Modern Construction Project Management, Second Edition

16.CONTRACTUAL CLAIMS USING CPM

16 CONTRACTUAL CLAIMS t USING CPM Introduction In running a construction contract, variations usually arise, particularly the variations of activity durations. Contractors are sometimes entitled to (an d sometimes not of course) the extension of time of the contract period. In the dispute o f extensio n o f tim e betwee n th e employe r (owner ) an d th e contractor, a bar chart can never help settle the dispute. Instead, the critical path method must be used. The following case study will illustrate the point. Case Study 1 Fig. 16. 1 shows th e mai n activitie s o f a construction contrac t an d thei r sequence. 2 0 8 MODER N CONSTRUCTION PROJECT MANAGEMENT Legend : E S te EF Description LS FL LF ES - Earliest Star t Time o f the Activit y EF - Earliest Finis h Time of the Activit y LS - Latest Star t Time o f the Activit y LF - Lates t Finis h Time o f the Activit y Description - Activity Descriptio n te -Activit y Duratio n FL -Floa t Time Critical path: A-B-C-F-H Project duration: 81 days Fig. 16.1 CP M networ k for a construction contract . The critical path i s A-B-C-F-H an d th e project duratio n i s 81 days. Thi s work programme was submitted by the contractor to the employer, through the engineering representative, as one of the contract documents when th e contract was awarded. During the construction of activity D, the contractor encountered unforesee n difficulties whic h were not expected under normal conditions. In order to overcome these difficulties, th e time taken to complete thi s activity by the CONTRACTUAL CLAIM S USING CP M 2 0 9 contractor wa s 30 days, not 1 6 days as originally show n i n th e contrac t programme. At the time the contractor discovere d th e unexpected difficulties , h e ha d commenced the activity 6 days after th e earliest start time. The earliest start time of activity D, according to the original programme, was 33 days afte r the commencement of the project, but because he knew that the activity had 7 days of float, he took advantage of the float and started this activity on Day 39 (6 days later than the original planned earliest start Day 33). So, the contractor recalculated th e project completion date and it is shown in Fig. 16.2. The project duration became 94 days and the critical path was re-routed t o A-B-D-E-F-H. Therefore, he claimed against the employer a n extension of time of 13 days (i.e. 94 - 8 1 = 13). 0 8 8 Activity A 0 0 8 8 25 33 Activity B 8 0 i) 33 30 63 Activity C 4 b 13 76 76 12 88 Activity F 76 0 88 88 6 94 Activity H 88 0 94 }9 30 69 Activity D 39 0 69 69 7 76 Activity E 69 0 76 76 8 84 Activity G 80 4 88 Critical path: A-B-D-E-F-H Project duration: 94 days Fig. 16.2 Modifie d CPM network after activity D was delayed (contractor's view). The employer, however, argued that the contractor should not count the 6 days float for activity D. If it was the case, the project duration should be 88 days, as shown in Fig. 16.3. Therefore, th e employer agreed to give only 7 days (i.e. 88 - 8 1 = 7) of extension of time to the contractor . 2 1 0 MODER N CONSTRUCTION PROJECT MANAGEMENT 0 8 8 I Activit y A 0 0 8 8 25 33 Activity B 8 0 33 33 30 63 Activity C 40 7 70 70 12 82 Activity F 70 0 82 82 6 88 Activity H 82 0 88 33 30 63 J Activit y D \M 0 63 63 7 70 Activity E 63 0 70 70 8 78 Activity G 74 4 82 Critical path: A-B-D-E-F-H Project duration: 88 days Fig. 16.3 Modifie d CPM network after activity D was delayed (employer's view). The dispute was reviewed by the engineering representative, who, although employed by the owner (i.e . employer), should give impartial judgement because of his...