Expert's View on Conducting Construction Management Due Diligence in Construction Dispute Resolutions

Expert's View on Conducting Construction Management Due Diligence in Construction Dispute Resolutions

Expert's View on Conducting Construction Management Due Diligence in Construction Dispute Resolutions
  Expert's View on Conducting Construction Management Due Diligence in Construction Dispute Resolutions 

 
Expert’s View on Conducting Construction Management Due Diligence in Construction Dispute Resolutions  By Steve Huyghe and Tsang Wong 

Abstract  

Construction project delays and their respective cost overruns are increasingly fueling construction litigation and arbitrations worldwide. In projects involving high labor cost or deployment of skilled workers, project delays are also driving massive claims in relation to losses of productivity. These types of claims and disputes are normally between the Owner and Contractor, or the Contractor and Subcontractor. With regards to design, there are claims in relation to errors and omissions and standard of care. 
 
Oftentimes, the Designer/Engineer is the respondent in the case for a dispute brought forward by an Owner or Contractor.   However, we have found that in today’s construction environment many of the delays and disruptions plaguing the construction industry are self-inflicted due to a lack of expertise and mismanagement of the construction process by project management staff. 

In claims and disputes, we often see these fundamental Project Management considerations overlooked:
  •  Lack of forethought into the construction market regarding to available resources;  ·        Insufficient experience to consider important site logistics (such as sufficient laydown areas, material handling, etc.)
  • Inability to recognize inaccurate estimates (primarily related to proper labor/quantity units)
  • Incapable of recognizing properly planned schedules regarding logistics, durations, and resources
  • In accurately established means to monitor the progress of a project correlating to accurate completion dates
  • Insufficient connections between engineering. procurement, and construction to properly understand where and how critical project delays may occur
  • Inadequate documentation, such as accurate daily reports and correct monitoring of labor productivity
  • Inability to recognize unqualified mechanical and electrical tradesmen
  • Inadequate responses to constructability reviews and risk assessments
  • Lack of proper monitoring in drawing releases, fabrication process, and long-lead item delivery   
  • Lack of project oversight especially across different works packages on mega projects. 
The combination of the above considerations has become at least one (and usually more) of the key factors causing critical delays on large, complex construction projects. Still, some contractors choose to prepare claims to recover costs that were primarily caused by their own lack of experience. 
 
More and more, these types of inadequacies are being recognized and the due diligence of EPC and EPCM contractors are becoming the root of investigation by experienced construction professionals, professionals who “have” constructed large complex projects and understand all of the processes and protocols necessary to construct projects on a timely basis. 
 
In EPCM contracts, an Owner typically engages a firm to provide Engineering, Procurement and Construction Management services. The EPCM firm provides a fee-based service and assists the Owner in coordinating and managing the project; however, the EPCM firm does not hold construction contracts. The Owner still needs to directly enter into contracts, with one or multiple contracting parties. Although the EPCM firm assists the Owner in managing the construction works, it is the Owner that assumes the contractual risks and financial consequences, such as those associated with project delays and cost overruns. 
In many large construction projects, Owners are now recognizing the lack of experience of the EPC and EPCM contractors and seeking claims against these contractors for the cost overruns due to mismanagement.   In any scenario, to establish or to defend liability in relation to the practice of construction management in arbitration/litigation, it is essential to adduce expert evidence in the discipline of construction management. 
From our experience, once the practice of construction management is examined and scrutinized, we are able to assist parties and counsels in clarifying and crystalizing the construction process. This then leads to opportunities to accurately assess project delays by taking the following construction management activities into consideration:

-Engineering and design management

Management of the design process, design assumptions, and 30% - 60% - 90% reviewsDrawing management  
 
-Procurement management  
Long lead items
Quantity take off 
Package/bid management  
 
-Construction management  
Estimate review
Site logistics considerations 
Manpower busing/housing
Material handling requirements
Evaluation of planned versus actual manpower
Scheduled reviews
Constructability reviews
Quality management
Change order reviews 
 
CORE International Consulting has provided the due diligence and evaluation of EPC and EPCM contractor project performance and facilitated numerous settlements of disputes for Owners. We have provided expert evidence on construction means and methods and procedures in cases worldwide. To provide this type of service requires a comprehensive level of construction experience extensively beyond the scope of services offered by a typical claims scheduling expert. We welcome the opportunity to share this knowledge with you and provide guidance on any large, complex construction project. 
Document management
Asset handover procedures

About the Authors:  

Steve Huyghe
Steve Huyghe is Founder and Chairman of CORE International Consulting. As a construction expert, he is recognized internationally and has testified extensively to project advisory services, general contracting, construction management, and dispute resolution. He is sought after as a leader in assisting Owners, Contractors, Designers, and Counsel on large domestic and international projects in distress or litigation. Steve can be reached directly at: [email protected] and by phone at +1 404.436.5026

Tsang Wong is the Regional Managing Director of CORE Asia Pacific and specializes in construction claims evaluation and forensic schedule delay analysis. He is experienced with expert witness commissions for issues relating to delay and disruption, loss of productivity, negligence, and standard of care in construction management arising from large scale and complex construction projects. Tsang has assisted testifying experts in preparing expert evidence, drafting expert reports and participating in numerous mediations and expert conferences in arbitrations conducted in HKIAC, KLRCA, DIAC, ICSID, ICC and AAA. Tsang can be reached directly at: [email protected] and by phone at +852 930.29.297
Previous Post Next Post

Comments