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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.

 

Mid-Continent Pipeline Project Management Program

December 7, 2008

Report #018

Interface Consulting International, Inc. (Interface Consulting), prepared this report at the request of Mid-Continent Pipeline, LLC (MCP), relative to the Mid-Continent Pipeline Construction Progress and Cost Monitoring Program (CPCM Program). This report will incorporate data for the week ending December 7, 2008.

I. Executive Summary

Interface Consulting has developed a pipeline construction contractor contract value weighted average to provide an overview of the project’s pipeline construction progress as a whole. The following graphic illustrates the weighted value progress of the project.

 

Chart 1: Total Pipeline Construction Percent Complete

736-Graphic-Table-Spread-Percent-Complete.jpg

1Based on footage of pipe installed.

 

All pipeline spreads’ progress toward mechanical completion excludes horizontal directional drilling (HDD) progress. HDD progress is identified in Chart 7 of this report. The following graphic illustrates the total project progress for the mainline construction crews as well as a forecast of future progress. The graphic also includes the difference between the actual and planned progress. As of December 7, 2008, the project is 17.0% behind the planned progress. The actual progress is diverging from the planned progress each week, and may diverge with the arrival of colder temperatures.

 

Chart 2: Total Project Progress Curve

 

Construction has commenced on all spreads. The pipeline construction crews were slow to start and continue to remain behind the planned schedule. The following table summarizes the progress of each construction contractor’s spread by crew.

 

Chart 3: Summary of Project Progress by Crew

 

Generally, ditching, lowering-in, backfill, tie-in, and cleanup activities continue to be well behind schedule for all of the spreads. It should be noted that many of the HDD activities have been rescheduled to the winter months, and this could be a major obstacle to putting the pipeline in service. It is noted that Spreads 1B and 3 have completed their HDD activities.

Interface Consulting’s primary observations and recommendations are as follows:

  • As of December 7, 2008, and as shown in the previous progress curve, the total project, in terms of pipeline construction, is 61.8% complete compared to a planned 78.8%.

  • Spreads 5, 6A, and 6B are significantly behind schedule and have not made significant progress since they commenced construction activities. The actual productivity of these three (3) spreads is well behind the planned productivity. Even though Spread 6B started several activities ahead of schedule, it has failed to make significant progress.

  • Construction activities are underway on the spreads as follows:

o   Clear and Grade: Spreads 1A, 4, 5, 6A, and 6B

o   Ditch: Spreads 1A, 1B, 2, 4, 5, 6A, and 6B

o   String: Spreads 1A, 4, 5, 6A, and 6B

o   Lay and Weld: Spreads 1A, 4, 5, 6A, and 6B

o   Lower-In and Backfill: Spreads 1A, 1B, 2, 3, 4, 5, 6A, and 6B

o   Tie-Ins: Spreads 1A, 1B, 2, 3, 4, 5, and 6A

o   Cleanup: Spreads 1A, 1B, 2, 3, and 4

  • Construction activities that have exceeded planned durations include the following:

o   Clear and Grade: Spreads 1A and 4

o   Ditch: Spreads 1A, 1B, and 2

o   String: Spread 1A

o   Lay and Weld: Spread 1A

o   Lower-In and Backfill: Spreads 1A, 1B, 2, and 3

o   Tie-Ins: Spreads 1B, 2, and 3

o   Cleanup: Spread 3

  • Construction activities are complete on the following spreads:

o   Clear and Grade: Spreads 1B, 2, and 3

o   Ditch: Spread 3

o   String: Spreads 1B, 2, and 3

o   Lay and Weld: Spreads 1B, 2, and 3

  • Spread 3 has exceeded its shifted planned completion date, but should be mechanically complete by the middle of December.

  • Ditching, lowering-in, backfill, tie-in, and cleanup activities for all the other spreads are falling significantly behind the revised planned schedule. The lack of progress for the pipeline spreads will push major work activities, such as welding, lowering-in, backfill, tie-in, and cleanup into the winter months which will most likely negatively impact labor productivity.

  • Five (5) of the HDD activities should have begun, but have not yet done so. The November 17, 2008, revised HDD schedule indicates that the last three (3) HDD activities are not planned to be completed until late April 2009.

 

II. Project Schedule

The late notices to proceed (NTPs) to the right-of-way (ROW) have impacted the project’s schedule. In the following sections, Interface Consulting reports on the project schedule and associated issues.

Notice to Proceed to the ROW

Overall, based on the schedules included in Exhibit E to the contracts, the project is behind schedule due to....

Revised Contract Completion Date

Exhibit F to the contracts, Authorization to Start Work on ROW, addresses the extension of the contract completion date due to the late issuance of the NTPs to the ROW. The following chart summarizes the revised contract completion date for each spread based on the actual NTP to the ROW.

 

Chart 5: Revised Contract Completion Date

Based on the Actual Notice to Proceed and Contracts’ Exhibit F Additional Days

*Note the late...

 

Shifted Planned Schedule

The following chart summarizes the shifted planned construction schedule for the spreads. The schedules have not been adjusted for additional days allowed due to the late issuance of the NTP to the ROW per Exhibit F to the contracts.

 

 

Chart 6: Shifted Planned versus Actual Project Schedule*

Based on Actual NTP without Adjustment for Contracts’ Exhibit F Additional Days

*Excludes HDD work.

 

HDD Schedule

The completion of the HDD activities is an integral part of the project’s completion. The following schedule provides a summary of the revised planned versus actual progress for each of the HDD activities on the project by spread. This schedule is based on the MCP HDD Planned Schedule dated November 17, 2008. Currently, the HDD activities are not planned to be completed until the end of April 2009.

 

Chart 7: Revised Planned versus Actual HDD Schedule

Source: MCP HDD Planned Schedule dated November 17, 2008

 

CPCM Program Conclusion

Construction activities have commenced on all of the spreads. Generally, the ditching, lowering-in, backfill, tie-in, and cleanup activities continue to be behind the planned schedule. The lack of overall progress on Spreads 5, 6A, and 6B could negatively impact the completion of the project and push the in-service date.

 

III. Progress Analysis

Exhibits 2.1A. through 2.6B. to this weekly report contain progress curves for each of the crews as well as the total progress curve for each spread. Also included on these charts is a forecasted progress curve based on the contractors’ actual progress to date. The forecast curves do not consider any disruption from weather events that could occur and are included only for those construction activities that have progressed at least 20%, as progress below 20% would not provide a valid forecast.

Additionally, Interface Consulting has included the planned and actual average productivity (feet per day) of each crew on the progress curves for those crews that have progressed the work at least 20%. The following chart summarizes the actual productivity (based on the latest progress) of each crew in feet per day compared to the planned productivity. This productivity is compiled on a weekly basis.

 

Chart 8: Planned versus Actual Average Productivity for Each Crew*

*All numbers in feet per day.

 

Exhibit 3, Percentage Complete, contains Interface Consulting’s analysis of the percentage complete for all the spreads that have completed at least 20% of the work. This evaluation addresses the clear, grade, ditch, string, lay, weld, lower-in, backfill, tie-in, and cleanup work.

Due to the delay in issuing the NTPs, Interface Consulting has established shifted baseline planned curves for each of the spreads to better evaluate the actual progress of the pipeline construction contractors’ crews. These curves can be found in Exhibit 1.

 

IV. Invoice Monitoring

Exhibit 4 to this report, Total Pipeline Construction Project Cost, Earned Value, and Progress Comparison, contains a graphic representation of the cost-to-progress analysis. Both dollars and percent complete are included to compare the actual cost and earned value from the progress reports to the actual progress achieved by the contractors. The total forecasted adjusted target price.... The earned value amount is also based on November 2, 2008, data. At this time, the actual cost information is available through August 2008 for all spreads except Spreads 1A and 1B, which is available through September 2008. Thus, the cost data is significantly behind the actual progress and earned value data available.

 

V. Conclusions and Recommendations

The various contractors' schedules are....

 

VI. Exhibits

...