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By: John Livengood, PSP, CFCC CDR-842: Multi-Primes and Multiple Critical Paths.

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Presentation on theme: "By: John Livengood, PSP, CFCC CDR-842: Multi-Primes and Multiple Critical Paths."— Presentation transcript:

1 By: John Livengood, PSP, CFCC CDR-842: Multi-Primes and Multiple Critical Paths

2 2 John Livengood, Esq., AIA, PSP, CFCC Degree: –B.Arch, Syracuse University –J.D., Catholic University Years of Experience: –37 years of experience Professional Field: –Expert Witness –Construction Claims –Schedule Delay Analysis –Productivity Analysis –Construction Cost Analysis Something you do not know about me: –My favorite music is produced by Female Pop Artists

3 Characteristics Owner contracts directly with several prime contractors to provide the full scope of services. Between 3 and 20 prime contractors on a particular job. Each prime contractor goes through the entire procurement system of reviewing technical drawings, submitting a bid, having the bid evaluated, and issuance of a contract. The owner has more management of the bidding process. The owner may not have the necessary staff or expertise to manage this greater workload. Often hires an Agency Construction Manager (CMa) to provide coordination and management for the owner. Designer may have had to package the technical documents in a manner that supports/enables multi-prime bidding. Why Multi-Prime Contracting?

4 Five Reasons 1.State statutes require it for certain types or values of construction. 2.The owner may have specific contractors it wishes to work with. 3.The owner may use the system in anticipation of costs savings by using specialized contractors and eliminating overhead. 4.The project may be a fast-track project where it is important to have work advance on portions designed even if the total scope and cost is unknown. 5.The owner may wish to minimize potential prime-subcontractor problems. Why Multi-Prime Contracting?

5 Private Use Private use of multi-prime contracting lies primarily in large EPC (Engineer Procure Construct) contracts. The EPC contractor administers and coordinates the numerous major equipment supplies as well as the more incidental construction contractors. Why Multi-Prime Contracting?

6 State Law Multi-prime contracting is almost exclusively a creature of state legislatures. Very few owners who are not mandated to use multi-prime contracts by law, do so. Reasons given: 1.Speeds the payment process. 2.Eliminates the risks of non-paying general contractors. 3.It is claimed to be less expensive: Lower Risk -- eliminating potential bid-shopping; Lower Risk -- prompt payment and reducing risk of non- payment. 4.Savings associated with the reduction of general contractor overhead and profit. Why States use Multi-Prime Contracting?

7 Cost Savings Studies support the conclusion that multi-prime construction is less costly. 1970s through % less costly Savings due to elimination of double OH. Studies ignore increased Owner Management Cost. Why States Use Multi-Prime Contracting?

8 Implied Duty Owners have an implied duty to coordinate and schedule the work of the prime contractors. General contractor has the duty to coordinate in a typical prime contractor – subcontractor agreement. Owners have limited ability to delegate the coordination obligation. This is true even in the case where one of the primes is a so-called general contractor. This responsibility of the owner can only be delegated where there is a very specific delegation. Owners Responsibilites in Multi-Prime Contracts

9 Coordination Duty Long established. Site access. Prompt decision. Scheduling management. Non-interference. Prompt time extensions. Resolve time-related disputes. Failure of this coordination could result in delay damages against the owner. Owners Responsibilites in Multi-Prime Contracts

10 Avoidance of Coordination Duty Delegation to prime contractors. Owner agents (CMa). Contract Clauses: o No-damages-for-delay clauses. o Anti-concurrency. o Primes required to coordinate amongst themselves. Owners Responsibilites in Multi-Prime Contracts

11 What does a Prime Contractor Say? I was delayed by other prime contractors failing to perform a timely manner. The owner or its agent (CMa) had coordination and schedule responsibility. My coordination responsibility was limited to near-term coordination/schedule. I had no control over the entire schedule. I had little input into its development and updating. Disputes and Multi-Prime Contracting

12 What does an Owner Say? I hired a CMa to manage the project. The CMa was responsible for all coordination and schedule control. Whatever schedule and coordination responsibilities remained were delegated to the contractors. Whatever disputes exist must be settled among the prime contractors first. Disputes and Multi-Prime Contracting

13 What does a Construction Manager Say? The owner made me do it. The owner directed it. The owner agreed to it. The owner approved all the major decisions. The prime contractors were required to coordinate/schedule amongst themselves. My only obligation was to push paper between the parties - facilitate the coordination and scheduling between the contractors and the owner. Whatever disputes exist must be settled among the prime contractors first. Disputes and Multi-Prime Contracting

14 Multi-party disputes The owner generally resolves each disputes w/o the other parties. Inconsistent decisions possible. Arbitration Clauses may prohibit multi-party proceedings The CMa will not be helpful. The owner has limited knowledge because of the role of the CMa. Each contractor will make its case against the owner only without regard to the other prime that might be involved. Contract may require primes to resolve disputes among themselves before pursuing the owner. Disputes and Multi-Prime Contracting

15 What issues does a Schedule Delay Analyst face? The project is likely to be large and inherently complex; There are multiple parties, which will necessitate detailed review and investigation of multiple sets of documents; The schedule development and conceptualization is likely to be defective; The schedule updates are less likely to be accurate since the CMas power over the prime contractors for data requests is weak; There will be a project critical path, but most of the delays experienced by the prime contractors will exist off of that project critical path; Each prime contractor will have its own critical path, which will only occasionally be coincidental with the project critical path; and Each of the multi-primes is likely to have their own schedule. Disputes and Multi-Prime Contracting

16 Multi-Prime Critical Path Disputes and Multi-Prime Contracting

17 Project Critical Path Normal forensic schedule delay process may actually be counterproductive. Identification of the project critical path disguises the real delays that are at issue. The real delays are particular to each of the multi-prime contractors. Disputes and Multi-Prime Contracting

18 Project Critical Path Both Planned critical path and the As-built critical path will likely fall on several major prime contractors during the course of the project. Each prime contractor often argues that it was on the project critical path for only a short time and any delays that occurred during that time were minimal. Sometimes the prime contractors jointly hire a scheduling consultant. Disputes and Multi-Prime Contracting

19 MEP Critical Path Disputes and Multi-Prime Contracting

20 MEP Critical Path Disputes and Multi-Prime Contracting

21 MEP Critical Path Disputes and Multi-Prime Contracting

22 Baseline and Update Issues Baseline Schedules are usually developed by the CMa using input from each of the prime contractors: o The schedule is released for review by the primes. o Comments and corrections are incorporated. o CMa often lacks the authority. o The iterative process may take longer. o The schedules are prone to gaps. Monthly Schedule Updates: o Collection of progress data. o Chaotic amalgamation creates defects. o Primes often maintain completely separate schedules. o Radically different sequences. Disputes and Multi-Prime Contracting

23 Methodology Dependent on availability of data. Seldom is there a series of carefully maintained logical schedules. Selected methodology must be able to accommodate these defects. RP29R-03 MIP 3.3 or 3.4 is preferred – Contemporaneous Period Analysis. RP29R-03 MIP 3.7 (Time Impact Analysis) may require so much remedial work on the underlying schedule as to make its use inadvisable. Identifying Multiple Critical Paths

24 Contemporary Period Analysis Essentially, the CPA methodology compares the planned sequence on a period-by-period basis at the outset of the period with the actual performance at the end of the period, with delays measured in each individual period along the as-built critical path for that period, as follows: Identifying Multiple Critical Paths

25 First Delay Identifying Multiple Critical Paths

26 CPA – Step One: Identify the schedule activities for a single multi-prime in the first schedule. In many CPM schedules contractor codes are used as an identifier. Identifying Multiple Critical Paths

27 CPA – Step Two: Identify the schedule activities for a single multi-prime in the second schedule. This can be a true challenge, particularly in the beginning of a project, as schedules are often refined repeatedly during the first months. Each multi-prime contractor modifies its proposed performance in light of other prime contractors work. Identifying Multiple Critical Paths

28 CPA – Step Three: Match the activities. In theory this mapping should be easy – but seldom is. If the project undergoes a major re-baselining process due to a major event or as a result of a series of events, such mapping can be extremely complicated. Consult with project personnel. Identifying Multiple Critical Paths

29 CPA – Step Four: Compare the Progress Compare the Duration Compare Float Compare the Logic (MIP 3.4) There will likely not be a continuous series of activities that form the as-built critical path because many of these activities will be associated with other prime contractors. Identifying Multiple Critical Paths

30 CPA – Step Five: Process is partly mathematical because it identifies the activities with the least float at any given moment. Process is partly expert judgment on the reasonableness of the identified sequence. The critical path identified will likely NOT be a continuous set of activities. This information, coupled with a careful review of the actual events on the project based on the daily reports and the analyst's experience, will enable a detailed identification of that months as-built critical path as well as when the critical path shifted from one activity to another. Identifying Multiple Critical Paths

31 CPA – Step Five (cont.): It is important that the number of days identified for delay during a period actually match the change in the month being studied. It is also likely that the overall CPM changes WILL NOT MATCH the calculation for a particular month since schedule updates usually contain modifications to future activity durations or logic that changes the overall projects projected end date. Identifying Multiple Critical Paths

32 CPA – Step Six: Delay Causation Prime Contractor being evaluated Other Prime Contractors Identify excusable, compensable and non-compensable time. Delays that are associated with other prime contractors or owners are likely all to be portrayed as compensable to the multi-prime being analyzed. Identifying Multiple Critical Paths

33 CPA – Step Seven: Repeat process for all prime contractors being evaluated. Perform all analyses for a single time period, then move to next time period. Based on experience, it is better to analyze the performance of all the prime contractors during a particular period because it allows an evaluation of the causes and responsibilities for delay each month amongst the prime contractors before moving to the next month. Identifying Multiple Critical Paths

34 Too much work Entire project needs to be analyzed, even for one multi-prime. Importance of contract remedies (no-damages-for-delay). Weather and Force Majeure. Multi-prime delay analysis is more difficult than on single prime contractor projects. Analysis often occurs during a period of negotiation: The Owner often has little data The Contractor has little data The CMa is often unhelpful Practical Tips

35 Multi-prime contracting is less popular today than it has been in the past. State exceptions to the general requirement for the use of multi-prime. More prime contractors successfully negotiating or litigating delay claims. Modern forensic schedule analysis has the tools to provide effective analysis. Convincing the prime contractors, and their experts that their delay will be measured on their own critical path, rather than the project critical path can be a significant challenge. CONCLUSION

36 Questions??

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