unit 2 schedule using a single analysis period.

Pinoak started its assembly and installation work on Condenser Unit 2 on October 2, 2006. Pinoak completed hydrostatic testing relative to Condenser Unit 2 on....

The Baseline Schedule contained two (2) calendar days of float compared to the September 7, 2006, milestone completion date mandated by the Contract. Thus, the total delay to the milestone completion date was....

Based on analysis of the project records, Savannah caused the entire critical path delay of 369 calendar days.

 

Condenser Unit 2 Critical Path Delay

 
 

II.E.      Savannah-Caused Labor Productivity Losses

Interface Consulting interviewed Pinoak personnel, reviewed project documentation, consulted various labor productivity studies, analyzed Pinoak’s labor-hour expenditures, and utilized our specific industry knowledge involving construction labor productivity to estimate the loss in construction labor productivity that Pinoak experienced from the various impacts to its work. Interface Consulting’s analysis began with reviewing the impact periods associated with each major delay and disruption. We then identified the actual labor hours Pinoak incurred during the impact periods and multiplied those actual labor hours by our assessment of the productivity losses....

 

III. Schedule Delay Analysis Discussion

III.A.    Schedule Delay Analysis Overview

Interface Consulting performed a schedule delay analysis to identify, quantify, and assign responsibility for the events and/or circumstances which impacted the various contractual milestone completion dates relative to Pinoak’s HRSG and condenser work.

Interface Consulting used a windows analysis methodology to perform the schedule analysis. This method allows the analyst to understand what issues were driving the critical path at discrete intervals in time. The windows schedule analysis considers the real-time perspective of project conditions, the knowledge of the project participants during each period, and the dynamic nature of the critical path....

III.B.    Schedule Delay Analysis Methodology

The methodology utilized for this analysis involves identifying time impacts by chronologically tracking progress of critical and near-critical activities. This involves comparing the planned timing and sequencing of schedule activities to their actual progress, and identifying the resulting effect on the project completion date.

The Baseline Schedule, which detailed Pinoak’s original plan to construct the Project, serves as the starting point for the analysis of critical path delays. Utilizing the Baseline Schedule, this analysis proceeded chronologically to the first available schedule update and advanced through the various schedule updates to the completion date associated with each contractual milestone, tracking progress for critical and near-critical activities and measuring impacts to milestone completion dates....

 

IV. HRSG Unit 1 Schedule Delay Analysis

In accordance with the performance plan outlined in the Contract Schedule, the critical path of HRSG Unit 1 began with casing erection work, and then proceeded through module installation, piping installation, and hydrostatic testing. The Baseline Schedule contemplated commencement of work on....The following graphic illustrates the as-planned critical path for Pinoak’s work on HRSG Unit 1.

 

HRSG Unit 1 As-Planned Critical Path

 

IV.A.    Period 1: Casing Erection Delay Analysis

As-Planned Casing Erection Critical Path

Progress through HRSG Unit 1 Casing Erection

Pinoak was unable to commence its work on February 3, 2006, as contemplated in the Baseline Schedule. Union strikes occurred which affected the surveyors and crane operators necessary for Pinoak to progress work. Pinoak mobilized to the site on....This is evidenced by the following excerpts from Pinoak’s daily reports....

 

Revised Critical Path


 

 

IV.B.    Period 2: Module Installation Delay Analysis

Updated Module Installation Critical Path

Relative to work on the HRSG Unit 1 module installation, Pinoak’s construction schedule contemplated commencement of work on April 10, 2006, beginning with modules for Bay 5. The following graphic illustrates the as-planned critical path activities associated with Pinoak’s HRSG Unit 1 module installation work….

Progress through HRSG Unit 1 Module Installation

Opinions on Causation of Delay

IV.C.    Period 3: Piping Installation and Hydro-testing Delay Analysis

Updated Piping Installation Critical Path

Progress through HRSG Unit 1 Piping Installation

Opinions on Causation of Delay

 
 

V. HRSG Unit 2 Schedule Delay Analysis

In accordance with the performance plan outlined in the Contract Schedule, the critical path of HRSG Unit 2 began with casing erection work, and then proceeded through module installation, piping installation, and hydrostatic testing. The Baseline Schedule contemplated commencement of work on....

V.A.    Period 1: Casing Erection Delay Analysis

As-Planned Casing Erection Critical Path

Progress through HRSG Unit 2 Casing Erection

Due to out-of-sequence material deliveries, Pinoak was forced to perform its work in a different sequence than contemplated in the Baseline Schedule. Rather than commencing casing erection work for Bay 3, Pinoak proceeded with erection work on Bay 2. The following graphic illustrates the planned and actual critical path of Pinoak’s HRSG Unit 2 casing erection work.

 

Revised Critical Path

 

 

Opinions on Causation of Delay

V.B.     Period 2: Module Installation Delay Analysis

Updated Module Installation Critical Path

Progress through HRSG Unit 2 Module Installation

Opinions on Causation of Delay

V.C.     Period 3: Piping Installation and Hydro-testing Delay Analysis

Updated Piping Installation Critical Path

Progress through HRSG Unit 2 Module Installation

Opinions on Causation of Delay

 
 

VI. Condenser Unit 1 Schedule Delay Analysis

The Baseline Schedule relative to Condenser Unit 1 and Condenser Unit 2 contained linear sequences of activities from start to completion. Due to the simplicity of the linear-sequenced schedules, Interface Consulting analyzed impacts relative to the condensers using a single analysis period for each condenser.

VI.A.    As-Planned Condenser Unit 1 Critical Path

VI.B.    Progress through Condenser Unit 1 Erection

VI.C.    Opinions on Causation of Delay

Pinoak completed hydrostatic testing relative to Condenser Unit 1 on August 8, 2007, which is 363 calendar days later than the date contemplated in the Baseline Schedule….The following is a summary of the delays and delay mitigations which occurred during Pinoak’s Condenser Unit 1 work.

Summary of Condenser Unit 1 Delays

 

VII. Condenser Unit 2 Schedule Delay Analysis

VII.A.   As-Planned Condenser Unit 2 Critical Path

VII.B.   Progress through Condenser Unit 2 Erection

VII.C.   Opinions on Causation of Delay

In the following....

 

Summary of Condenser Unit 2 Delays

 

VIII. Labor Productivity Impacts

When Pinoak prepared its lump sum pricing for the Project, it had the reasonable expectation that critical design documents and other technical data were basically complete and accurate in accordance with the Contract. Pinoak expected Savannah-supplied materials and equipment to be delivered to the site....

During the course of the Project, Savannah failed to comply with many of its contractual obligations. SE’s adverse actions and/or inactions include, but are not limited to, the following....

As a result of Savannah’s shortcomings, Pinoak’s work plan was substantially delayed and disrupted. Pinoak was forced to alter its work plan and perform work out of sequence. Pinoak experienced significant losses in labor productivity and....

VIII.A.  SE Deficiencies

VIII.B.  Excessive RFIs

In accordance with the Contract, Pinoak anticipated that critical design documents and other technical data would be delivered complete, accurate, and in accordance with the Contract. Pinoak also expected Savannah-supplied materials and equipment to be delivered to the site free of defects in accordance with the dates specified in the Contract.

As discussed previously in this report, Savannah failed to provide complete and accurate design documents in a timely manner, and Savannah-supplied materials were late, out-of-sequence, and defective. As a result of these and other issues, Pinoak issued an excessive number of RFIs seeking resolution of engineering, fabrication, material supply, and general clarification issues. In total, Pinoak issued over 1,600 RFIs during the course of the Project. The situation quickly escalated to a level that the established change management system was unable to handle. The following graphic illustrates the timing and magnitude of RFIs on the Project….

VIII.C.  Savannah-Caused Loss of Productivity

Delays and Disruptions due to Work Scope Changes

Changes in the Work Sequence and Methodology

Trade Interference, Site Congestion, and Inadequate Site Access

SE-Mismanaged Material Supply Issues

VIII.D.  Quantification of Increased Labor Hours due to Lost Productivity

Due to Savannah’s failures to perform in accordance with its Contract obligations, Pinoak’s productivity was adversely impacted, resulting in a productivity loss of…labor hours.

 

Lost Productivity Labor Hours

 

IX. Conclusion

In Conclusion....

 

X. Signature

 

XI. Exhibits