Aba division 4 presentation outside consultants handling of change orders (8 27-13)

Delivering Advice:Delivering Advice:Competing Delivery MethodsCompeting Delivery Methods

for Contemporary Project Change for Contemporary Project Change Order AnalysisOrder Analysis

The PanelistsThe Panelists

Michael HagerMichael Hager– Senior Counsel, AECOMSenior Counsel, AECOM

Terry YeagerTerry Yeager– Director, Berkeley Research GroupDirector, Berkeley Research Group

Ben Patrick, moderatorBen Patrick, moderator– Partner, Wilson ElserPartner, Wilson Elser

Relying on the Designer or CM:Relying on the Designer or CM:DonDon’’t Fix What Aint Fix What Ain’’t Brokent Broken

-or--or-90% of Owners Can90% of Owners Can’’t be Wrongt be Wrong

Designer/CM v. Consultant:Designer/CM v. Consultant:Factors to ConsiderFactors to Consider

What are ownerWhat are owner’’s available resources for s available resources for performing the scope involved?performing the scope involved?

How knowledgeable is the Owner regarding How knowledgeable is the Owner regarding the work and construction in general?the work and construction in general?

What construction phase services would the What construction phase services would the designer or CM be performing?designer or CM be performing?

What type of delivery method is being used What type of delivery method is being used for the Project or Program?for the Project or Program?

Who is in charge of the overall Risk Who is in charge of the overall Risk Management Program?Management Program?

Advantages of relying on your Advantages of relying on your Designer or CMDesigner or CM

Cradle-to-grave involvement with the Cradle-to-grave involvement with the project (Designer)project (Designer)Better familiarity with the design and Better familiarity with the design and design intent than contractorsdesign intent than contractorsInvolved with RFI responses, and Involved with RFI responses, and potential bases for change order potential bases for change order requestsrequestsInvolved with submittals, and Involved with submittals, and potential bases for change order potential bases for change order requestsrequests

Advantages of relying on your Advantages of relying on your Designer or CMDesigner or CM

Designer or CM may have already Designer or CM may have already anticipated the change proposal and anticipated the change proposal and has response in mindhas response in mindDesigner or CM may identify Designer or CM may identify constructability issues; however, the constructability issues; however, the Designer/CM does not opine re: Designer/CM does not opine re: construction means and methodsconstruction means and methodsCM may be able to observe and CM may be able to observe and advise re: potential schedule impactsadvise re: potential schedule impacts

Disadvantages of Relying ona Third Party

CostRedundancy – Is consultant performing scope, e.g.,

COR evaluations or project controls work that the design or CM team is performing?

Technical background and experience?Bias to Owner– How “independent” is the consultant

Relying on anRelying on anindependent consultant:independent consultant:

If the old way worked, there If the old way worked, there wouldnwouldn’’t be a new way.t be a new way.

Reasons NOT to Rely on a Reasons NOT to Rely on a Designer or CMDesigner or CM

1.1. May not recognize risks as they occur or worse fail to address risk in a May not recognize risks as they occur or worse fail to address risk in a timely mannertimely manner

Independent Consultants Independent Consultants proactively address proactively address knownknown

and and unknowunknown risksn risks

Known RisksKnown Risks

Unknown RisksUnknown Risks

Reasons NOT to Rely on a Reasons NOT to Rely on a Designer or CMDesigner or CM

1.1. May not recognize risks as they occur or worse fail to address risk in a May not recognize risks as they occur or worse fail to address risk in a timely mannertimely manner

2.2. Motivated by Self InterestsMotivated by Self Interests3.3. Mask Design and CM Issues Mask Design and CM Issues

Typical Risk Management Typical Risk Management Strategies Employed by Strategies Employed by

Designers and CMsDesigners and CMs

Strategy 1: No Risk ManagementStrategy 1: No Risk Management

Strategy 2: ProcrastinationStrategy 2: Procrastination

Strategy 3: Blame Someone ElseStrategy 3: Blame Someone Else

Reasons NOT to Rely on a Reasons NOT to Rely on a Designer or CMDesigner or CM

1.1. May not recognize risks as they occur or worse fail to address risk in a May not recognize risks as they occur or worse fail to address risk in a timely mannertimely manner

2.2. Motivated by Self InterestsMotivated by Self Interests3.3. Mask Design and CM Issues Mask Design and CM Issues 4.4. Failure to understand and effectively administer the contractFailure to understand and effectively administer the contract5.5. Inadequate resources to manage the work exacerbated when problems Inadequate resources to manage the work exacerbated when problems

arise requiring contemporaneous progress, performance and risk arise requiring contemporaneous progress, performance and risk analysis analysis

6.6. Untimely provision of Design Changes Untimely provision of Design Changes 7.7. Flawed reporting Flawed reporting

Top 10 Advantages of Engaging an Top 10 Advantages of Engaging an Independent ConsultantIndependent Consultant

1.1. Independent Perspective (Project Advocate)Independent Perspective (Project Advocate)

2.2. Independent Analysis of Design Errors, Omissions, and ConstructabilityIndependent Analysis of Design Errors, Omissions, and Constructability

3.3. Entirely focused on Anticipating, Containing, and Mitigating Problematic IssuesEntirely focused on Anticipating, Containing, and Mitigating Problematic Issues

4.4. Integrated Approach to Project Risk ManagementIntegrated Approach to Project Risk Management

5.5. Proven Processes and Analytical Methodologies for Contemporaneous Progress, Proven Processes and Analytical Methodologies for Contemporaneous Progress, Performance, and Risk AnalysisPerformance, and Risk Analysis

6.6. Timely and Accurate Progress, Performance, and Risk Analysis and ReportingTimely and Accurate Progress, Performance, and Risk Analysis and Reporting

7.7. Schedule Analyses Expertise Facilitating Accurate Determination of Critical Path Schedule Analyses Expertise Facilitating Accurate Determination of Critical Path Delays, Disruption, and Related Cost Overruns and Determination of Issue Causation Delays, Disruption, and Related Cost Overruns and Determination of Issue Causation and Responsibilityand Responsibility

8.8. Proven Processes and Analytical Methodologies to Perform Contemporaneous Labor Proven Processes and Analytical Methodologies to Perform Contemporaneous Labor Inefficiency StudiesInefficiency Studies

9.9. Independent Analysis of Entitlement and Merit of Change Orders/Time ExtensionsIndependent Analysis of Entitlement and Merit of Change Orders/Time Extensions

10.10. Project Risk Management Efforts Enhance Claims Containment and Mitigation and Project Risk Management Efforts Enhance Claims Containment and Mitigation and Provide Necessary Information to Defend ClaimsProvide Necessary Information to Defend Claims

CROSS-FIRE ROUND

Costs

Identifying, interviewing, retaining, and bringing a third-party consultant up to speed costs time and money. Do the benefits of retaining a third-party consultant outweigh the associated costs?

Conflicts of Interest

Many change order requests arise out of alleged errors and omissions in the plans and specifications. Doesn’t asking the designer to comment on the validity of such requests pose an inherent conflict of interest? Wouldn’t the opinion of a third-party be more useful to the owner?

Lack of Technical Expertise

Many change order requests arise out of the RFI and submittal process. Isn’t the designer in a better position to assess change order requests that implicate technical aspects of the design?

Lack of Impact Expertise

Some change order requests seek time extensions. Some seek money for inefficiencies. Designers don’t have any particular expertise in forensic scheduling or assessing inefficiency claims. Wouldn’t a third-party consultant be better able to assess such requests?

QUESTIONS?