Cost Engineering Publication Jan - Feb 2017

THEJOURNALOFAACE INTERNATIONAL
THEAUTHORITY FORTOTALCOSTMANAGEMENT
COST
January/February 2017
ENGINEERING
EARLY WARNING SIGNS OF
CONSTRUCTION
CLAIMS AND
DISPUTES
ESSENTIAL SPECIFICATION
GUIDELINES FOR
ORACLE
PRIMAVERA P6
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CONTENTS
COST ENGINEERING
TECHNICAL ARTICLES
4 Early Warning Signs of
Construction Claims and Disputes
James G. Zack Jr., CFCC FAACE
30 Essential Specification Guidelines for

Oracle Primavera P6
Charlie Jackson, PSP and Hannah E. Schumacher, PSP
ALSO FEATURED
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Cost Engineering Journal Information
Professional Services Directory
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COST ENGINEERING JANUARY/FEBRUARY 2017
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TECHNICAL ARTICLE
Early Warning Signs of
Construction Claims
and Disputes
James G. Zack Jr., CFCC FAACE
Abstract: It is axiomatic that claims and disputes on projects do not appear

out of nowhere. Experience indicates that when a dispute occurs, there is a
history of events, decisions, lack of decisions, etc. that can be traced back
from a few weeks to several years. These are early warning signs of claims
and disputes. Typically, it is when claims are filed at the end of a project that
attorneys and claims consultants review project documentation and inter
view the project team in order identify such early warnings. This article lists
numerous "early warning signs" of disputes. There is little literature setting
forth a detailed list of early warning signs of claims and disputes. Based on
the collective observations of numerous construction claims consultants, the
author collated these early warning signs into typical project phases. This ar
ticle also identifies which party should watch for which early warning sign
and what sort of claim or dispute may arise. This article was first presented
at the 2016 AACE International Annual Meeting as OWN.2140.
onstruction projects over the

past few decades have be
come increasingly complex.
As a result, disputes have
grown in direct relation to the size and
complexity of projects. For the pur
poses of this article, the term claim is
defined as a request for additional time
or money or some other modification
to the contract which is in the hands of
the owner and contractor representa
tives and is still in some form of negoti
ations. The term disputes, for the
purposes of this article, refers to a claim
which has not been resolved via nego
tiations and has been removed to some
form of legal proceedings such as me
diation, arbitration, or litigation. One
recent study reported that the value of
the average dispute in the United States
is approximately $34.3 million [26]. A

slightly older survey of claims and dis
putes determined that in the 2009
2011 timeframe there were 65
international contract arbitrations in
which at least US$1 billion was in con
troversy [19]. The amounts in contro
versy ranged from US$1 billion to
US$20 billion. The amount in contro
versy represented the sum of both the
claims and the counterclaims. The total
value of these 65 disputes was
US$174.8 billion, with the median value
being US$2.73 billion.
One key to delivering a dispute free
project is the early identification of po
tential claims and disputes. Disputes
cannot be avoided by simply drafting
and issuing a contract that attempts to
shift all risk of delays and costs to the
contractor. Contractors and their legal

counsel will likely find some way
around such contract terms. As the old
saying goes, what one man can invent
another man can circumvent [29].
Before owners and contractors can
deal with a dispute, both must recog
nize that one is in the offing. Experience
shows that the parties to a contract are
often in a dispute long before they re
alize it. The author believes that the
keys to successful dispute resolution
are: to recognize a potential dispute as
it starts, and to take appropriate action
to resolve whatever the issue is. Wait
ing in the hope that the dispute will re
solve itself, rarely if ever, succeeds.
Early Warning Signs

Bid and Proposal Phase
It has been the authors experience
that some early warning signs of claims
and disputes are apparent as early as
the bidding or proposal; for a
design/build (D/B) or engineerprocure
construction (EPC) contract phase of a
project. All too often, owners and bid
ders overlook or ignore these warning
signs as they are focused exclusively on
awarding the contract or on winning
the next project. Such early warning
signs, during this very early phase of the
project, are outlined in more detail in
the following section.
Early Warning Signs for Owners

First Time Experience With the Project
Delivery MethodIf the owner has de
cided to employ a new project delivery
method the chances of claims and dis
putes increase. Experience shows, and
research by the Construction Industry
Institute confirms that claims and dis
putes are likely to increase significantly
when an owner decides to use a new or
different project delivery method for
the first time [7]. New project delivery
methods require owner representatives
to change their thinking, their work
processes and procedures, etc. For ex
ample, if the owner typically contracts
for projects using the DesignBidBuild
(DBB) process and for this new project
decides to deliver the project using the
D/B or EPC process, the owners staff
has a huge learning curve to overcome.
Such shifts in project delivery methods
often leads to claims and disputes.
Recommended Claims and Dis

pute Avoidance Actions: In such
situations, the owner should invest
heavily in educating and training
their staff on the new project deliv
ery method. The owner may also
want to hire a few key personnel
who are experienced in the chosen
project delivery method. Alterna
tively, the owner may want to re
tain the services of a consulting
construction management firm
that has experience with D/B or
EPC. Employing either, or both, of
these recommendations may re
duce impact damage and delay
claims resulting from owner ac
tions or inactions.
Lack of Biddability and Constructability

ReviewDesign professionals are typi
cally experienced with preparing plans,
specifications, and other related techni
cal documents. However, design profes
sionals are not constructors and may
have limited experience being in the
field while a project is built. Further
more, design professionals often have
no experience bidding hard dollar work,
or preparing a proposal in response to
an invitation to bid for an EPC project.
Additionally, design professionals fre
quently find themselves in an unenvi

able position. They are required to per
form a quality control check on
documents they themselves prepared.
For example, experience shows
that it is very difficult to objectively re
view work we performed ourselves; not
because we do not know our business;
but because, in our minds, as a reviewer
we are reviewing what we think we
wrote or drew which may not be what
was actually written or drawn.
Finally, plans and specifications are
prepared for the end user (i.e., the con
tractor) and not the design professional.
A contractor may review and interpret
drawings and specifications differently
than design professionals, thus increas
ing the likelihood of changes, claims,
and disputes.

pute Avoidance Actions: To reduce
the level of change orders during
the construction phase and to de
crease the chances of claims and
disputes, owners ought to have a
biddability and constructability re
view performed on the contract
documents prior to bidding or issu
ing an invitation to propose for an
EPC project. A biddability review
is a review of the bidding docu
ments by a team of construction
experienced and oriented individu
als who had nothing to do with the
design, in order to determine if
there is sufficient information in
cluded in the bid package to allow
a bidder to prepare and submit an
intelligent bid. A constructability
review is performed by a similar
team of construction oriented indi
viduals to determine if there is
enough clear, concise information
in the bid documents that will
allow the contractor to build the
project the owner wants. In this re
gard, the constructability review
team is looking for errors, omis
sions, ambiguous requirements,
conflicts, and impossible or imprac
ticable requirements. These two
reviews should, if implemented
with the proper team(s), go a long
way toward decreasing the need
for changes during construction
and mitigate the potential for con

structive change claims and dis
putes.
Known Internal or External Constraints
Not Identified in Contract Documents
Design professionals generally know
a great deal about architecture or engi
neering but often know little about the
details concerning operating facilities. It
is not uncommon that when construc
tion is being performed in an operating
facility, there are operational needs that
must be met, but which a contractor is
unaware of because the constraints are
not included in the bidding documents.
The author was once involved in a hos
pital expansion project that involved
constructing a mirror image midrise
building immediately adjacent to the
existing facility. The drawings called for
sky bridges from the second through
fifth floors. Once the contractor erected
the steel and decks were installed on
the new building they prepared to in
stall the sky bridges. At that point the
owners representative advised, for the
very first time, that work on the sky
bridges could only be performed be
tween midnight and 6 a.m., so as not to
endanger surgical procedures through
potential vibrations to the existing
building. While the explanation and rea
soning made perfect sense to everyone,
there was no mention of this require
ment in the contract documents. As a
result, the contractor had no budget for
the additional night work labor cost, the
added work lighting, etc.

pute Avoidance Actions: Owners
need to think through and identify
all potential project constraints,
such as work hour restrictions or
requirements; operational con
straints (such as: the contractor
may take only one clarifier off line
at a time and must return each
clarifier to full service before taking
the next unit off line, site access re
strictions, construction sequences
such as Building 1 must be com
pleted within 270 days after is
suance of Notice to Proceed
(NTP), Building 2 must be com
pleted within 360 days; etc). In the
event the design professional is

contracted to design a project ex
panding or modifying an existing
operating facility and the owner
does not provide a list of con
straints, the design professional
needs to meet with the owners
staff to learn about constraints that
may impact construction and in
clude these constraints clearly in
the contract documents. Such ac
tion helps avoid delay and impact
claims from arising during the per
formance of the work, when the
constraints are finally identified to
the contractor.
Lack of Operability ReviewIf the
project involves an operating facility (ei
ther new, an expansion or a modifica
tion) project owners should have an
operability review performed on the
bidding documents prior to bidding.
Similar to the previous reviews dis
cussed, an operability review is a re
view of the bidding documents by a
group of senior, experienced operators,
to ascertain that the facility design in
corporates everything needed to suc
cessfully operate the constructed
facility. As mentioned earlier, design
professionals are not operators, and
thus are at a distinct disadvantage
when trying to incorporate operational
needs into the project during the de
sign process. The failure to perform
such a review is likely to lead to numer
ous end of the job change orders, once
the operating staff starts to take pos
session of the project.

of operating facilities should assign
one or two senior operators to the
design review team in order to
make certain that the project de
sign team incorporates all operat
ing and maintenance needs of the
project. This action should help
avoid late change orders which are
all too common toward the end of
construction when the operators
start commissioning the project
and transfer of care, custody, and
control of the work process is un
derway. End of the job change or

ders are inordinately expensive as
they almost always involve delay
which is exacerbated by the fact
that craft labor has been demobi
lized at the site and must be remo
bilized to perform such changes.
This review is intended to avoid
these changes.
Rushed DesignPublic works owners
often operate under schedules driven
by fiscal year constraints, an annual
goal of bidding and awarding x num
ber of projects per year and other arti
ficial requirements to put the project
out for bid no later than June 30. Such
scheduled bid dates often result in a
rushed design. Private owners often
push their design professionals to com
plete design faster in order to convert
construction financing to permanent fi
nancing; to complete the project design
and begin manufacturing sooner in
order to meet a time to market dead
line; to avoid inflationary costs; etc. Ex
perience teaches that rushed design
frequently leads to more change orders
as overlooked details during design
come to light during construction. Fur
ther, rushed design often sacrifices ap
propriate time allotted for quality
control and quality assurance reviews,
leaving the design incomplete or full of
flaws. This in turn may lead to delay and
attendant impacts.

pute Avoidance Actions: If the
project owner is faced with inter
nal or external time constraints
(i.e., court ordered deadlines; con
tractual timeframes; time to mar
ket considerations; etc.) the owner
may want to consider alternative
project delivery methodologies in
order to speed up the design and
construction process. If the owner
is unable to extend the program
schedule, then they should at least
alert bidders to the shortened
timeframe to help them prepare
and submit realistic bids. If internal
and external constraints are not
project drivers, when an owner
reaches a decision to construct a
new project they should consult

with designers and experienced
construction oriented profession
als to determine the reasonable
amount of time needed to prop
erly design and construct the proj
ect. Planning for the project should
include the information obtained
from this consultation plus a con
tingency. If necessary, the owner
should extend the overall project
or program plan for design com
pletion, bidding, contract award
and project completion. Owners
need to remember the old adage
that, No one ever remembers
whether the project was bid on
time, but everyone always remem
bers whether it was completed on
time!
Poor Estimate During Bid Process
Owners should review the cost esti
mate prepared by the design profes
sionals to determine that it is complete,
thorough, realistic, and takes into ac
count all known factors concerning the
project and its surrounding circum
stances. Design professionals undoubt
edly do their best to prepare good
estimates for bidding purposes. How
ever, as noted previously, they may not
have construction experience and tend
to look at drawings and specifications
differently than potential bidders. Ini
tially, this type of situation is likely to
lead to bids coming in higher than the
approved budget. Should this happen,
the owner may have to revise the ap
proved budget by reallocating project
contingency funds and/or management
reserve funds. If this action is taken, the
funds initially planned for handling
changes during the work may well be
exhausted before construction even
commences. The alternative to this
would be for the owner to reject all
bids, have the project redesigned and
then rebid the work. This, of course, re
sults in additional design and bidding
costs as well as delay to the entire proj
ect.

owner does not have experienced
internal resources to review the

design professionals project cost
estimate they would be well ad
vised to retain such service either
from a construction management
firm or an estimating consultant.
While this action will add to the
project costs somewhat, it may
more than repay the owner by
helping set a realistic estimate of
the work prior to bidding.
Bidders Requesting for Project Dura
tion ExtensionIf, during the bidding
period, potential bidders complain that
the time for performing the work is too
short and ask that it be extended, own
ers need to pay close attention. Such
situations arise generally when the
owner has not performed any prebid
scheduling, or when the projects
schedule is driven by some outside
force (i.e., a court order, time to market
concerns, commercial agreements,
etc.). In the latter event, there may be
nothing the owner can do to revise the
time of performance duration. How
ever, in the former event, the owner
may want to take appropriate action to
prevent potential delay claims from
arising during the performance of the
work. Owners should realize that if con
tractors believe the time of perform
ance is unreasonable they will: prepare
higher bids based on overtime work,
added labor and/or added construction
equipment and/or be on constant look
out for potential owner caused delays,
or delays caused by situations for which
is owner is contractually liable (i.e., dif
fering site conditions). Some years
back, the author was involved in a proj
ect to upgrade a large wastewater
treatment facility. Bidders requested
that the project duration time be ex
tended during the bidding period. The
owner did not do so. The contractor
who ultimately won the project, mobi
lized to the site, and prepared and sub
mitted a baseline schedule. The
schedule showed the contractor initiat
ing underground work at a specific lo
cation of the plant site. When
excavation commenced, the contractor
encountered uncharted utilities and
had to stop work and demobilize from
that area of the site to another area.
Much to the owners surprise, the con

tractor again encountered uncharted
utilities and had to remobilize to yet an
other area where they, again, encoun
tered uncharted utilities. By the time
the time extensions for these three dif
fering site condition claims were re
solved, the time of performance was
substantially extended even beyond
what bidders had initially requested. In
hindsight, it would have been less ex
pensive to extend the project duration
by bid addendum than it was to nego
tiate the three claim settlements.

should prepare, or have prepared,
a prebid schedule that allows the
owner and design professional to
establish a reasonable time of per
formance for the work about to be
bid. Experience shows that design
professionals typically establish the
project duration without such pre
bid scheduling because this work is
not typically included in their
scope of work or their planned
cost. If the owner is not experi
enced with construction of such
projects and does not have experi
enced in house staff to prepare
such a schedule, the owner may
want to engage the services of a
construction management or a
scheduling firm to do this work.
Ineffective Project ControlsOwners

about to begin construction of a capital
improvement project need to assess
the capabilities of their work processes
and inhouse staff to determine
whether they have a robust internal
project control system, as well as the
staff necessary to run the system. In the
context of this article, a project control
system includes:
Scheduling, schedule monitor

ing, and the ability to perform
and/or analyze schedule delay
analyses.
Cost estimating, including the
capability to negotiate change
order costs and evaluate the
proposed cost savings of value
engineering proposals.
Cost management, including

the tools and ability to assess
the contractors proposed
schedule of values, as well as
monitor ongoing construction
in order to properly assess the
contractors payment requests
or draw requests.
Cost trending, including
earned value management if
the contract requires costs be
monitored in that manner;
and the ability to perform
labor hour analysis in order to
perform impact analysis and
assess loss of productivity and
efficiency claims.
The failure to have an effective

project controls system and sufficient
experienced personnel to run the sys
tem is likely to lead to claims or dis
putes concerning delay, constructive
acceleration, and impact damages.

owners selfassessment indicates
that they do not have an adequate
project controls system in place
and/or do not have experienced
staff to manage such a system,
then the owner needs to either
hire staff to put a system in place
and manage it, or retain the serv
ices of a construction management
firm to prepare, implement, and
operate such a system.
Inadequate Change Management Pro

cedureAs the ancient Greek philoso
pher, Heraclitus said, There is nothing
permanent except change [21]. This
statement still holds true today, espe
cially during the construction of a capi
tal project. Owners often decry change
orders on a project as something bad
and some owners even start new proj
ects by informing their contractor
There will be no change orders on this
job! Owners with this attitude miss the
point. The changes clause of a contract
is for the benefit of the owner, not the
contractor. The changes clause allows
the owner to change their minds, to
make changes to the work in progress,
to modify the project to fit the owners
changing needs, etc. Change is in

evitable. As a result, the owner prior to
beginning a new project needs to re
view their change management system
internally as well as in the contract doc
uments. The change management pro
cedure must provide for timely notices
of change; timely submittal of change
order submittals; in depth review of
such proposals, including both time and
cost; etc. Further, the owner needs to
examine the experience and capabili
ties of their project team to see that the
team can properly operate the change
management system. The failure to im
plement such a system will likely result
in the owner overpaying for needed
changes, or facing claims and disputes
over the time and cost of changes on
the project.

pute Avoidance Actions: Should
the owners selfevaluation lead to
the conclusion that their change
management procedure is inade
quate and/or their staff lacks the
experience and capability to imple
ment a good change management
system, the owner should consider
hiring additional experienced staff
or retain the services of a construc
tion management firm to create,
implement, and staff a good
change management system.
Again, as with some of the previ
ous recommendations, the cost of
this recommendation may pale in
comparison to the cost of a poorly
managed change management
procedure.
Bid Amount Substantially Below All

Other BidsProvided that the project
is well designed, the time of perform
ance is reasonable, and biddability and
constructability reviews have been per
formed, most projects should have a
fairly tight grouping of bids. When bids
are opened and the apparent low bid
der is substantially below the other bid
ders, chances are there is something
wrong with the bid. Too many owners
believe they should snatch up the sub
stantially low bid as soon as possible
and enjoy the money saved resulting
from the low bid. This approach ignores

the fact that if they award the contract
on the basis of the very low bid, the
owner is buying into a set of unknown
problems starting the day the contract
is awarded and NTP is issued. The con
tractor in this situation will move onto
the project looking for changes, claims,
and potential disputes.

pute Avoidance Actions: If such a
situation arises, it is recommended
that the owner follow a procedure
similar to that employed by the US
federal government, described
below:
After the opening of bids,

contracting officers shall ex
amine all bids for mistakes. In
cases of apparent mistakes
and in cases where the con
tracting officer has reason to
believe that a mistake may
have been made, the con
tracting officer shall request
from the bidder a verification
of the bid, calling attention to
the suspected mistake To
assure that the bidder will be
put on notice of a mistake sus
pected by the contracting offi
cer, the bidder should be
advised as appropriate
That its bid is so much lower
than the other bids or the gov
ernments estimate as to indi
cate a possibility of error
[13];
If the owner follows this course of

action and the low bidder verifies there
are no errors in its bid, the owner will
likely be protected from claims based
on a mistaken bid. If the low bidder
finds a mistake, they should identify it
to the owner and the owner should fol
low state statutes, local ordinances, or
internal policies concerning the han
dling of mistaken bids. The sum and
substance of this recommendation is
that owners are best served by avoiding
contract awards to contractors based
on mistaken bids.
Early Warning Signs for Contractors

Onerous Contract LanguageWhen
reviewing a set of bid documents con
tractors should review the General and
Supplemental Conditions of the con
tract as carefully as they examine the
drawings and specifications. This review
should look for inappropriate risk as
signment or exculpatory clauses. For
example, contracts declaring that con
current delay is inexcusable delay; force
majeure clauses that exclude a large
number of typical force majeure
causes; No Damages for Delay
clauses; Differing Site Condition
clauses that provide contractors may
only recover the cost of overcoming the
situation, but not the delay related to
the situation; clauses declaring that the
owner owns the float in the schedule;
etc. [31]. Such clauses may or may not
be enforceable in the jurisdiction where
the project is located and thus are likely
to be the cause of claims and disputes.

contractor does not have the in
house capability to perform this
sort of review, they should have a
construction litigation attorney
from the jurisdiction where the
project will be built perform the re
view. If the contract is very oner
ous, the contractor has two
options. First, the contractor may
decide not to bid the project on
the basis that the risk of bidding
may wipe out any potential profit
that can be earned on the project.
Or, second, if it is risky, but the con
tractor believes the risk is manage
able, they may want to add to their
bid contingency.
Apparent Lack of PreBid Scheduling

As part of the contract review during
the bidding phase, the contractors staff
should review the time of performance
clause. If the schedule is too short or
too long this indicates that the owner
did not perform any prebid scheduling.
Projects based on a schedule that is too
long are likely to have increased bid
costs as most contractors preparing a
bid assume owners have performed

prebid scheduling and that the time of
performance is reasonable. On the
other side of the coin, if the project du
ration is too short, but the contractor
assumes this time has been reasonably
estimated, then the contractor will
likely not bid the required acceleration
costs necessary to complete the work
on time. If the contractor does realize
that the time is too short, the bids will
be significantly higher than necessary.

pute Avoidance Actions: Despite
the fact that bidding construction
projects is quite expensive, con
tractors are well advised to have a
team consisting of one of their ex
perienced project managers or su
perintendents and an experienced
construction scheduler review the
drawings and specifications and
then prepare a summary plan and
construction schedule. In a DBB
project, the bidder has a complete
set of drawings and specifications
available for review. In a D/B or
EPC project the bidder is more
likely to be reviewing the Front End
Engineering Documents (FEED) or
Bridging Documents. Notwith
standing, the bidder should be in a
position to prepare a Class 4 or
Class 5 schedule to assess whether
the contracts time of performance
is reasonable and achievable with
out extraordinary cost and efforts
by the contractor. AACE Interna
tional Recommended Practice No.
27R03, Schedule Classification
System, Revised November 12,
2010, describes the methods for
preparing a Class 4 or 5 schedule
as, Top down planning using high
level milestones and key project
events. Semidetailed [1].
Insufficient Disputes ClauseAnother

indicator of a good potential for dis
putes is a contract that does not have a
well thought out disputes clause. This
type of disputes clause typically calls for
project level negotiations which, should
they fail to reach resolution, takes the
project participants directly to binding
arbitration or litigation in a court of

competent jurisdiction. A wellcrafted
dispute clause should include a two
step negotiation process (with the first
step being project level negotiations
and the second being executive level
negotiations). The clause ought to stip
ulate one or more alternative dispute
resolution (ADR) methods such as me
diation or a Dispute Resolution Board
(DRB) prior to arbitration or litigation
[6]. The lack of a thorough disputes
clause is an obvious early warning sign
of potential disputes, as the contract
does not provide for more than one op
portunity to resolve an issue if it cannot
be negotiated on the project site.
change orders and constructive

changes claims, as well as the resulting
delay and disruption.

contractors review shows this to
be the case, there is little the con
tractor can do to change the situa
tion. The contactors project risk
analysis review needs to take this
into consideration when deciding
whether to bid the project or not.
Poor Denition of Scope of WorkIf

the contractors review of the bidding
documents shows that the projects
scope of work is poorly dened, this too
is an early warning sign of claims and
disputes. Indicators of an inadequate
scope of work may include an exces
sively high number of submittals re
quired; language in the quality control
portions of specications indicating
that, work must be accomplished to
the satisfaction of the engineer or the
architect; the bidding documents do
not contain any subsurface conditions
report where one typically would be re
quired for a project of this type; the in
vitation to bid contains wording similar
to, neither the owner nor the archi
tect assumes responsibility for errors or
misunderstandings resulting from the
use of incomplete information; or in
cludes language such as, The work in
cludes any other items necessary to
provide a complete, useable building
even if not shown or specified in the bid
documents. A poor definition of the
project scope of work is likely to result
in an abnormally high number of

pute Avoidance Actions: If indica
tions, such as the above, are
found; the bidder may consider
not bidding the project. In the al
ternative, the bidder may prepare
and submit a written list of de
tailed questions concerning the
proposed scope of work to the
owner during the bidding process
and in accordance with the instruc
tions contained in the invitation to
bid. The owner is generally com
pelled to respond to these ques
tions to all potential bidders and
may be required to issue a bid ad
dendum. In either event, the con
tractor is allowed to rely upon the
owners response, thus eliminating
some potential change orders,
claims, and disputes during the
performance of the work.
Defective DesignJust as owners

should perform their own con
structability review, so should bidders.
In the process of analyzing the bidding
documents for estimating and pricing
purposes, the bidders sta must stay
alert for indications of defective design
(including errors, omissions, ambigui
ties, and impossible or impractical re
quirements). While there may be some
of these items even in the most care
fully prepared set of bid documents, if
the bidders review indicates numerous
design deficiencies, this may be an
early warning sign of major claims and
disputes. Claims and disputes arising
from defective design include construc
tive changes, as well as suspension of
work, delay, and impact damages.

pute Avoidance Actions: If review
of the bidding document reveals a
large number of design defects,
the bidder has two choices. Either
the bidder decides not to bid the
project or they prepare a written
list of design deficiencies found, in
the form of questions, and submit
this list to the owner seeking re

sponses prior to bidding. If the
owner responds, then bidders are
entitled to rely on their responses.
Should the owner take the posi
tion, Bid these items as you see
them, then the contractor may
want to reconsider their earlier de
cision and not submit a bid.
Early Warning Signs

Early Construction Phase
At times, there are no early warn
ing signs during the bidding period.
However, once the contract is awarded
and the NTP issued, early warning signs
start popping up. Among them are the
following.
Problems Concerning the Baseline
ScheduleTypically contracts call for
submittal of a project schedule within
a short time after issuance of the pro
jects NTP (i.e., 30 or 45 days). Most
owners believe this is adequate time to
prepare a schedule and most contrac
tors attempt to submit their as planned
or baseline schedule within the man
dated timeframe. However, some con
tractors play games with the baseline
schedules for a variety of reasons [3].
Inadequately planned schedules, late
schedule submittals, poor level of de
tails, lack of procurement information,
etc. are often found within the initial
baseline schedule submittals. It is not
uncommon to find that the baseline
schedule is not accepted or approved
by the owner for several months after
issuance of the projects NTP. Should
this happen it may lead to disputes over
project delays, especially for those
events that occurred prior to accept
ance of the baseline schedule.
10

pute Avoidance Actions: In order
to obtain timely submittal of a
good baseline schedule, owners
may modify their contract docu
ments in the following ways: craft
ing and including a detailed
scheduling specification in the con
tract documents; tying mobiliza

tion payments to submittal and ap
proval of the baseline schedule;
requiring that the contractors
scheduling effort start at Notice of
Award, not NTP; employing a two
step NTP process; etc. [3].
Early Need to Tap into Contingency
Fund or AllowancesTypically project
owners establish contingency funds or
allowances for use by the project team
to cover the cost of potential changes.
Some owners may also set up a man
agement reserve for each project to
have funds available in the event there
is a major change to the work. Experi
ence indicates that owners typically rely
on past project experience when estab
lishing such funds (e.g., anticipated cost
of change orders or delays). These
funds are almost always intended to
last for the duration of the project.
However, on occasion, owners find
themselves in a situation where the
project is only partially complete but
the contingency funds and allowances
are nearly exhausted. This is an early
warning sign of potential claims and
disputes centering on future changes
and their impacts.

pute Avoidance Actions: It is rec
ommended that the owner
carefully review the remaining
work to determine whether more
changes will be needed. If so, then
the owner needs to estimate the
projected cost to complete the
work, including identified changes.
At this point, the owner needs to
determine whether to terminate
the project, complete the neces
sary redesign and rebid the re
maining work, or continue to
complete the work by change
order, after adjusting the project
budget and reestablishing the
contingency and reserve funds. If
this is done proactively, the owner
may be able to restate the project
budget, including the needed
changes, and complete the work
within the revised budget and
schedule.
Bid Breakdown Excessively Front End

LoadedOn hard dollar bid projects,
the normal procedure is to require the
contractor to submit a bid breakdown
shortly after NTP. This breakdown allo
cates the contract value across all pay
items on the project. One of the
owners challenges in dealing with a
proposed bid breakdown is to deter
mine that the proposed pay items are
not unbalanced. Accepting an unbal
anced bid breakdown or a cost loaded
schedule and making project payments
based on either, may lead to a dispute
with the contractors surety in the
event the contractor is defaulted and
the owner calls on the surety pursuant
to the performance bond. It also places
the owner at risk should there be
changes on work that is carrying exces
sively high costs. An unbalanced bid
breakdown is an early warning sign of
claims and disputes especially over the
cost of potential future change orders.

and their representatives need to
review proposed bid breakdowns
very carefully to eliminate unbal
anced pay items to the maximum
extent possible. Each proposed pay
item needs to be reviewed individ
ually in order to avoid such a situ
ation. If some items are
determined to be unbalanced, the
owner needs to negotiate more
balanced items.
Changes in Major SubcontractorsIt is

not uncommon, especially on public
works projects, that bidders are re
quired to list all or almost all subcon
tractors in the bid. Almost all contracts
that require subcontractor listing also
set forth a formal procedure for sub
contractor substitutions. Such require
ments are intended to prevent
potential bid shopping and/or bid ped
dling. If, after contract award and NTP
issued, an owner finds that the contrac
tor is requesting substitution of one or
more major subcontractors then this
may be an early warning sign of claims
and disputes. Experience indicates that
substitutions after award frequently
stem from contractor/subcontractor

disputes over the subcontractors
scope of work or the terms and condi
tions of the subcontract. In either
event, such disputes will disrupt the
project and lead to disputes concerning
work scope issues and change orders.

pute Avoidance Actions: There
probably are times when subcon
tractor substitutions are clearly
warranted and entirely justified.
However, owners are advised to
make certain that the subcontrac
tor substitution procedure con
tained in the contract documents
is well defined and thorough. In
the event that such a substitution
is requested, owners need to make
certain that both the contractor
and the owner themselves follow
the contract procedure exactly.
Inability to Ramp Up Planned/Needed

Craft LevelsOne key to a successful
project is labor productivity. Labor pro
ductivity depends entirely upon the
contractors ability to provide the right
number of qualified craft labor to the
project. Many scheduling specifications
require that the contractor resource
load their baseline or asplanned
schedule. Resource loading often is de
fined to include cost and labor by trade
and craft. If the contractors baseline
schedule is labor loaded, the owner has
the ability to analyze the labor needed
to complete the project on time and
track the labor actually on the project
site. If the owner reviews a labor
loaded baseline schedule and calcu
lates what labor is needed on site over
time, the owner can review certified
payrolls, or obtain site labor data from
the contractor or their construction
management staff, to determine if the
contractor has the planned labor on
site. If the owner determines that the
contractor has not ramped up to the
needed level of labor, this is an early
warning sign of claims and disputes.
Claims and disputes concerning delay
and lost labor productivity are likely to
result.

pute Avoidance Actions: As soon
as an owner determines that the
actual labor on site has fallen
below the planned level, the
owner should meet with the con
tractor and discuss the issue and
inquire how the contractor intends
to rectify the situation. The owner
may also want to calculate the ac
tual labor productivity achieved
and extrapolate actual labor pro
ductivity into the schedule for the
remaining work to determine what
project delay is likely. If this is
done, then this to should be
brought to the contractors atten
tion to demonstrate their potential
exposure to liquidated damages.
D/B or EPC Contractor Going to Field

Too Early A common issue with D/B
or EPC contracts is the need to com
plete sufficient design work to allow
the contractor to move to the field and
progress their construction efforts effi
ciently and effectively. All too often
owners fail to understand the value of
the contractor waiting until there is
enough approved design to allow them
work effectively. When owners get im
patient with waiting for the contractor
to move to the field, they start com
plaining to the contractor about the
lack of real progress. If the contractor
moves to the field at the owners re
quest and the owner finds that the con
tractor is working haphazardly and
ineffectively then this may be an early
Claims of project delay, lost productiv
ity and attendant impact damages are
likely to arise from this type of situa
tion.

pute Avoidance Actions: The situ
ation is avoidable if the owner and
contractor work together in accor
dance with the project plan and
schedule. If, however, the owner
convinces the contractor to move
to the field earlier than planned
and then observes inefficient work
in the field, the owner and the
contractor need to meet and dis
cuss the situation and work out a

plan to allow the contractor to pro
ceed efficiently or, potentially, sus
pend the work in the field until the
design effort catches up.
At PreConstruction Meeting the
Owner Announces There Will Be No
Change Orders on this ProjectFor
the contractor this is clearly an early
disputes as it is an indicator that the
owner has unrealistic expectations con
cerning design and construction and/or
has not read their own contract. The
type of claims and disputes likely to
grow from this attitude include con
structive changes; delays and construc
tive suspensions of work; disputed
differing site condition claims and con
structive acceleration.
Recommended Claims and
Dispute Avoidance Actions: Con
tractors dealing with an owner
with this attitude must review the
contract very carefully to deter
mine what clauses provide the
right of recovery and what the re
quired procedure is. Paying very
careful attention to notice require
ments is critical as is documenta
tion of all events leading to a
request for change order or filing
a claim. The communications pro
cedure on the project must also be
well documented as the attitude
on the part of the owner is unlikely
to be swayed by verbal commit
ments and handshake deals in the
field.
Multiple Prime Contractors on Site
Several states (approximately 10) re
quire that all or some contracts be bid
as multiple prime contracts. Under this
project delivery method, the project is
bid in several different packages such
as civil and architectural, electrical,
plumbing and heating, and ventilating
and cooling. Other states allow public
works owners to bid multiple prime
contracts (California, for example) [28].
It is also the authors experience that
11
some state agencies and municipalities

opt to bid work using multiple primes
in order to keep the work local and
some major oil, gas, and chemical proj
ect owners use this project delivery
method to complete projects faster
and, perhaps, decrease their own risk
exposure. Contractors bidding on a
multiple prime contract should view
this delivery method as an early warn
ing sign of potential claims and dis
putes. Since there is no privity of
contract (contractual relationship) be
tween the independent prime contrac
tors when one prime contractor delays
or impacts another, the only option the
impacted contractor has is to file a re
quest for change order or a claim
against the project owner. Experience
indicates that owners in situations such
as this frequently resist issuing such
change orders on the basis that We
didnt impact you, the electrical prime
did! Such refusal to deal with claims of
this nature often leads to larger claims
concerning lost productivity and/or
constructive acceleration.
(ROW) are acquired and all site ac

cess issues clearly resolved. Having said
this, the authors experience is that
owners frequently bid a project prior to
resolution of site access and other
property issues. This is not uncommon
in Public Private Partnership (P3)
highway projects which are typically
bid on a D/B basis prior to the final ver
tical and horizontal alignment being
fully established. Contractors bidding
on projects where property acquisition
issues are not fully resolved are typi
cally advised of this in the bidding doc
uments. An early warning sign of
potential claims and disputes would be
if the needed property acquisitions,
easements or ROW do not become
available in accordance with the prop
erty acquisition schedule contained in
the bid document or if there is no prop
erty acquisition schedule included in
bidding documents. The types of claims
and disputes are likely to be delay, sus
pension of work and/or constructive
suspension of work and their attendant
impacts.

pute Avoidance Actions: There is
not a lot a contractor can do to in
sulate themselves from potential
claims or disputes on multiple
prime contract projects. Since the
situation arises from a well known
prebid condition, the contractors
opportunity to claim unrevealed
superior knowledge on the part of
the owner (a classic starting point
for many claims) is not available.
The contractors best defense is to
insist that all baseline schedules
and schedule updates be circu
lated to all multiple prime contrac
tors and that the owner hold
frequent coordination meetings
with all prime contractors in an ef
fort to identify potential problems
early and come to a coordinated
agreement on how to avoid such
problems or mitigate them.
Lack of Site Access, Property, Ease

ments or Rights of WayOwners
should not bid projects until all prop
erty, easements and rights of way
12

pute Avoidance Actions: Assum
ing the owner acknowledges in the
bid documents that not all prop
erty acquisition will be completed
as of the bid date, the owner
should include a property acquisi
tion schedule in the bidding docu
ments. If one is not included,
bidders should request such a
schedule be added by addendum.
If the owner does not provide a
schedule bidders may want to re
think their decision to bid this proj
ect. If the project is bid, awarded
and NTP issued without such a
schedule at the preconstruction
meeting the contractor should de
mand this information and advise
the owner that a baseline sched
ule cannot be prepared on a ra
tional
basis
without
this
knowledge. Should the owner still
refuse, the contractor should pre
pare their baseline schedule using
their internal plan and placing the
completion of each property ac
quisition or easement activities at
logical dates in the schedule but

do so as milestone dates or com
plete no later than dates and an
notate each such schedule activity
as an owner responsibility. Should
the owner not make the property
or easements available on those
dates, written notice of potential
delay should be filed on that date
to preserve the contractors right
to file a claim at a later point in
time.
Lack of Necessary PermitsAs with
the property issue above, owners
should not put projects out for bids
until they have received all necessary
permits the owner is obligated to ob
tain. Some owners, however, acting on
the belief that the permits will be is
sued quickly and wanting work on their
project to start sooner, may bid the
project without the required permits.
It is the authors experience that when
this occurs, owners often do not tell
the bidders of the presumption that all
permits will be available prior to NTP. It
is also the authors experience that fre
quently this is not the case. Thus, there
is a potential for project delays, suspen
sions of work and/or constructive ac
celeration. But, how can contractors
learn about this during the bid phase?

pute Avoidance Actions: As a mat
ter of routine, bidders ought to
submit a written question to the
project owner prior to the prebid
conference asking if all owner fur
nished permits were already in
hand. A follow on written question
should be, If the answer is no,
when does the owner believe the
permits will be issued? If the re
sponse is no the permits are not
yet issued, and the owner refuses
to provide a response, or cannot
tell bidder when the permits are
likely to be issued, then any of
these are early warning signs of
potential claims and disputes.
Such claims as delay, constructive
suspension, constructive accelera
tion and the impacts of these
claims are likely. Similar to the lack
of site access and property avail

ability discussed above, the con
tractor would be well advised to
obtain information concerning the
permits from the owner and in
clude it in the baseline schedule.
In the absence of any owner fur
nished information concerning
permit issuance, the contractor
should create a baseline schedule
and include receiving the permits
by dates certain. If the permits are
not available by those dates, a
written notice of potential delay
should be provided to the owner
on that day.
Unanticipated Work Hour Restrictions
or Limits on Work AreasIf, after con
tract award and/or NTP the owner ad
vises the contractor of work hour
restrictions or limitations on work
areas that were not identified in the
bidding documents, this is an early
disputes. The most likely claims arising
from this situation are constructive
changes, delays, suspensions of work,
constructive suspensions and construc
tive acceleration.

as these new work restrictions are
identified, the contractor needs to
provide written notice of potential
delay. The contractor should then
analyze their baseline schedule
and plan and modify it accordingly
to account for these new restric
tions. Once this is done, the con
tractor should be in a position to
estimate the project delay, if any,
and the impact costs caused by the
previously unidentified work re
strictions. This analysis must be
performed promptly and an ap
propriate change order request for
additional time and/or damages
be filed with the owner.
Early Warning Signs

Construction Phase
Early warning signs continue as the
project progresses. They are not lim
ited to the early phase of construction.

In fact, there are more warning signs as
the project progresses but as a result of
other business on the project, owners
and contractors frequently do not rec
ognize the warnings when they first
occur. For the purposes of this article,
the author has classified and presents
these early warning signs in the follow
ing four categories:
Scheduling Issues
Change Issues
Project Management Issues
Field Issues

Scheduling Issues
Contractors Not Submitting Monthly
Schedule UpdatesOnce the project
baseline schedule has been approved
or accepted, it is typical for the contract
to require a routine schedule update
on a regular basis (i.e., monthly, quar
terly or by milestone). One schedule
related early warning sign is when the
contractor does not submit routine
schedule updates despite clear require
ments in the scheduling specification.
This is an early warning sign of poten
tial claims and disputes and it is likely
that delay and impact damage claims
will arise as a result.

pute Avoidance Actions: This situ
ation is avoidable if the owner
adopts appropriate defenses in the
scheduling specification including
making schedule update submit
tals a pay item on the schedule of
values; implementing a pay off the
schedule specification; stipulating
liquidated damages for late sched
ule submittals; or crafting a clause
allowing the owner to withhold
payment for the failure to submit
schedule updates. If any of these
defenses are included in the
scheduling specification, the
owner needs to enforce them. If
none of these defenses were in
cluded in the contract documents,
then the owner needs to meet
with the contractor to discuss the
situation and convince the con

tractor to submit these updates.
The theme of this meeting should
be that the project will run more
smoothly if the contractor submits
the required updates and the
owner performs a detailed analy
sis. The owner may also point out
that it is impossible to agree with
any time extension requests unless
they are based on a current, up
dated schedule.
Key Milestone Dates Missed but Proj
ect Completion Still On TimeWhen
the project records show that the con
tractor has missed one or more mile
stones, or when analysis indicates that
a large number of planned activity start
dates have not been achieved on time
but the project completion date has
not moved, this is an early warning sign
of claims and disputes. Scheduling
away delay typically is accomplished
by changing durations of remaining ac
tivities, deleting activities from the
schedule, using leads and lags, using
constraints, changing logic or schedule
calendars, etc. The type of claims aris
ing out of this situation will be delays,
impacts, and lost productivity.

pute Avoidance Actions: Similar to
the early warning sign above, this
sort of situation can be mitigated
by including some or all of the fol
lowing in the scheduling specifica
tion require and review carefully
a schedule change report with
every update; require joint update
meetings with the contractor,
owner and all major subcontrac
tors; require electronic schedule
update submittals; and/or obtain
the contractors weekly scheduling
documents typically provided to
trade superintendents. If none of
these defenses are in the schedul
ing specification, the owner needs
to meet with the contractor to dis
cuss the situation and convince
the contractor to submit properly
updated schedules. The meeting
should focus on the need for prop
erly updated schedule submittals.
13
The owner needs to point out that

time extension requests cannot be
assessed unless they are based on
accurately updated schedules.
Schedule Updates that Focus Primarily
on Owner Caused Delays and Im
pactsIf all schedule updates focus
primarily on alleged owner delays and
impacts, this is obviously an early warn
ing sign of claims and disputes, espe
cially if this sort of update starts very
early in the project. The typical way to
accomplish this sort of schedule update
is for the contractor to insert new
owner caused delays in the schedule
updates. The type of claims likely to be
asserted sometime during the project
include delays, constructive suspen
sions of work, impacts and lost produc
tivity.

pute Avoidance Actions: One way
to mitigate this type of schedule
update is to include a strict written
notice requirement in the delay
clause and a well thought out Time
Impact Analysis (TIA) requirement
in the scheduling specification. If
these are in the contract docu
ments, then owners should en
force them. If not, the owner may
want to use their construction
management team to create and
maintain a ghost schedule that
more accurately reflects the real
status of the project [4].
Need to Rebaseline the Schedule

There are occasions on a project when
a schedule may need to be rebaselined.
Typically, this becomes necessary when
changes or delays have rendered the
original project plan meaningless. This
type of situation and its causation is
generally obvious to both the owner
and the contractor. However, if the con
tractor unilaterally rebaselines their
schedule on several occasions, this is
an early warning sign of potential
claims and disputes. Claims of delay,
constructive suspensions of work and
other impacts are likely to be raised as
justification for rebaselining the sched
ule.
14

pute Avoidance Actions: A classic
way to mitigate this situation is to
include a requirement in the
schedule specification that any
schedule rebaseline effort must be
supported by a Schedule Rebase
line Report which justifies the
need for a rebaseline and must be
done in a joint review meeting
with the owner, the contractor and
all major subcontractors and that
unilateral rebaselined schedules
will not be accepted by the owner.
In the absence of such a contract
requirement, any time a schedule
rebaseline is submitted, the owner
should convene a joint review
meeting involving the contractor,
the owners representatives and
all major subcontractors. The
owner and contractor should dis
cuss the need for a schedule re
baseline and, if not justified, the
owner should refuse to accept a
rebaselined schedule. As noted
above, the owner may also want
to have their representatives cre
ate and maintain a ghost schedule
for the owners use in the event
delay claims are later filed.
Constant Resequencing of WorkCrit

ical Path Method (CPM) schedules are
dynamic in nature. That is, as the proj
ect proceeds it is likely that not every
thing will go as planned. Some
activities will start earlier or later than
planned; labor productivity may not
come up to the planned level; labor
shortages may occur; equipment and
material deliveries may be later than
planned; weather or differing site con
dition delays may be encountered; etc.
When events such as these arise, the
schedule must be adjusted to accom
modate such occurrences. Under cir
cumstances
such
as
these,
resequencing of work activities may
well be justified. However, if every
schedule update contains resequencing
of work activities without apparent jus
tification, then this is an early warning
sign of claims and disputes. Claims aris
ing from this sort of scheduling gener
ally include delay, constructive
suspensions of work, constructive

changes and loss of productivity.

should review every schedule up
date carefully. Whenever rese
quencing of a number of activities
is encountered the owner needs to
meet with the contractor and any
affected subcontractors to ques
tion the need for resequencing of
each activity resequenced. If the
answers are logical and justified,
then there would appear to be no
problem accepting such rese
quencing. On the other hand, if
there is no justification, the owner
should reject the schedule update.
If the contractor refuses to aban
don their resequencing efforts, the
owner should document this and
consider the possibility of creating
and maintaining a ghost schedule.
Continual Schedule Slippage and Float

ConsumptionAs noted above, CPM
schedules are dynamic and should al
ways be responsive to changes in the
project plans in the current schedule
update. However, if the owners update
review encounters constant schedule
slippage and a continual erosion of
float in the schedule, this is an early
warning sign of potential delay claims.

pute Avoidance Actions: When an
owner observes this happening in
a schedule, rather than ignoring
this trend or refusing to approve or
accept the schedule update sub
mittal (which effectively leaves the
project with no schedule) could in
clude in the schedule specification
a requirement for a TIA for every
identified delay, the owner may be
justified in requesting a TIA for
each schedule slippage in the up
date. Additionally, the schedule
specification should contain a
schedule update narrative submit
tal with every update. The specifi
cation should outline the contents
of this narrative report, one item
of which should be an explanation
of all schedule slippage including

the event(s) causing the slippage
(i.e., who or what caused the ac
tivity to slip, how that impacted
the activity, etc.). If the specifica
tion has such a requirement, care
fully review the narrative report to
see if the slippage is justified. If the
schedule specification has neither
requirement, the owner ought to
perform a joint schedule update
review with the contractor and all
major subcontractors to review
the update, ask about schedule
slippage and justification for the
same and deal with the situation
at this join meeting.
Change Issues
Excessive Number of Notices of
Change and/or DelayVirtually all
construction contracts contain written
notice requirements in both the
Changes and the Delay clauses. The
purpose of such notice requirements is
to keep the owner apprised of poten
tial problems and allow the owner to
get involved in resolving such issues.
Contractors submitting such written
notices are complying with the terms
and conditions of the contract and
should not be faulted for doing so. On
the other hand if the contractor is con
stantly filing spurious or questionable
notices of change and delay, this is
likely an early warning sign of potential
claims and disputes.

pute Avoidance Actions: One con
tractual defense that may be
employed is a requirement in both
the changes and the delay clauses
that requires the contractor to
submit a complete change order
proposal or claim submittal within
a specified number of days after
the notice is filed (i.e., 30 calendar
days). If such a requirement is in
cluded in the contract, the clause
should identify what must be in
cluded in a complete change
order proposal or claim submittal.
In order to make this clause realis
tic, the clause should include lan

guage to the effect that if the delay
event or changed work is not com
pleted within this timeframe, the
contractor must still file the re
quest for change or claim within
the specified time, but may note
the submittal is not complete and
may file an amended request
within 30 calendar days after the
event or work is completed. Ab
sent such a requirement, the
owner should review each notice
promptly and carefully to deter
mine whether the notice if justi
fied or not. If it is justified, the
owner should work with the con
tractor to craft the most cost effec
tive solution to the issue. If it is not
justified, the owner should re
spond to the notice, advising the
contractor that the notice is not
warranted and include detailed
reasons or justifications as to why
not. The owner should continue to
track each identified situation
carefully to determine potential li
ability and the eventual outcome.
Change Orders Do Not Address Time
and Impact Costs or the Contractor Re
fuses to Sign Change Orders and Will
Perform Changed Work Only on a
Time and Material BasisBoth situa
tions discussed here are common in
construction and either one is an early
warning sign of future claims and dis
putes. Many contractors are loathe to
provide a complete change order pro
posal which includes all hard dollar
costs, the projected time extension and
delay costs, and any related impact
damages. While they are willing to pro
pose, negotiate, and settle the hard
dollars costs they either do not know
how to estimate time and impact or are
unwilling to take on the risk of doing so
and signing a change order with a
reservation of rights. This type of con
tractor is likely to only be willing to per
form changed work under a change
order with a reservation of rights or, if
the owner is not willing to allow this,
perform changed work on a Time and
Material (T&M) or cost reimbursable
basis. This latter scenario is tantamount
to a complete reservation of rights to

hard dollar costs, delay and impact
costs. Situations such as this are likely
to lead to claims concerning the cost of
directed changes, delay and delay im
pact. Of course, this situation is exacer
bated in many instances by an owner
who refuses to deal with requested
time extensions and/or impact dam
ages. Owners who want to deal with
hard dollar costs only open themselves
up to such claims every time they take
this course of action.

pute Avoidance Actions: One pre
ventive measure that can be
included in the changes clause is a
requirement defining what must
be included in all change order
proposals scope of work, hard
dollar costs, time extension re
quest and impact costs all of
which must be justified by a com
plete breakdown of the requested
costs and a TIA demonstrating the
need for a time extension. Absent
such a contractual requirement,
the owner and the contractor
should first negotiate the scope of
the change order work in detail, to
make certain both parties are
preparing estimates on the same
work. The owner may then pre
pare their own cost estimate in
cluding impact damages and their
own TIA. Once this is completed,
the owner and contractor should
meet to compare estimates and
TIAs. If agreement cannot be
reached through reconciliation of
the two estimates and TIAs, the
owner should challenge the con
tractor to correct the owners es
timate on a line by line basis and
do the same concerning the
owners TIA. If this is done, rather
than the traditional method of at
tacking the contractors estimate,
the more likely it is that the owner
and contractor can reach a mutual
satisfactory resolution of the
scope, time and cost of a change
before work proceeds in the field.
15
Contractor Working on T&M Changes

Does Not Submit Daily T&M
RecordsShould the owner decide to
issue T&M change orders, they are at
risk for all time, all costs and all impacts
as this is an openended work order.
While some owners attempt to limit
their risk by issuing T&M changes with
a Not to Exceed (NTE) cost, this does
not totally resolve the issue as contrac
tors are not required to perform all the
changed work for the NTE cost; but
rather, they are only required to per
form the changed work up to the NTE
cost and then drop tools. Should the
owner want to complete the changed
work, they will be required to change
the NTE cost. Thus, the owner is not re
ally protected in this situation. The only
way the owner can exercise some de
gree of control over the time and cost
of such changes is to obtain contempo
raneous information on the time and
cost of the change. When contractors
do not submit daily T&M records, the
owner is at increased risk. This lack of
information should serve as an early
warning sign of a forthcoming claim or
dispute. The nature of this claim would
be a claim for disputed change order
costs.
16

pute Avoidance Actions: The best
defensive measure against this
sort of situation is to include clear
language in the changes clause of
the contract requiring a contractor
to submit daily T&M records for
each T&M change separately, at
the end of each shift of work, to
the owners representative. Such a
requirement should also mandate
the information that must be sub
mitted daily (i.e., labor forces by
trade for both the contractor and
any subcontractor working on the
T&M change, equipment, materi
als, etc.). Owner representatives
must be trained to observe T&M
work closely and compare their
daily observations to the daily
T&M submittals from the contrac
tor. Should the owners represen
tative disagree with some portions
of the daily T&M submittals, they
should mark up the contractors

submittal in a different color ink
and attach a record of their own
observations. Such submittals, re
viewed and marked up documents
and owners records should be
filed daily and used to reconcile
the final cost when the T&M work
is completed. If the contract does
not contain such a requirement,
then the owner should assign one
or more inspectors to the T&M
work with the direction to record
everything concerning the T&M
work from start to finish. While
this may require the employment
of more inspectors onsite, it will
likely cost far less than not having
any contemporaneous documen
tation of the actual cost of the
T&M work.
Excessively High Change Order Cost
Proposals and/or Lump Sum Cost Pro
posals with No Supporting Documen
tationOften times contractors, when
the opportunity presents itself, will
submit one line lump sum proposals in
response to an owners request for a
change order cost proposal. When the
owner receives such a proposed lump
sum cost, it may significantly exceed
the cost the owner anticipated and/or
have no supporting documentation
which would afford the owner the op
portunity to analyze the proposed cost.
Contractors may do this because they
perceive themselves to be in the
drivers seat. That is, they may believe
the owner needs this change made and
feel that they are the only one on site
who can perform the changed work.
Thus, they may try to coerce the owner
into either accepting the proposed cost
or issuing a T&M change order. If this
happens it is an early warning sign of a
pending claim or dispute concerning
the cost and impact of a specific
change or group of changes.

pute Avoidance Actions: The most
effective tool to prevent this situ
ation from occurring is a clear re
quirement in the changes clause
that the contractor must submit a
breakdown of all elements of the

proposed cost separately (i.e.,
labor, materials, equipment, sub
contractor costs [broken down in
the same manner], small tools and
consumables, etc.). The clause
ought to make clear that even
though the owner intends to issue
lump sum change orders the lump
sum value of the changed work
will be derived from negotiations
based on the individual elements
of cost. If such a requirement is
not contained in the contract then
the owner should prepare their
own detailed estimate as a
counter proposal and challenge
the contractor to show the
owners estimate is erroneous, on
a line by line basis.
Excessive and Frivolous Requests for
InformationRequests for Information
(RFI) are a typical communication
mechanism on most construction proj
ects. An RFI is typically a question
raised by a contractor and submitted to
the owner and/or design professional
concerning some requirement or pro
vision of the drawings or specifications
that the contractor is not clear on.
However, numerous claims games have
been created revolving around the use
and abuse of RFIs [22]. Should the
owner start to see numerous RFIs that
are actually submittals: (routine project
correspondence, requests for substitu
tions, responses to notice of noncon
formance, RFIs that are easily
answered by reviewing the specifica
tions and/or drawings, or RFIs asked
more than once), these are early warn
ing signs of pending claims and dis
putes. Claims arising from RFIs are
typically constructive change claims in
cluding the attendant delay and impact
costs. Having noted this, the author has
observed situations where the design
was not complete at the time of bid
ding and the owner and design profes
sional opted to complete the design
through the submittal and RFI process
rather than delay awarding the con
tract. In the event this happens, the

number of RFIs are certain to increase
radically.

pute Avoidance Actions: One of
the more effective ways to avoid
situations such as this, is to incor
porate a well thought out RFI
clause and system in the contract
documents, intentionally designed
to control the RFI process [22]. If
the contract does not have such a
clause, the owners team needs to
set up a process similar to that
outlined in the referenced report
(i.e., strict review of all documents
labeled as an RFI immediately
upon receipt; rejection of those
documents that are not truly RFIs;
and classification and tracking of
all documents submitted as an RFI
by category; and tracking all justi
fied RFIs to insure prompt re
sponse).
Massive Letter Writing Campaign or

Change in Style of Contractors Project
CorrespondenceThe technique is
frequently referred to as papering the
job. It involves flooding the owner
with a large number of letters providing
notices; complaining of poor design,
slow responses to notices, requests for
change orders, RFIs, submittals or time
extensions; multiple complaints con
cerning designer or CM performance;
etc. The object of this tactic is to put
the owner on the defensive from the
outset of the project and fill the project
files with documentation of unre
solved issues. A variant of this tactic
may be observed when the contrac
tors attorneys or claim consultants
start writing such letters to the owner.
When either of these situations arise
they should be taken as early warning
signs of pending claims and disputes.
Such claims will typically revolve
around constructive changes, construc
tive suspensions of work, delay and the
attendant impact of such claims.
strate entitlement to a change

order as a result of an event, the
owner should issue such change
orders as promptly as possible to
demonstrate that the owner com
plied with the provisions of the
contract. As expensive as it
sounds, the most effective way to
deal with the remaining spurious
or questionable correspondence is
to make certain each letter is re
sponded to promptly, objectively
and professionally. All project cor
respondence must be logged and
tracked to document prompt re
sponses. This course of action will
create a more accurate record of
what happened on the project,
when, who caused each issue, etc.
If necessary, the owner may need
to increase the size of the project
staff to achieve this result. How
ever, this additional cost will likely
be substantially less than a drawn
out dispute.

pute Avoidance Actions: If some
of the contractors letters demon
Change in Character and Content of

Progress Meetings and Meeting Min
utesAnother early warning sign of
potential claims and disputes is if there
is a radical change in the character or
content of routine progress meetings
or meeting minutes (if the contractor
kept them), or in objections to draft
meeting minutes (if the owner kept
them). This may be an early warning
sign of simmering claims and disputes
even though the contractor may not
have provided written notice. When
this occurs, it is nearly impossible to
predict what sort of claims may be lurk
ing in the background, but there is a
near certainty some problem(s) is caus
ing the change of attitude.

pute Avoidance Actions: The chal
lenge for the owner in a situation
like this is to get the contractor to
open up so the owner can ascer
tain what the problem(s) are. If
this is a partnered project then the
owner may be able to use the
partnering facilitator to learn
about the unresolved issues [12,
27]. If partnering is not part of the
project management process the

owner may want to recommend
bringing in a turnaround partner
ing facilitator to initiate a partner
ing process on the project and
improve project communications
[23]. If this is done the owner
should be able to determine the
underlying unresolved issues.
Once the issues are identified, per
haps the owner can work with the
contractor to resolve the issues.
Inflated Payment ApplicationsIt is
not uncommon on lump sum projects
with a negotiated list of pay items to
encounter disagreements on monthly
payment applications between the
owner and the contractor. Typical dis
agreements tend to center on the con
tractors estimate of the percentage of
work completed on various pay items.
For example, where the contractor may
estimate that pay item no. 13 is 55 per
cent complete, the owners represen
tatives may assert that it is only 52
percent complete. This type of dispute
is more or less common and can be
worked out on the site. However, when
the owner starts seeing monthly pay
ment applications or loan draws that
are substantially inflated, or that in
clude disputed pay items, this may be
an early warning sign of a pending
claim or dispute. This may indicate a se
rious cash flow problem for the con
tractor. If there are a number of
ongoing disputes over ambiguities in
the contract where the owner directed
the contractor to proceed with the
work in accordance with the owners
interpretation this may, in part, explain
the contractors cash flow problems.
The type of claim growing out of this
situation is likely to be a series of con
structive change claims.

pute Avoidance Actions: If there
are a number of ambiguous speci
fication claims on the project, the
owner should reexamine their pre
vious determinations to make cer
tain their earlier decisions were
correct. If the owner determines
some decisions were incorrect, is
17
suance of a change order may help

alleviate the cash flow problem. If
this is not the case owners ought
to confer with their legal counsel to
determine if the owner should no
tify the contractors surety to get
them involved in trying to resolve
or mitigate the situation.
Complaints from Subcontractors and
Suppliers Concerning Slow or Late Pay
mentsSimilar to the above situation,
if the owner starts to receive com
plaints from subcontractors and/or sup
pliers about slow or late payments from
the contractor, this too is an early warn
ing sign of claims and disputes. Like the
above, the typical claim arising from
this scenario is one of constructive
changes to the work.

pute Avoidance Actions: The
owner should examine their pay
ment process to see that it is not
extremely slow thus exacerbating
the situation. If it is, the owner
needs to quickly modify the pay
ment system appropriately. And,
like the above situation, the owner
should confer with their legal
counsel and consider notifying the
contractors surety.
Attorney or Claim Consultant Attend

ing Project MeetingsObviously, this
is an early warning sign of pending
claims and disputes. Owners probably
cannot prohibit the contractor from
bringing their legal counsel and/or
claims consultant to progress meetings.
So, the challenge for the owner is to as
certain what are the simmering claims
and disputes. The type of claims arising
from this situation need to be discov
ered and addressed as quickly as possi
ble so as to avoid a dispute at the end
of the project.
18

pute Avoidance Actions: While the
owner cannot prevent this action,
they should not be intimidated.
The owner should still run the
progress meeting in the normal
fashion, using their standard meet

ing format. The owner should still
focus the discussion on the con
tractor and the subcontractors are
typically included in the meeting
and maintain thorough meeting
minutes. In the meeting the owner
should ascertain what issues are
unresolved and work on a plan to
resolve these issues.
Early Warning Signs for OwnersField
Issues
Late Delivery of Materials & Equip
mentIt is axiomatic that construction
cannot proceed effectively or efficiently
unless materials and equipment are on
site as planned. This may even involve
delivery to the correct working space
on the site. For example, in a high rise
office structure having thousands of
sheets of drywall on site does not help
progress the work if they are stored in
side on the first floor when the crews
needs several hundred sheets each on
the 17th and 18th floors. If material and
equipment delivery is proceeding in
this manner and the owner notes idle
crews waiting for delivery to their work
area, this is an early warning sign of po
tential claims and disputes. The likely
type of claims growing out of this will
be delay, constructive suspension of
work and/or lost productivity.

an owner can track this issue from
the outset of the project is to re
quire in the scheduling specifica
tion that all equipment and
material procurements activities
be included in the baseline sched
ule and coded in the Work Break
down Structure (WBS) accordingly.
If this is done, the owner can iso
late the delivery activities using the
correct WBS codes and print out a
delivery schedule. This delivery
schedule can be used by the
owners representatives in the field
to track such deliveries and deliv
eries should be discussed in the
weekly project meetings [3]. In the
absence such a contract require
ment, at each weekly update

meeting the owner should ask the
contractor to list what activities
will be starting over the next two
to three week period and then in
quire about the necessary material
and equipment deliveries required
to support this planned effort.
Lower Than Expected Craft Labor Lev
els or Contractor Ramps Down Craft
Labor Levels Prior to the End of the
ProjectSimilar to the above, the proj
ect cannot be completed on time nor
the work proceed efficiently unless the
contractor has the appropriate num
bers and type of qualified craft labor on
site when, and, as needed. If the owner
observes that the anticipated craft labor
levels have not been met, or notes that
the number of workers on site is drop
ping off even though there is a large
amount of work remaining to be ac
complished, this is an early warning sign
of potential claims and disputes. The
most likely type of claim arising from
this situation is one of productivity loss.

to track the labor required to meet
the schedule is for the scheduling
specification to require that the
baseline schedule be craft labor
loaded. If this is done, the owner
can extract a set of histograms by
craft for the duration of the project
and then observe on a weekly basis
whether the contractor and each
subcontractor has the required
amount of labor on site to support
the schedule. If not, the owner can
surface this issue at the weekly
project meetings to find out what
is happening, why and what can be
done about it. Without such a con
tract requirement, the owner is
somewhat at a loss to create pre
dictive histograms, but can still
track ongoing productivity of key
activities (i.e., activities on the
schedules critical path and any
subcritical paths of 30 calendar
days or less) and measure progress
of these activities. Using these two
metrics the owner can adjust the
durations of the remaining key ac

tivities work to determine
whether they will complete on
time and achieve the contract
completion date. If they will not
meet the required date, the owner
can address this issue at routine
project meetings, showing their
calculations and address with the
contractor how to remedy this sit
uation.
Turnover in Contractor Project Man
agement StaffYet another early
disputes is a turnover in the contrac
tors key project management staff dur
ing the course of construction and with
no apparent logical reason. The owner
should directly contact the contractors
executives to determine what is hap
pening and why. There may, however,
be a logical reason. For example, the
contractor may have been awarded a
large new contract and needs to staff it
immediately while this project is past
its most critical points and can be com
pleted with another project manage
ment team.

pute Avoidance Actions: One ef
fective way to prevent a situation
like this is to include in the contract
a listing of contractor key project
management personnel (e.g.,
project manager, project sched
uler, project quality control man
ager and others as appropriate)
with the requirement that no key
personnel can be removed from
the project until substantial com
pletion is achieved without ad
vance written approval of the
owner. Lacking such a contractual
requirement, the owner should
meet with the contractors execu
tives to learn why the shift in proj
ect management personnel is
taking place. If the reason revolves
around the current staffs lack of
resolving issues, obtaining ade
quate labor, managing subcontrac
tors, etc. the owner may want to
engage in a discussion of how they
can assist in resolving such issues.
Decline in Labor ProductivityAgain,

like the two indicators above, if labor
productivity has dropped off or is de
clining slightly month after month, this
is an early warning sign of potential
claims and disputes. Obviously, the
type of claim likely to be generated is
one of productivity loss.

scheduling specification included
craft labor loading then baseline
productivity can be calculated
from this data. If the contract re
quired the use of earned value, the
planned and actual productivity
can be calculated easily. If neither
of these techniques was specified,
the owners field representatives
ought to observe and make some
recording of labor productivity.
Such observations should be made
after the learning curve effect
has diminished. Further observa
tions of labor productivity should
take place routinely throughout
the project and compared to the
baseline metrics. If a drop off in
labor productivity is observed, the
owner should bring this to the at
tention of the contractor and initi
ate discussions on why this may be
occurring and what can be done to
resolve the problem.
Excessive Quality DisputesIt is fairly

typical that there will be a limited num
ber of quality disputes on any project.
All nonconformance reports should be
received and reviewed by the owner in
order to minimize the amount of re
work on the project [10]. Contractor re
sponses typically propose means and
methods of resolving the nonconfor
mance issue. If, however, the contrac
tor refuses to provide a proposed fix to
the nonconformance report and cor
rect deficiencies, this is an early warn
ing sign of pending claims and disputes.
The type of claim most likely to result
from this situation is one of construc
tive changes.

pute Avoidance Actions: If a situ
ation like this arises the owner
needs, in the first instance, to re
view the nonconformance report
in contention to see if it is correct.
Assuming it is correct in all re
spects, the owner needs to meet
with the contractors project man
ager (and perhaps their execu
tives) to determine the nature of
the problem and find a way to get
the quality dispute resolved with
out a claim being filed.

Scheduling Issues
Requests for Recovery SchedulesAl
most all scheduling specifications pro
vide that the owner may require
submittal of a recovery schedule when
a schedule update shows a projected
late project completion. If, however,
the contractor has filed multiple re
quests for time extensions that the
owner has not yet responded to but
still demands a recovery schedule, this
claims and disputes. The type of claim
arising from this situation is most likely
to be one of constructive acceleration.

this situation arise and assuming
the contractor has properly filed
notices of delay and time exten
sion requests in accordance with
the terms of the contract for each
delay event, then the contractor
should file a notice of constructive
acceleration upon receipt of the
owners request for a recovery
schedule. If the owner ignores this
notice or responds with a contin
ued demand for a recovery sched
ule, the contractor should proceed
to plan their acceleration efforts,
provide the recovery plan to the
owner, initiate the recovery efforts
(only after the owner approves the
recovery plan) and then initiate
tracking of all time, costs and im
pact arising from this effort.
19
No Responses to Notices of Delay

Typical construction contracts require
written notices of delay to be filed with
the owner for every event the contrac
tor believes may cause a delay and for
which they may be entitled to a time
extension. The purpose of these notices
is to keep the owner apprised of what
is happening on the project and to give
the owner the opportunity to get in
volved with solutions to such problems.
However, some owners are loathe to
deal with delay claims until the end of
the project when the owner can actu
ally see how much time does the con
tractor really needs. When notices of
delay are filed and no response re
ceived, this is an early warning sign of
potential claims. As with the above
warning, the type of potential claim is
likely to be a constructive acceleration.

pute Avoidance Actions: When a
situation such as this arises, the
contractor needs to meet with the
owner and explain the potential of
a constructive acceleration claim.
The contractor needs to convince
the owner to deal with the notices
of delay in a timely manner in
order to avoid a later dispute. If
this approach is ineffective the
contractor should confer with their
legal counsel.
Multiple Suspension of Work Direc

tivesVirtually all construction con
tracts contain a Suspension of Work
clause. This clause gives owners the
right to direct a work stoppage, of all,
or a portion of the work, at any time.
Owners are not required to justify the
issuance of such stop work orders but
contractors are required to comply with
such orders. It is the authors experi
ence that stop work orders are not
common on the typical project. There
fore, if the contractor encounters mul
tiple suspension of work orders on a
project this is an early warning sign of
potential claims and disputes. The type
of claim would likely center on the stop
work orders and the resulting project
delay.
20

pute Avoidance Actions: When
ever a stop work order is issued
(especially if the order is to stop
all work on the project) the con
tractor needs to meet with the
owner to discuss how long the sus
pension is likely to last and
whether the owner wants the con
tractor to remain on hot standby
or demobilize all resources (labor,
equipment, and project manage
ment staff). Agreement on this as
pect of the stop work order is
critical in order to establish what
damages are owed at the end of
the work stoppage.
Late or Incomplete Delivery of Owner

Furnished,
Contractor
Installed
ItemsMany owners prepurchase
major pieces of equipment for a project
to save time and/or cost. Some owners
of large programs may even prepur
chase some of the bulk commodities
common to several projects on a pro
gram (e.g., rail and concrete ties for a
large light rail system program). If this
is done, the bid documents will reflect
the fact that the owner is purchasing
certain items of equipment and/or ma
terial and will furnish them to the con
tractor when needed. This is commonly
referred to as Owner Furnished, Con
tractor Installed (OFCI) items. When
owners employ OFCI they either stipu
late delivery dates in the contract doc
uments or provide them to the
contractor after contract award. Con
tractors must include such dates in
their project plan and the schedule.
Should the OFCI equipment or material
not be delivered on time, or if the de
liveries are incomplete, or not as repre
sented by the owner, this is an early
disputes. The type of claims likely to
arise include delay and constructive
changes.

pute Avoidance Actions: If a situa
tion such as this arises, the
contractor must file written notice
of delay and/or change in strict ac
cordance with the terms of the
contract. At this point, the contrac

tor should commence tracking all
time and cost impacts cause by this
situation, separately from base
scope time and cost. Ultimately
the contractor must perfect and
submit an appropriate claim.
Should the owner refuse to deal
with the claim or is unwilling to re
solve the claim, contractors should
seek advice from their legal coun
sel.
Change Issues
Excessive Number of ChangesVirtu
ally all contracts have a changes clause
providing the owner with the right to
make needed changes within the gen
eral scope of the work. This clause al
lows the owner to make changes to the
work, as needed. Virtually all projects
have at least a few change orders. How
ever, the contractor may encounter a
project with an excessive number of
changes. The author was involved in a
project that ultimately had 900+
change orders, some of which involved
multiple changes. This is an early warn
ing sign of potential claims and dis
putes. The type of claims likely to arise
would be claims for disputed cost of
changed work, delay, lost productivity
and attendant impact costs.

pute Avoidance Actions: The con
tractor must always be alert to
changes and the need to file writ
ten notice of change in a timely
manner. Once the contractor be
comes aware of the potential for
an excessive number of changes
they need to tighten up their
change management procedure
and system including written noti
fications, negotiation of the scope
of changed work, the ability to pre
pare and submit timely adequate
cost and time estimates, and the
ability to negotiate agreements on
scope, time and cost. The contrac
tor may need to retain additional
project management staff (i.e., es
timators, schedulers, document
control personnel, etc.) to deal

with a large number of changes. If
this becomes necessary the con
tractor would be well advised to
provide notice to the owner that
additional site staff are being as
signed to the project due to the
large number of changes and the
contractor anticipates that the
owner will compensate them for
the added staff.
Owner Refusal to Negotiate Time or
Impact Costs with Change Orders
Despite the fact that almost all owners
say they want to settle all change or
ders full and final and with no reserva
tion of rights on change orders, all too
often owners refuse to deal with delay
arising from changes or impact costs
such as changes to unchanged work. If
an owner takes this approach to
change orders, this is a clear warning
sign of forthcoming changes and
claims. Obviously, the resulting type of
claim will involve the cost of changes,
time and other cost impacts and per
haps constructive acceleration.

pute Avoidance Actions: When an
owner starts to take this position,
the contractor needs to open a dis
cussion of what the downside risk
of this approach is. The contractor
needs to advise the owner that
this position will result in all
change orders having a reservation
of rights and if this is the case then
there will be a major claim at the
end of the project for all delay and
all impact costs. Should the owner
persist in this approach the con
tractor needs to be vigilant in
recording all costs and all time im
pacts arising from each change
order. If the owner refuses to allow
reservation of rights language on
the face of each change order, the
contractor should confer with their
legal counsel concerning the viabil
ity of including reservation lan
guage in the cover letter when
returning the change order to the
owner. If this technique is not ac
ceptable, the contractor may want
to adopt the position that they will

not sign any change order and if
the owner wants work changed
they will have to issue a unilateral
change on a T&M basis. Finally, if
the owner refuses to deal with the
potential delay of each change the
contractor should make certain
that the time extension section on
the face of the change order does
not state 0 days. It should be an
notated To Be Determined or
TBD.
Disagreements Over Scope of Work
Items and/or Contract Interpretation
DisputesThis type of disagreement is
typically unpredictable at the outset of
the project and generally does not
manifest itself until a submittal of some
sort is provided for review by the con
tractor. At this point, if the owners de
sign professional rejects the submittal
or directs a substantial revision, the
contractor only then realizes that there
is a disconnect between themselves
and the owner as to what the contract
actually requires. The authors experi
ence is that more times than not, the
specification governing the submittal
has an ambiguity which was not iden
tified until the submittal was provided.
Up to that point both the owner and
contractor thought they understood
the requirement clearly. Now, they
know there is a disagreement concern
ing what exactly is in the scope of work
for this specification section. This is an
early warning sign of potential claims
and disputes. The type of claim ordi
narily arising from this situation is a
constructive change claim.

as a submittal is rejected or the
contractor is told to substantially
revise the submittal to include x,
y and z the contractor needs to
review their submittal to see if
they made an error. If this review
indicates that the submittal re
flected exactly what the contractor
thought was required, they need
to send a written notice of change
to the owner. This is important to
preserve the contractors rights

and to emphasize to the owner
and their design professional that
the contractors objection must be
taken seriously. Subsequently, the
owner and their design profes
sional to discuss the different in
terpretations of the specification
in contention. If the owner and de
sign professional insist upon their
interpretation of the specification
and direct the contractor to pro
ceed accordingly, the contractor
must do so or face a potential de
fault interpretation. The contractor
must obtain this direction in writ
ing and carefully track all time and
cost impacts separately from base
scope work so that when the dis
puted work is complete, a properly
documented claim can be filed and
supported.
Turn Over in Owner Project Manage
ment StaffIf the owner suddenly and
without apparent reason replaces their
project management staff, this is an
early warning sign of potential claims
and disputes as it is illogical for an
owner to take this action if they are sat
isfied with what is happening on the
project. Unfortunately, the type of
claim and dispute likely to arise cannot
be predicted and it is up to the contrac
tor to suss out the issue(s) behind this
decision.

pute Avoidance Actions: The most
obvious way to find out what
caused the change out of project
personnel is to meet with the out
going project team and ask the
question Why is this happening?
This should be done before they
depart the project if at all possible.
Depending on the information re
ceived, the contractor ought to
meet with the owners executives
to ask the same question. Once
the real issues are tabled the con
tractor can, hopefully, work with
21
the owner to resolve the issues

without need to resort to claims or
disputes.
Payment ProblemsIf the contractor
encounters slow or late payments this
claims and disputes. This may indicate
that the owners staff is not doing a
good job of tracking the progress in the
field which, in turn, causes them to dis
pute the percentages complete claims
by the contractor. On the other hand,
this may also mean that the owner is
running out of funds to complete the
work of the project. In either event, this
disputes. If allowed to go on too long
the type of claims likely to result will in
clude delay or constructive suspension
of work.

slow or late payments stem from
disagreements over progress, the
owners staff that reviews payment
applications to discuss the issue.
The owner and the contractor may
need to renegotiate and revise the
Schedule of Values. If there is no
apparent reason for such payment
delays, the contractor needs to
seek advice from their legal coun
sel to see what options are open to
them (i.e., terminate involvement
in the contract if the contract pro
vides for contractor termination;
take action under the relevant
Prompt Payment Act, if there is
one in the state that covers this
project, etc.)
Change in Style of Owners Project

CorrespondenceIf, during the per
formance of the work, the owners cor
respondence changes radically, this
may indicate that the owner has an at
torney or claim consultant writing their
letters. If, unlike earlier correspon
dence, there are constant references to
poor contract performance on the part
of the contractor, or there are multiple
complaints concerning contractor non
compliance with contract require
22
ments, this is obviously is an early

The type of claim or dispute likely to re
sult will be a default termination.

tractor needs to notify their legal
counsel and perhaps, their surety
of the situation and seek their ad
vice. Additionally, the contractor
should convene a meeting with the
owner and their staff or construc
tion managers to discuss the situ
ation and determine the
underlying issue(s). If issues are
clearly revealed then the contrac
tor can work with the owner to re
solve the issues and avoid
disputes.
Delayed Submittal Reviews and Re

sponsesOne of the major changes in
the construction industry over the past
few decades is the radical increase in
the number of shop drawings and sub
mittals that must be provided by the
contractor. This change, when com
bined with the contract requirement
that materials and/or equipment
may not be imported to the site nor
work proceed until the submittal is
approved, means that each submittal
has the potential to create a delay to
the work and, perhaps, the critical path
of the schedule. The author has noted
that to protect the owner, many con
tracts have a stipulated time for review
and response to each submittal (typi
cally 30 calendar days). In some in
stances, the contract may contain a
submittal metering clause prohibiting
the contractor from submitting more
than x submittals per week or per
month. Given the potential for delay,
the contractor must monitor the sub
mittal review and response process
very carefully. When submittal re
sponses are not as prompt as called out
in the contract or as they should be, this
disputes. The typical claims are likely to
be delay or constructive suspension of
work.

pute Avoidance Actions: At the
outset of the project, when
preparing the baseline schedule,
the contractor should consider
putting all required submittals in
the schedule including either the
contract stipulated review time or
a reasonable period of time for
review. If this is done and assuming
the contractor uses a robust WBS
system such that all submittals and
submittal review times are coded
separately from other activities,
the contractor can print out their
own submittal schedule docu
menting when each submittal is
due to the owner and when the re
sponse is scheduled. This provides
the contractor with the beginnings
of a good tracking system concern
ing submittals. Some owners may
ask the contractor to remove the
submittal review times from the
schedule but since each review
and response may be the source of
a delay, contractors may rightfully
decline such a request. Contractors
must stay alert to submittal re
sponses and each time the sched
uled period has lapsed without a
response, should submit a written
notice of potential delay to the
owner and track, in the schedule,
the actual response time in order
to track the consumption of sched
ule float.
Owners Correcting Design Deciencies

Through the RFI ProcessThe RFI
process is used widely in construction
as a communications tool. The in
tended use of an RFI is for the contrac
tor to ask a question of the owner,
construction manager and/or design
professional concerning some require
ment of the contract. The response
should not be a change to the require
ments of the contract, but rather, a clar
ification. The exception to this
statement is when the RFI has identi
fied an issue that requires a change to
the work and then the response should
indicate that a change order is forth
coming. It is the authors experience
that all too often owners and their rep
resentatives attempt to use RFI re

sponses to correct errors or deficien
cies in the contract documents without
issuing a change order [22]. Should the
contractor encounter situations such as
this, this is a clear early warning sign of
potential claims and disputes. The type
of claim resulting from this sort of ac
tion is a constructive change claim.

pute Avoidance Actions: Contrac
tors must review each RFI
response to determine whether it
is simply a clarification or a change
to the work. Any time a response
appears to cause changed work,
written notice to the owner must
be filed in strict accordance with
requirements of the contract. If
the owner persists with their inter
pretation and directs the contrac
tor to proceed, the contractor
should do so under protest, track
ing all time and cost impacts sepa
rately from base scope work so as
to be able to file and document a
claim for damages when the
changed work is completed.
Design Professional Advises Coordi

nation of Details Will Be Done through
the Shop Drawing Process Coordi
nation of trade subcontractors in the
field is typically the role of the general
contractor. However, coordination of
design details between trades (espe
cially mechanical, electrical, plumbing
and control systems) should be per
formed by the design professional
and/or construction manager prior to
the project being bid. This type of co
ordination should be included in the
drawings (such as one line electrical
conduit runs; plumbing and HVAC runs;
wall penetrations; etc.). When a de
signer advises the contractor that coor
dination of these details will be
accomplished through the submittal
process, this is an early warning sign of
claims and disputes as it indicates that
the project design is not complete. The
typical claim growing out of this situa
tion is a constructive change claim.

pute Avoidance Actions: Given
this attitude by the design profes
sional the contractor must review
each submittal and/or RFI re
sponse thoroughly and cautiously.
The review should be oriented at
whether the response will cause a
change to the work. If it appears to
do so, the contractor should pro
vide timely written notice of
change to the owner. If the owner
directs contractor compliance with
the response from the design pro
fessional without a change order,
the contractor should comply,
under protest, carefully docu
menting all time and cost impacts
in order to be able to compile a
welldocumented claim at some
later point in time.
Exclusion of Design Professional from

Project MeetingsDesign profession
als should be included all project up
date meetings as contractors
frequently have questions concerning
the project design which can be ad
dressed in the meeting by the design
team. When the design team is ex
cluded from the project site meetings
by the owner, even when design input
is needed, this should be taken as an
early warning sign of claims and dis
putes. The types of claims likely to re
sult include constructive changes,
delays and/or constructive suspensions
of work.

tractor probably will not be
advised why the owner has ex
cluded the design professional
from project meetings. And, the
reason may not matter. In a situa
tion such as this, a contractor in
need of an opportunity to meet
with and discuss issues with the
design professional, should specif
ically notify the owner in writing
that they need to have the design
professional present at the next
project meeting to discuss certain
issues that require resolution. The
written request should briefly
identify each issue and the con

tractor should request that each
issue be specifically included in the
meeting agenda. If the owner con
tinues to exclude the designer the
contractor should pose their in
quiries as best they can through
the RFI process but each should be
accompanied by a written notice
of potential delay on the basis that
the issue could have been re
solved at this weeks project meet
ing rather than awaiting a
response to RFI #35.
Attorney or Claim Consultant Attend
ing Project MeetingsIt is quite appar
ent that having the owners legal
counsel and/or claims consultant at
tend routine project meeting is an early
What sort of claim is likely to be raised
is, however, unknown to the contractor.
It is up to the contractor to ascertain
this information.

contractor has filed several claims,
none of which are yet resolved,
the owner may have these addi
tional individuals at project meet
ing to discuss the claims. This is
logical and understandable. How
ever, if there are no pending claims
from the contractor, then the con
tractor should ask the owner why
they were invited. If the owner
fails to provide a reasonable re
sponse perhaps the contractor
ought to advise the owner that if
the owner is going to have their at
torney attend all meetings then
the contractor will do likewise.
Hopefully, at this point, each party
will consider the cost of such ac
tions and adopt a more reasonable
manner to proceed.
Contractor Told not to Put Things in

Writing The author was involved in
a project where the owner specifically
told the contractor not to put things in
writing. The owners direction included
meeting minutes, RFIs and notices of
change and/or delay. This project was
23
a gigaproject with a huge potential

award fee based upon completion of
the work under budget and earlier than
required. (A gigaproject is generally
defined as any project costing more
than US$1 billion) [18]. The author,
upon arriving at the site, learned that
the project was under budget and
ahead of schedule. The author also
learned that this directive was a mech
anism used by the owner to direct extra
work (which absorbed the cost and
time savings the contractor had
achieved to date and inflated the proj
ect cost and extended the project time)
thus lessening the chances of the con
tractor achieving the award fee. If a di
rective like this is provided by the
owner, the contractor should recognize
this as an early warning sign of poten
tial claims and disputes. Virtually any
type of claim may result from this sort
of action.

pute Avoidance Actions: If given
such a directive the contractor
should request that the directive
be put in writing by the owners
project manager or executive. If
the owner fails to do so, the con
tractor ought to document the di
rective by writing a letter to the
owner repeating the directive;
stating the date upon which the di
rective was given; and asking the
owner to confirm the directive in
writing. Whether the owner con
firms the directive or not, the con
tractor should keep and distribute
meeting minutes, submit written
RFIs and document the responses
in written form and provide all con
tractually required notices in writ
ing and as specified in the contract.
If the owner continues to object,
the contractor should remind them
of the unchanged contract require
ments.
Owner Advises Well Take Care of This
at the End of the JobMany owners
are loathe to grant time extensions
and/or pay impact costs while the proj
ect is in progress. Owners who take this
approach generally claim that they
want to deal with real, documented
24
damages, not speculative projected

damages. What they fail to realize or
acknowledge is that impact damages
are real and are paid by the contractor
on a daily basis so the refusal to deal
with impact damages on an ongoing
basis harms the contractors cash flow.
Such owners also fail to understand
that contractors need to protect them
selves against the potential imposition
of liquidated or late completion dam
ages and, thus, may accelerate the
work to avoid the imposition of late
completion damages. When an owner
asserts this position, this is an early
warning of potential claims and dis
putes. The most likely claims growing
from this scenario of lost productivity
damages and constructive acceleration
claims [32].

pute Avoidance Actions: To pro
tect themselves, contractors must
adhere to the written notice re
quirements of the contract at all
times and in all situations. As soon
as notice is provided to the owner
of any event, contractors need to
open new job cost accounts in
order to accrue all related costs to
the event. Likewise, contractors
should include a new activity re
lated to the event in the current
project schedule. The new sched
ule activity should be connected to
a logical predecessor activity or ac
tivities and its end date should be
allowed to float free until the event
has past. At that point, the sched
ule activity should be connected to
appropriate follow on activities
(successors) on the schedule. This
process allows the contractor to
prepare a schedule delay analysis
to determine whether the event
impacted the critical path or not.
Even if the event did not impact
the critical path, this process will
track the consumption of float
within the schedule such that later
delays can be proven.
Negative Cost TrendsContractors

must employ a robust cost control sys
tem on each project to protect them
selves [8]. At least monthly, all job cost

accounts on the project should be up
dated. Each account should be trended
to see if the costs associated with that
account are tracking the estimate, or
are overrunning the planned cost. If the
trend for one or more cost accounts is
overrunning, the individuals responsi
ble for that account should be queried
as to what is causing the potential over
run. Additionally, project controls per
sonnel should prepare an estimate at
complete for the entire project to as
certain the net effect of all trends. If
there are multiple potential negative
trends and/or the projects estimate at
complete indicates a potential cost
overrun, the contractor needs to take
this as an early warning sign of poten
tial claims and disputes. The types of
claims growing from this type of situa
tion will be defined by the causes of the
negative trends.

tractor needs to examine each cost
account showing a negative trend
and determine causation. If the
negative trend is being caused by
something the contractor, or one
of their subcontractors, are re
sponsible for (i.e., bad bid, material
cost increases, lower than planned
labor productivity, etc.) then the
contractor needs to create a plan
to reverse the negative trend and
execute to this plan. On the other
hand, if the negative trend is being
caused by something for which the
owner is liable, the contractor
must prepare and submit timely
written notice(s) to the owner and
begin preparing a change order
proposal or claim submittal.
Lack of Reasonable Evidence Concern

ing Financial ArrangementsIf the
contractor is performing work under a
FIDIC contract and has any concerns
about the owners ability to finance and
pay for the entire project, the contrac
tor has the right to request reason
able
evidence
that
financial
arrangements have been made and are
being maintained which will enable the
employer to pay the contract price in

accordance with Clause 14 [Contract
Price and Payment] [14, 15].

pute Avoidance Actions: Pursuant
to this clause, the owner (em
ployer) has 42 calendar days to
provide the requested reasonable
evidence. The failure of the owner
to do so may result in a number of
follow on actions. If the em
ployer fails to comply with Sub
Clause 2.4 [Employers Financial
Arrangements] the contractor
may, after giving not less than 21
days notice to the employer, sus
pend work (or reduce the rate of
work) unless and until the contrac
tor has received reasonable evi
dence [16]. Continuing, The
contractor shall be entitled to ter
minate the contract if: (a) the con
tractor does not receive the
reasonable evidence within 42
days after giving notice under Sub
Clause 16.1 [Contractors Entitle
ment to Suspend Work] in respect
of a failure to comply with Sub
Clause 2.4 [Employers Financial
Arrangement] [17]. Thus, there is
a clear 105 calendar day process in
place to obtain satisfactory evi
dence the owner has the where
withal to pay for the project or the
contractor may withdraw from the
project. During this period, a con
tractor is well advised to notify and
seek guidance from their own legal
counsel and, perhaps, their surety.
Owner Unreasonably Withholding Is

suance of the Certificate of Substantial
CompletionSubstantial completion
(sometimes referred to as mechanical
completion) is that point in the project
where work is sufficiently complete
such that the owner can begin using the
project for its intended purpose. That
is, unless the contract documents pro
vide a more specific or detailed defini
tion. Substantial completion is also
when liquidated or late completion
damages cease, unless the contract
specifically states otherwise. Typically,
construction contracts require the con
tractor to file a notice of substantial

completion. Upon receipt of such no
tice, the owner is generally required to
inspect the work. If the owner agrees
the work is substantially complete, the
owner is generally required to notify
the contractor in writing to this effect.
This written notice is often referred to
as a certificate of substantial comple
tion. If the owner is unreasonably with
holding issuance of the certificate of
substantial completion (i.e., for no
stated reasons at all or for very flimsy
reasons) then this is an early warning
sign of potential claims and disputes.
The type of claims growing out of this
situation will generally revolve around
constructive changes and project delay.
The type of disputes likely to arise will
resolve around a substantial punchlist,
including items the contractor does not
believe are in the scope of work.

pute Avoidance Actions: In order
to avoid such lastminute project
disruption, a contractor should
start working with the owner staff
sometime prior to substantial com
pletion to have them perform pre
liminary substantial completion
inspections on a floor by floor or
system by system basis. If this can
be arranged and punchlists pro
vided after each preliminary in
spection, legitimately incomplete
work can be completed before the
final inspection. This will help avoid
major project delay and disruption.
In any event, whenever the owner
provides the contractor with a
punchlist, it must be carefully ex
amined to determine that all al
legedly incomplete work items
are truly within the scope of work.
If some are not, the contractor
should provide prompt written no
tice of change. Should the owner
demand the contractor complete
the disputed work items, the con
tractor should perform with work
under written protest, keep track
of all time and cost impacts, and
file a claim when the disputed
work is complete.
Receipt of Cure Notice or Default No

tice from OwnerShould the owner
send a cure notice or show cause notice
to the contractor (either of which is a
precursor to a default termination) this
is a clear warning sign of a large dispute
in the making. The claim and dispute is
likely to be one of wrongful termina
tion.

pute Avoidance Actions: Upon re
ceipt of a cure notice, the
contractor should immediately
confer with their legal counsel and
seek their advice. Depending upon
their advice, the contractor may
also need to provide notice to their
surety. The contractor needs to ex
amine the claimed contract
breaches to determine whether
they actually breached the con
tract. Additionally, each alleged
breach should be examined to de
termine whether the owner
caused, in whole or in part, the al
leged breach. If it is determined
that the owner is at least partially
responsible, the owner may not
have clean hands and thus may not
be able to terminate the contractor
for default. The results of all such
internal examinations must be pro
vided to and discussed with legal
counsel. The contractor at this
point, should place themselves in
the hands of their legal counsel,
following their advice carefully so
as to minimize the damage from
this type of claim.

Field Issues
Multiple Holds on Drawings or
WorkContractors tend to assume
that once they are in the field perform
ing work, the design effort is complete.
It is the authors experience that this is
not always true. For example, the au
thor was involved with the construction
of a courthouse in the Midwest. The
work was speeding toward an on time,
in budget completion with a minimum
of change orders. A few weeks before
project completion when interior fin
25
ishes were nearing completion the

chief judge toured the building and
ended up putting a hold on some 15
percent of the rooms in the project.
These were all rooms for use by defen
dants and their attorneys during trials.
The complaint relayed to the contractor
by the contracting officer was that the
judge was extremely upset that the
interior finishes in these spaces were
equivalent to the finishes in spaces
used by prosecutors and judges. He
found this unacceptable even though
the interior finish schedules had been
approved more than two years previ
ously and were unchanged. Should
something like this happen on a proj
ect, this is an early warning sign of
pending claims and potential disputes.
The typical claims are likely to be
change and delay claims.

as a hold notice is provided the
contractor must provide a written
notice of potential delay. A hold
notice under some contracts is
similar to a directed Suspension of
Work on many projects but is typi
cally not accompanied by all the
paperwork that accompanies sus
pension orders. Again, and as
noted previously, the contractor
needs to open new job cost ac
counts to accrue the cost damages
growing from this action and add a
new schedule activity (or more
than one if necessary) to track the
potential delay and/or the con
sumption of float within the sched
ule. Once the holds are released,
the contractor should complete
the documentation, prepare and
submit a claims for cost and/or
time, as appropriate.
Lack of Responses to RFIsAs noted

earlier an RFI is a communications ve
hicle whereby the contractor asks a
question and receives a response. As
suming this is a legitimate RFI on the
contractors work, at least on the por
tion of the project where the question
arose, the work is probably stopped or
at least slowed down [22]. The longer it
26
takes for the owner or their represen

tatives to respond, the greater the like
lihood of a delay or constructive
suspension of work claim. Thus, the fail
ure to respond to RFIs should be con
sidered an early warning sign of claims
and dispute.

contract stipulates a turnaround
time for RFI responses then on the
day this time has expired the con
tractor should provide written no
tice of potential delay. If no such
time is contained in the contract
and the owner and contractor did
not negotiate a turnaround time
for RFIs at the outset of the project
or during an early partnering
meeting, the contractor should
provide written notice of potential
delay after a reasonable period of
time for a response has expired.
Research into the management of
the RFI process indicates that 10
working days should be a reason
able amount of time to respond to
most RFIs [22]. A new project cost
account code should be opened to
capture the impact costs (such as
demobilizing crew(s) from this area
of work to another and remobiliz
ing them back to this area once the
response is received). And, a new
schedule activity should be in
cluded in the current schedule
starting the date the RFI was sub
mitted and continuing to the date
when the response is received.
When all is said and done, these
actions will serve as the basis of
the damages in the claim to the
owner.
Owner Refusal to Acknowledge Differ

ing Site ConditionsMost construction
contracts contain a Differing Site Condi
tion (DSC) clause under which the
owner assumes liability for latent site
conditions in order to reduce contrac
tor contingencies at the time of bidding
(Sometimes referred to a Changed Con
ditions or Unforeseeable Physical Con
ditions) [9]. All such clauses require a
written notice of DSC as soon as a ma
terially different condition is encoun

tered and direct the contractor to cease
work in the area of the alleged DSC
until the owner has the opportunity to
investigate. Most such clauses require
the owner investigate promptly. Once
the owner makes their investigation it
is not at all uncommon for the owner
to simply advise the contractor to go
back to work. That is, a standard DSC
clause does not require the owner to
tell the contractor whether they believe
the condition is, or is not, a DSC before
directing them to return to work. In
most such cases, the contractor will
work their way through the condition
at their own expense. Obviously, to per
fect a DSC claim the contractor will,
among other things, have to document
the time and cost damages resulting
from the DSC. Thus, careful tracking of
time and cost is mandatory. However,
most owners will likely advise the con
tractor within a reasonable period of
time whether they believe the condi
tion is, or is not, a DSC. If the owner re
mains silent for some period of time on
their decision concerning the alleged
DSC, this is an early warning sign of
claims and a potential dispute.

pute Avoidance Actions: If this sit
uation occurs, the contractor
should formally write to the owner
seeking their final decision on the
DSC either under the disputes
clause or the DSC clause. If no de
cision is still forthcoming and the
contractor is working on a contract
that has established either a Dis
pute Resolution Board (DRB) or a
Dispute Adjudication Board (DAB)
the contractor can take the issue to
the Board and obtain a decision.
Alternatively, if the contract em
bodies a Project Neutral, Individual
Decision Maker, or an Early Neutral
Evaluation process the contractor
can seek their input on the issue
[6].
Unreasonable Disapproval of Contrac

tors Ordinary and Customary Means
and MethodsMany owners employ
standard specifications for their proj
ects changing them only occasionally.
And many contractors bid to the same
owners time after time. As such, con
tractors who have executed several
projects for the same owner using the
same specifications, gain a right of re
liance concerning the specifications. If
a contractor is working on a project for
an owner they have worked for previ
ously and, again, using the same speci
fications, have a submittal rejected
even though it is based on the contrac
tors ordinary and customary means
and methods used on previous proj
ects, this should be considered as an
early warning sign of claims and a po
tential dispute. The type of claim likely
to result would be a constructive
change claim.

submittal is rejected, or the con
tractor is directed to make sub
stantial changes to the submittal in
accordance with review com
ments, the contractor should re
view the response carefully. If it
looks like they are being directed
to make a change then a written
notice of change should be filed
with the owner. This notice should
be followed up with a meeting
where the contractor provides
documentation that what they
proposed on this project is exactly
what they did on several previous
projects, using the same specifica
tion. Unless there is some special
need for modified means and
methods, the owner should ap
prove the contractors submittal. If
there is a special need requiring
changed means and methods, the
contractor and owner can negoti
ate a change order using the con
tractors base bid for this piece of
work as the basis or floor for the
damages.
Over Inspection or Changes to Inspec

tion Criteria after Contract Award
Most technical specifications are based

on building codes or on recognized and
published industry practices. And,
many technical specifications contain
detailed inspection criteria so the con
tractor understands the standard their
work will have to meet in order to get
paid. However, at times the owners in
spection team may decide to use a dif
ferent inspection technique or
procedure after the project is awarded.
For example, the welding specification
may state that certain type of weld will
be inspected using the magnetic parti
cle technique and, after award of the
contract, decide to use ultrasonic test
ing in its place. ultrasonic testing is
more sophisticated and likely to find
much smaller welding flaws, thus neg
atively impacting welding productivity
[20].

the owner make a change to in
spection standards after contract
award the contractor, upon be
coming aware of this, should file a
written notice of change with the
owner. Subsequently, the contrac
tor should closely monitor the pro
ductivity of the activities impacted
by the change in inspection tech
niques. If a drop in productivity is
observed, the contractor needs to
document the loss of productivity
probably using the classic Meas
ured Mile technique [2]. Once the
issue is past, this data can be used
to prepare and submit a claim for
lost productivity and, perhaps,
delay.
Excessive Quantity VariationsIf the

contractor is working on a unit price
contract and the units vary excessively,
this is an early warning sign of claims
and a potential dispute.

pute Avoidance Actions: Once the
quantities start to vary, although
generally not specifically required
to do so, the contractor ought to
give notice of change to the owner
citing both the changes clause and
the quantity variation clause. The

contractor should document their
as bid quantities and track and
document actual quantities. The
contractor should also carefully re
view the quantity variation clause
to determine at what point (typi
cally expressed as a percentage of
the as bid quantities) they may
claim a quantity variation and how
such a variation can be calculated.
If the quantities vary because the
contractor encounters an entirely
different job or there is an unfore
seen need for an unusual construc
tion methodology then the DSC
clause may be employed in lieu of
the quantity variation clause [5,
11]. If it can be demonstrated that
the owners estimate was negli
gently performed or if owner is
sued change orders substantially
increase the estimated quantities
again, the DSC clause may override
the quantity variation clause when
it comes to pricing such variations
[24, 25]. And, material variations
on owner provided quantity esti
mates may become a Type 1 DSC if
they resulted from a differing site
condition [30].
Conclusion
This article highlights a large num
ber of early warning signs concerning
potential claims and disputes. This is
not an exhaustive list, certainly, but the
article lists many of the most common
early warning signs. Having said this the
author wants to reiterate a point made
earlier in the article. That is, the real key
to dispute avoidance is early recogni
tion of potential claims and prompt ac
tion on the part of both the owner and
the contractor to identify the issue and
work together to craft an acceptable
resolution based upon the terms and
conditions of the contract. If both par
ties focus on achieving project success
rather that positioning, then the likeli
hood of delivering a project on time
and in budget substantially increases.
27
REFERENCES
1.
AACE International Recommended

Practice No. 27R03, Schedule
Classification System, Revised No
vember 12, 2010, AACE Interna
tional, Morgantown, WV, Nov.
2010.
2. AACE International Recommended
Practice No. 25R03, Estimating
Lost Labor Productivity in Construc
tion Claims, AACE International,
Morgantown, WV, April, 2004.
3. Amadon, Amanda, Emily Federico,
Steve Pitaniello and James G. Zack,
Jr., Construction Scheduling Games
Revisited & Updated, Navigant
Construction Forum, Boulder,
Colorado, 2014.
4. Beisler, Scott A. and James G. Zack,
Jr., Ghost Schedules What, Why &
Whats the Risk?, Navigant Con
struction Forum, Boulder, CO,
March 2015.
5. Brezina Construction, Inc., ENG
BCA No. 3215, 751 B.C.A.
10,989.
6. Bult, Adam K., David W. Halligan,
Jonathan Pray and James G. Zack,
Jr. Delivering Dispute Free Projects:
Part III Alternative Dispute Reso
lution, Navigant Construction
Forum, Boulder, CO, June, 2014.
7. Construction Industry Institute,
Special Publication 233 Disputes
Potential Index, Disputes Preven
tion and Resolution Team, Con
struction Industry Institute, The
University of Texas at Austin, Feb
ruary 1995.
8. Construction Management Associ
ation of America, Cost Manage
ment Procedures, 2001 Edition,
McLean, VA.
9. Collins, Steven A. and James G.
Zack, Jr., Changing Trend in Risk Al
location Differing Site Conditions,
Navigant Construction Forum,
Boulder, CO, September, 2014.
10. Dougherty, Jason M., Nigel
Hughes, James G. Zack, Jr., The Im
pact of Rework on Construction &
Some Practical Remedies, Navigant
Construction Forum, Boulder, CO,
August 2012.
28
11. Dunbar & Sullivan Dredging Co.,

ENG BCA No. 8265, 732 B.C.A.
12,285.
12. Dyer, Sue, Partner Your Project,
Pendulum Publishing, Livermore,
CA, 1997.
13. Federal Acquisition Regulations
(FAR) 14.407, Mistakes in Bids.
14. FIDIC Federation Internationale de
IngenieursConseils (FIDIC) con
tract.
15. FIDIC SubClause 2.4, Employers Fi
nancial Arrangements, FIDIC Con
ditions
of
Contract
for
Construction for Building and Engi
neering Works Designed by The
Employer, 1998 Edition.
16. FIDIC SubClause 16.1, Contractors
Entitlement to Suspend Work,
FIDIC Conditions of Contract.
17. FIDIC SubClause 16.2, Termination
by Contractor, FIDIC Conditions of
Contract.
18. Galloway, Patricia D., Kris R.
Nielsen and Jack L. Dignum, Man
aging Gigaprojects: Advice from
Those Whove Been There, Done
That, ASCE Press, Reston, VA,
2013.
19. Goldhaber, Michael D., 2011 Arbi
tration Scorecard, american
lawyer.com/focuseurope, Summer
2011.
20. Hayes, Charles, The ABCs of Non
destructive Weld Examination,
NDTnet, Vol. 3, No. 6, June 1998.
21. Heraclitus, On Nature, 6th Century
BCE.
22. Hughes, Nigel, Christopher L. Nut
ter, Megan Wells and James G.
Zack, Jr., Impact & Control of RFIs
on Construction Projects, Navigant
Construction Forum, Boulder, CO,
April 2013, pgs. 21 28 for an ex
ample.
23. International Partnering Institute,
Collaborative Construction Les
sons Learned for Creating a Cul
ture of Partnership, Livermore, CA,
June, 2008.
24. John Murphy Construction Co.,
AGBCA No. 418, 791 B.C.A.
13,836.
25. Leavell & Co., ENG BCA 3492, 752
B.C.A. 11,596.
26. PwC, Resolving Capital Project Dis

putes: Adopting a Business Case
Approach, September 2014.
27. Stephenson, Ralph J., Project Part
nering for the Design and Con
struction Industry, John Wiley &
Sons, Inc., New York, 1996.
28. Sweeney, Neal J. and Peter C.
Brown, Coordination Responsibili
ties on MultiPrime Projects, Fed
eral Publications, Inc., Washington,
D.C., September 1998.
29. The Illustrated London News, April
12, 1856.
30. United Contractors v. United
States, 177 Ct. Cl. 151, 368 F.2d
585 (1966).
31. Zack, James G. Jr., Trends in Con
struction Claims and Disputes, Nav
igant Construction Forum,
Boulder, CO, December, 2012.
32. Zack, James G. Jr., Constructive Ac
celeration A Global Tour, Navi
gant
Construction
Forum,
Boulder, CO, 2011.
ABOUT THE AUTHOR
James G. Zack Jr.,

CFCC is with Navi
gant Consulting, Inc.
He can be contacted
by sending email
to: jim.zack@navigant.com
FOR OTHER RESOURCES GOTO:
web.aacei.org/resources/publica
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Do an advanced search by au
thor name for an abstract listing of
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area and retrieve a listing of all avail
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terest. AACE also oers prerecorded
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TECHNICAL ARTICLE
Essential Specification Guidelines
for Oracle Primavera P6

Charlie Jackson, PSP and
Hannah E. Schumacher, PSP
Abstract: It is curious that while some scheduling specifications mandate the

use of Oracle Primavera P6 scheduling software for the project, many of
these same scheduling specifications do not contain guidelines for configu
ration of the scheduling software. Oracle and Primavera are registered trade
mark of Oracle Corporation and/or its affiliates in the United States and/or
other countries. Proper P6 configuration is essential to manage the specific
project requirements. The software can be configured in various ways, in
cluding but not limited to activity types, resources, costs, calendars, coding
and even scheduling calculations. Without the guidelines or standards, each
stakeholder may get a different result when viewing the schedule in the na
tive scheduling format especially if they are using their own database sys
tems. This can cause confusion and review delays for the various
stakeholders of the project when submitting and reviewing the various
schedule submittals required by contract. The authors will present their rec
ommended guidelines for the configuration of Primavera P6, to ensure
consistency. They will demonstrate the benefits of an enterprise setup and
the importance of establishing scheduling specifications and checklists to
support that setup. This article was first presented at the 2016 AACE Inter
national Annual Meeting as PS.2191.
his article discusses the ne

cessity of schedule specifica
tions to specifically address
the use of one of the indus
trys leading scheduling applications,
Oracle Primavera P6. The article at
tempts to alleviate ambiguity within
scheduling specifications as they relate
to the contractors setup and manage
ment of the project schedule while
using the applications ability to manage
the owners overall program of sched
ules. This article also attempts to en
hance the owners abilities to
understand, and to approve and/or par
ticipate in the scheduling process as it
relates to Primavera P6. [1, p. 1]
30
The goals in writing this article are

to not only assist the owner in knowing
what they can and should expect from
the contractors use of Primavera P6,
but also to alleviate the potential of an
ambivalent specification that does not
clearly define the owners expectations
for the project schedule as it relates to
the scheduling software.
The reader of this article should
understand that its authors make
suggestions based on realworld
experience and based on their
knowledge of Primavera. These
suggestions do not promise to create a
successful schedule or management
system for reviewing the schedule.
However, they may prove beneficial to

those who develop the projects
schedule requirements, those who
review the project schedule, and to
those who develop and maintain the
project schedule.
When
discussing
schedule
specifications, it is understood that
there are several factors that may
impact the degree to which the
specifications are detailed, including
but not limited to project scope and
complexity, project type, cost, and in
some cases differing attitudes toward
the project schedule. As described by
Paul Levin in his paper, Scheduling
Specifications for the 21st Century,
some owners may take a handsoff,
open approach in assuming the
contractors capabilities to both
understand and manage the schedule.
The scheduling specifications reflect
this assumed trust in their simplicity
and generality. The opposite approach,
or closed specification, is a greater
level of detail, dictating not only the
scheduling application but additional
considerations when developing the
schedule. [1, p. 2] This article speaks to
the later of the two, to the more
complex project in which the owner
wishes for a more detailed schedule;
the owner or reader may decide
whether the suggestions laid out in this
article apply to their projects as
necessary.
This article addresses assumptions

that are made in managing a complex
project schedule, namely the
submission of an electronic schedule
file in native software format by the
contractor. The authors also address in
detail two types of schedule
requirements: those that relate
specifically to Primaveras unique
functionality, as well as to more
general requirements and how they
are achieved using Primavera.
From the initial stages of schedule
development to project closeout,
scheduling specifications should
recommend that the owner and the
contractor maintain an open line of
communication to discuss schedule
management expectations. [2, p. 6]
This
line
of
communication
recommendation underscores the
importance for both parties to
understand the required tools for
managing the schedule. This
communication based on knowledge
creates
an
atmosphere
that
encourages adherence to the
specification guidelines and to the use
of Primavera to its maximum potential
for both contractor and owner.
Primavera has basically two
format types in which project
information can be exported from the
contractors system, an XER format or
an XML format. Once submitted, the
selected format choice can impact the
data imported into the owners
system, and with the latest versions of
Primavera, can expedite the import
process.
Due to the complexity of the
Primavera system and the general
standards and importance that is
placed on the project schedule, this
article focuses on specific scheduling
specifications to advance the owners
use of Primavera in managing
individual contracts while maintaining
the organizations overall program or
initiative.
Assumptions in This Article

As previously mentioned, the
premise of this article assumes the
owner expects an initial schedule
submittal as well as frequent
submissions of the project schedule to

measure
project
performance.
Electronic file submissions in native
format of the schedule allow for more
detailed schedule review of the
contractors plan to complete the
scope of work as defined by the
contract.
This premise also assumes that
the contractor has Primavera P6 to
develop and maintain the project
schedule and that the owner and/or
owners representative has Primavera
P6 to review the schedule. And
although each organization has a
licensed copy of Primavera P6 it is
also assumed that their structures
within the P6 system or database(s)
are unique based on each
organizations
needs
and
requirements. This ability to manage
an organizations unique requirements
is one of Primavera P6s greatest
features; however, as cited in the panel
discussion, A New Scheduling
Paradigm Challenges Implementing
Primavera P6, this enterprise
management feature can also create
issues when transferring data from one
organization to another organizations
unique environment. [2, p. 6] A
standard must be defined such that the
transfer of data is a seamless as is
possible. It is this standard that is
outlined in the contract scheduling
specifications along with the rules and
guidelines
of
Critical
Path
Methodology (CPM).
In reviewing the schedule
specifications that require Primavera
P6, this article focuses on two types
of requirements: those that relate
specifically to Primaveras unique
functionality to allow for seamless data
transfer and those that are more
general, relating to industry standards
and best practices.
Schedule Specication
Requirements:
Primavera Requirementsbased
on application functionality and
the owners specific use of
Primavera (e.g., adherence to data
naming conventions, use of
project level data, exclusion of

global data, etc.)
General Requirementsbased on
the owners schedule standards
and on the projects scope and/or
based on industry standards (e.g.,
acceptable logic considerations,
acceptable activity duration
restrictions, phasing constraints,
etc.) which can affect project data,
including dates and criticality.
This article focuses specifically

with meeting the first requirement
type, Primavera requirements, as it
may not only affect project data but
may also affect management of the
project schedule within the owners
overall program. This article also
discusses the second requirement
type, the general or standard schedule
requirements, and how Primavera
applies these standards.
Global vs. Project

As
mentioned
previously,
Primavera P6, using database
technology, provides an organization
the ability to organize and report
general project data, as well as
program data across the enterprise.
Primavera provides both enterprise or
global data functionality that can be
incorporated at various levels of data
and across multiple projects to
categorize and catalog data for
enterprise reporting. Primavera also
provides project level data that is
unique to a specific project within the
overall database of projects.
The software by nature is an
enterprise scheduling system, meaning
that schedule data can be configured
to provide schedule standardization
and reporting [2, pp. 45]. Each
organization, in setting up P6, can
develop its own standards for
reporting, schedule development, and
resource management. To accomplish
this
crossproject
functionality,
Primavera provides global data that
can be used to categorize projects and
to assign to the projects individual
activities giving the organization the
tools required for standardization and
consistency to manage the enterprise
31
projects. Figure 1 identifies the

following data types within Primavera
P6:
Global or Enterprisethis type of

data can be assigned to multiple
projects within the database and
is
used
for
enterprise
management and reporting (e.g.
owners managing a program of
projects).
Global and Projectthis type of
data has both global or enterprise
options, as well as project specific
options. Care should be taken to
use only the project level options
when
developing
and
submitting/receiving schedule
files.
Projectthis type of data is
contained within a single project
file.
However, as mentioned, all

organizations do not have the same
requirements for managing their
projects nor the same understanding
of Primavera. The contractors use of
certain global data may not coincide
with and may even conflict with the
owners use of global data. Therefore,
the inclusion of global data in the
contractors submitted file should be
discouraged to prevent importing
extraneous data into the owners
system or the overwriting of owner
data and possible data override of
other projects within the owners
system. The intent of scheduling
specifications, as they relate to
Primavera, is not to dictate the
contractors means and methods in
managing its work, but to create and
maintain a standard by which the
project stakeholders can report and
analyze the project schedule.
Figure 1 Primavera P6 Data Types

projects within the owners system can
create confusion once the project file
has been imported into the owners
system. To avoid this confusion, it is
suggested that the owner enforce a
consistent naming convention for
various project level data (i.e., activity
codes and calendars) as well as global
data (i.e., resource data) that in some
cases must be imported.
Primavera P6 uses the Project ID
field (a 40 character, unique identifier
of the project within the database) as
well as the project name. The
incorporation of the Project ID or
project name can be used within
project level data ids and descriptions
to identify the specific project. It is
suggested that the owner require the
contractor to incorporate a project
identifier within the following three
data fields as shown in Figure 2.
Consistent Naming Conventions

Although the owner can dictate
that the submission of global data by
the contractor is unacceptable, certain
data that is both global and project,
can still be a source of confusion to the
owner when reviewing the schedule.
Duplicate naming conventions of
project level data across multiple
32
Project Calendar Descriptionsas

calendars in Primavera P6 have
both global and project level
functionality including the project
identifier in the project calendar
description distinguishes it from
other calendars, both global and
those used by other projects.
Project Activity Codes as activity
codes in Primavera P6 have
project as well as global and
enterprise
functionality
incorporating
the
project
identifier in the project activity
code
description
alleviates
confusion with global and
enterprise activity codes.
Resources when used, resources
within Primavera P6 are
inherently global and as such
project required resources must
be distinguished from other
resources assigned to other
projects as well as those which are
used as global resources.
Associating the project identifier
in the resource id creates a unique
identifier that distinguishes the
projects resources from others
within the same database. All
resource associated options
within Primavera (i.e. roles,
resource curves, cost accounts,
resource codes, resource shifts,
etc.) are global, and if allowed by
the owner to be included in the
contractors submittal, should also
incorporate the same project
identifier in their descriptions to
alleviate confusion and data
conflicts.
Employing
a
consistent,
standardized naming convention is key
to identifying project specific data
when viewing, reporting, or comparing
data across multiple projects. It also
alleviates confusion with the use of
Figure 2Data in Which to Use the Project Identier

existing
global
data
naming
conventions. And in the case of
resources, it eliminates data from
being overridden.
Although Primavera P6, version
15.x, allows for up to 40 characters in
the Project ID field and in the Resource
ID field, it is recommended to consider
earlier versions of Primavera (that
restrict these fields to a maximum of 20
characters) which may be used by
either the owner or the contractor.
Importing Outside Data

Using Primaveras capability of
maintaining multiple project schedules
within a single database, the owner
should require that all schedule data be
kept at the project level (i.e. no global or
enterprise data should be accepted
without the prior consent of the
owner). The only exception to this
requirement would be for the inclusion
of required resources (inherently global
within Primavera) and one global
calendar to be assigned to the
resources (to be discussed in detail).
When exporting data, the
contractor has two format choices in
which the schedule file can be created.
The format selected can impact the

data that is imported into the owners
system as well as the process for
importing. Primavera provides two file
formats in which schedule data can be
transferred: an XER format and an XML
format. In using an XER file format,
Primavera restricts the users ability to
limit the global data imported but
imports all data (global and project
level) associated with the schedule file.
In using an XML file format, only project
level data is imported. The owner can
specify whether or not to import global
data associated with the file. In version
15.x using the XML format, the file that
the contractor exports from their
system can be scrubbed prior to the
import, and global level data (other
than resources) can be changed to
project level data. Using either format,
caution should be taken that the
desired data is imported into the
owners system. Garbage out equals
garbage in.
It is recommended that, prior to
version 15.x, both the owner and the
contractor maintain multiple databases
to manage the import process: one to
manage active/production project
schedule files and the other to be used

as an intermediary database in which
external data is imported and checked
for the inclusion of global or erroneous
data prior to importing into the
production database. Once data is
imported into the production database
it can be difficult and sometimes
impossible to scrub.
Production Database used to

review the feasibility of the
contractors schedule for work
completed and work planned; used
to review adherence to second and
third criteria or category of
schedule review
Intermediary Databaseused to
review the submitted data to verify
data compliance; used to review
adherence to exclusion of global
data and naming conventions prior
to import into production database
The owner could choose to scrub

the global data from the contractors
submitted schedule following the
import into the intermediary database
or, by utilizing version 15.x, during the
import process. However, care should
33
be taken when scrubbing data from a

submitted schedule file as the altering
of the data may have an undesirable
effect on the schedule as a whole. It
should be the contractors responsibility
to maintain the schedule according to
the
schedule
specification
requirements. The owner should not
lightly modify what has been officially
submitted by the contractor, but should
maintain the schedule file as it was

submitted.
Therefore,
it
is
recommended that the owner maintain
multiple databases for schedule
submission and management a
production
database
(possibly
multiple) for managing project schedule
files and an intermediary database for
the initial import of the submitted
schedule files, to review potential data
issues. Employing an XML format for

importing data in version 15 can be
used to view data prior to completing
the import but should not be used to
alter the submitted file. Table 1 lists the
import options for global data using an
XML file versus an XER file. All
remaining global data not shown in this
table is imported.
Primavera P6, version 15.x,
provides the user options for reviewing
and scrubbing an XML file format.
Figure 3 depicts the steps involved to
review and or modify the file during an
XML import.
Importing Resource Data
Table 1 XML Versus XER Global Data
Figure 3 XML Steps for Importing
34
As a rule, Primavera global data

should not be imported unless the
project or program requires such an
import. There are however a couple of
exceptions to this rule that cannot be
avoided and are imported with each
schedule submission. The first is the use
of Primavera resources to track project
labor, material, equipment, costs, etc.
Resources are inherently global within
Primaveras enterprise system to
provide organizational tracking of a
companys resources. However, when
the project schedule requirements
focus on generalized tracking of project
specific labor, materials, costs, etc. this
enterprise feature can create
frustration
for
both
the
Figure 4 Task Dependent Versus Resource Dependent Activities

scheduler/reviewer, as well as the
Primavera administrator.
The second exception is the use of
a global calendar which is assigned, by
default, to resources within Primavera.
Based on the basic purpose of resource
loading, resources should identify and
support what is required (costs and
labor/equipment/materials) to perform
the scope of work defined within the
project.
As resources are global so are their
assigned calendars. If the owners
interest in a resource loaded schedule is
to have the contractor demonstrate
their plan to complete work for a given
activity and not as a means of
calculating activity dates the following
should be considered. To minimize data
conflicts and to encourage consistency,
the contractor should create a Resource
calendar, using an owner identified,
standard naming convention. This
global resource calendar should be
assigned to all of the projects
resources. The resource calendar
should not include holidays or non
work days, and it should not be
assigned directly to any activity as its
base calendar. Resource IDs and any
associated resource curves should
identify the project specific indicator to
alleviate data conflicts within the
owners database.
As mentioned, if resources are
used to quantify the means to complete
an activitys scope of work and not to
automatically calculated the activitys
duration, this is achieved within
Primavera by assigning the activity type
to Task Dependent the activity
Figure 5 User Preferences for Units Format

durations effect on the activity dates
are based on the base calendar
assigned to the activity. The alternative
is to allow the resource calendar(s) and
resource availability to determine the
activitys dates, see Figure 4.
User Specic Settings

Aecting Resource Costs
When accessing and reviewing
schedule data within Primavera P6,
each user can manage his or her own
settings which may affect how the data
is seen and entered (i.e. durations
viewed and/or entered in days or

hours). These user settings or User
Preferences affect the users experience
throughout the database and are not
based on a projectbyproject basis.
As
mentioned
previously,
Primaveras base units for both
durations and resource units are hours.
To avoid erroneous resource cost
calculations, the user should set their
preferences to enter and view resource
costs per unit (other than material) in
hours as shown in Figure 5. As
mentioned previously, costs are by
35
default linked to the unit of the

resource. Without the appropriate
settings, users may choose to enter
costs based on the unit of a day (i.e.
one dollar per day or costs per day).
For an 8hour day, the one dollar would
equal $0.125 per hour. Primavera
rounds to the nearest hundredth or, in
this example, $0.13. And although
when entering the data into the
schedule may provide the correct
number to the contractor, when that
data is imported into the owners
system, Primavera multiplies the $0.13
by 8 for a value of $1.04 per day.
Calendars and Their Eects

on the Schedule
Calendars are used in scheduling
project activities to calculate when
specific activities can and cannot
happen. Calendars not only contain the
standards for the workweek (i.e.,
Monday through Friday, Saturdays and
Sundays are nonwork days) but they
should also contain the contractors
and owners specified exceptions to
the workweek (i.e., holidays).
Global calendars should not be
used by the contractor to develop the
project schedule, unless the owner
consents to their use. Project calendars
(created from global calendars) should
be used to develop and manage the
project schedule. Also, the project
calendar should not inherit holidays or
exceptions from its originating global
calendar or any other global calendar
as shown in Figure 6. A linked global
calendar is imported with the
submitted schedule file. As mentioned
Figure 6 Project Calendars Should Not Inherit Global

Calendar Settings
earlier, to encourage consistency, it is
recommended that all project
calendars include the project specific
indicator prefixed to the calendar
name.
Primavera allows for the use of
multiple project calendars to be used
in the project schedule (i.e. Project XYZ
5 Day with Holidays assigned to
standard work activities, Project XYZ
7 Day no Holidays assigned to curing
activities). Within Primavera an
activitys start and finish is not limited
to the beginning of the day or the end
of the day. Primavera calculates project
times to the minute and uses hours as
a base unit for times. The software
calculates the activity Start/Finish
dates based on the activitys assigned
calendar, as well as the logical
restrictions
of
the
activitys
Figure 7 Diering Calendar Times Aect Schedule Dates
36
predecessor(s) and the predecessor(s)

start or finish dates.
If the schedule contains multiple
calendars with differing hours per day
or differing start/finish times, the
assigned activity and/or its successors
start/finish times can occur during the
course of the same work day (based on
when the predecessors finish time) as
shown in Figure 7. An activitys
duration (although entered in whole
days) may result in partial working
days. And an activity which may have
1day duration may span multiple
dates.
To avoid such occurrences, a
common calendar base time should be
required for all project calendars such
as eight consecutive hours per day
unless approved by the owner. This will
Figure 8 Conicting Calendar Work Days and Time Periods Aect Dates
provide duration and date consistency
across the project schedule.
Workweeks and time periods
should also be defined using the same
base time (e.g., 8 consecutive
hours/day) unless exceptions are
approved by the owner. Primavera P6
allows the scheduler to not only
determine the number of hours
available for any given workday but to
also decide how many hours equal one
day. These should be set to the same
value
unless
the
scheduler
understands and effects these settings
have on the schedule and unless
approved by the owner. Figure 8 shows
what can happen when the calendar
workday hours do not equal the hours
per time period. The activity and its
successors can have start/finish times
that result in partial working days.
Additional Activity Level Settings

The standard definition of activity
durations is measured in whole days
(with possible maximum/minimum
duration requirements set by
scheduling specifications used to
encourage an appropriate level of
Figure 9 Schedule Options Window
37
Conclusion
Table 2 Schedule Options, Their Explanations and Suggestions

detail for maintaining the project
schedule) for all construction activities
unless exceptions are consented to by
the owner. Scheduling specifications
may also reference the frequency of
submitted, progressed schedules and
their requirements, including the Data
Date and its role in updating the
project schedule. The owner should
require that the contractor use
Remaining Duration to update
progressed activities and not Percent
Complete. As mentioned, Primavera
calculates times based on minutes and
using percentages to update actual
performance can lead to partial days
(e.g., 30 percent of a 4day duration
activity = 1.2 days completed and 2.8
days remaining). Remaining duration
should be entered in whole days (or
38
periods) based on the

requirements for durations.
project
Schedule Requirements
The second type of specification
relates to more general practices of
Critical Path Methodology (CPM).
These standards can be set on a
projectbyproject basis and are
applicable to the majority of
scheduling systems used today. The
schedule developed using Primavera
P6 Schedule Options, as shown in
Figure 9, should be reviewed based on
the incorporation of these standards.
Schedule calculation rules for a
project within Primavera are defined
within the schedule calculation
options, listed in Table 2.
As more owners move to leverage

technology implementing project
management applications such as
Oracle Primavera P6, they need a
process that supports project centric
capabilities while not sacrificing
enterprise program management.
Project schedule specifications that
detail schedule requirements can be
used to support the owners goals. To
develop and communicate these
specifications, owners must first
understand
the
fundamental
differences between Primavera global
and project level data. They must then
dictate consistent naming conventions
that align with their inplace enterprise
systems and must consider the
ramifications of importing external
data and the options they have using
Primavera.
They
should
be
knowledgeable in the Primavera
nuances of schedule data (i.e.
resources and calendars) and their
unique attributes in the enterprise
environment. And lastly, the owner
should be familiar with the schedule
options that the contractor uses to
calculate schedule dates. This level of
understanding of Primavera P6 and
detailed delineation of scheduling
requirements should provide the
owner the ability to communicate and
manage the project within their overall
program.
REFERENCES
1.
2.
3.
Levin, Paul, Scheduling Specifications

for the 21st Century, AACE
International manuscript 21312.
Morgantown, WV, 2006.
Ross, Thomas I., Julie K. Owen,
Bryan Payne, Joanne Schultz and
Brian Criss, "Panel Discussion: 'A
New Scheduling Paradigm Challenges
Implementing Primavera P6',"
2011.
Tamboli, Devdas K. Julie K. Owen
and A. A. A. Alkuwari, "Schedule
Update Analysis: Retained Logic
versus Progress Override," 2013.
ABOUT THE AUTHORS
Charlie Jackson, PSP,

is with Project Life
Span. He can be
contacted
by
sending email to:
cjackson@projectlifespan.com
Hannah E. Schumacher,
PSP, is with Hill
International Consulting,
Inc. She can be
contacted by sending
email to:
heschumacher@q.com
FOR OTHER RESOURCES GOTO:

web.aacei.org/resources/publica
tions
Do an advanced search by au
thor name for an abstract listing of
all other technical articles this author
has published with AACE. Or, search
by any total cost management subject
area and retrieve a listing of all avail
able AACE articles on your area of in
terest. AACE also oers prerecorded
webinars, an Online Learning Center
and other educational resources.
Check out all of the available AACE re
sources.
AACE
International
Annual
Meetings
2017 Annual Meeting

June 11 14
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Orlando, Florida, USA
2018 Annual Meeting

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San Diego, California, USA
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THEJOURNALOFAACE INTERNATIONAL

EARLY WARNING SIGNS OF

30 Essential Specification Guidelines for

AACE International Board of Directors

COST ENGINEERING JANUARY/FEBRUARY 2017

Vol. 59, No.1 January/February 2017

Charles E. Bolyard, Jr. CFCC PSP FAACE

Julie K. Owen, CCPPSP

James Jim E. Krebs, PE CCP FAACE

Larry R. Dysert, CCP CEP FAACE Hon. Life

1265 Suncrest Towne Centre Dr

AACE International The Authority for Total Cost Management

Policy Concerning Published Columns, Features, and Articles

COST ENGINEERING JANUARY/FEBRUARY 2017

Early Warning Signs of

Abstract: It is axiomatic that claims and disputes on projects do not appear

onstruction projects over the

is approximately $34.3 million [26]. A

COST ENGINEERING JANUARY/FEBRUARY 2017

contractor. Contractors and their legal

Early Warning Signs

Early Warning Signs for Owners

Recommended Claims and Dis

Lack of Biddability and Constructability

quently find themselves in an unenvi

Recommended Claims and Dis

and mitigate the potential for con

Recommended Claims and Dis

COST ENGINEERING JANUARY/FEBRUARY 2017

event the design professional is

Recommended Claims and Dis

derway. End of the job change or

Recommended Claims and Dis

COST ENGINEERING JANUARY/FEBRUARY 2017

new project they should consult

Recommended Claims and Dis

internal resources to review the

Much to the owners surprise, the con

Recommended Claims and Dis

Ineffective Project ControlsOwners

Scheduling, schedule monitor

Cost management, including

The failure to have an effective

Recommended Claims and Dis

Inadequate Change Management Pro

COST ENGINEERING JANUARY/FEBRUARY 2017

changing needs, etc. Change is in

Recommended Claims and Dis

Bid Amount Substantially Below All

from the low bid. This approach ignores

Recommended Claims and Dis

After the opening of bids,

If the owner follows this course of

COST ENGINEERING JANUARY/FEBRUARY 2017

Early Warning Signs for Contractors

Recommended Claims and Dis

Apparent Lack of PreBid Scheduling

bid assume owners have performed

Recommended Claims and Dis

Insufficient Disputes ClauseAnother

arbitration or litigation in a court of

change orders and constructive

Recommended Claims and Dis