Cost Engineering Nov Dec 2013 - (Page 29)

TECHNICAL ARTICLE Recommended Contractual Methods For Resolving Delay Events Prospectively or Retrospectively Patrick M. Kelly, PSP Abstract: The reality of construction projects is that the oft-mandated methodology for granting a contract time extension is ignored during the press of work. This can result in a significant change in the risk allocation between the parties. The traditional risk allocation model requires performing a prospective time impact analysis (TIA), with agreements on time and money prior to corrective work commencing. Yet, when the work is performed before negotiation, the risk allocation has shifted significantly. This article makes recommendations for two contractual paths for resolution of changes with potential time impacts, to balance risk and responsibility for cost control. The first method, occurring prior to the start of corrective work, uses a prospective TIA to determine entitlement to time, and bilateral negotiation to manage costs. The second method occurs immediately upon completion of corrective work, tracks costs through stringent time and material cost accounting, and determines time through a contemporaneous period analysis. Having two methods for resolution gives project managers additional tools to resolve time-related issues early and prior to contract completion, minimizing potential disputes. This article was first presented as CDR.923 at the 2012 AACE International Annual Meeting in San Antonio, Texas. Key Words: Construction, contracts, cost, project management, and risk T he AACE Total Cost Management Framework, Section 10.3, "Change Management," states: Change management refers to the process of managing any change to the scope of work and/or any deviation, performance trend, or change to an approved or baseline project control plan. The change management process is used to approve or disapprove changes in the scope and baseline plans, thereby closing the project control cycle loop. The process includes the identification, definition, categorization, recording, tracking, analyzing, disposition (i.e., approval or disapproval for incorporation into approved or baseline project control plans), and reporting of deviations, trends, and changes [14]. Furthermore, regarding the analysis of changes, "Section "Assess Impact" states: Having defined the nature and cause of trends and the scope and cause of deviations and change requests, corrective action alternatives are developed and assessed using the forecasting process (Section 10.2). Forecasting applies the methods of integrated project planning (Chapter 7) in the context of a project that is progressing while demanding quick and effective change management decisions. The change management process may identify alternative actions to implement changes and to correct performance trends (including process improvements). These are generally simple action statements (e.g., "revise schedule logic"). The forecasting process develops the proposed action statements into actionable control plan alternatives for further assessment (e.g., "complete activity B before activity A"). Additional alternative actions may be identified in this process [15]. COST ENGINEERING NOVEMBER/DECEMBER 2013 29

Table of Contents for the Digital Edition of Cost Engineering Nov Dec 2013

AACE International Board of Directors
Cost Engineering Journal Information
Forensic Schedule Analysis- Chapter 2: Delay Analysis On Non CPM Scheduled Projects
Forensic Schedule Analysis: Example Implementation, Part 3
The 2014 ITCM Conference
Recommended Contractual Methods For Resolving Delay Events Prospectively or Retrospectively
The 2014 Annual Meeting
Professional Services Directory
Index to Advertisers
The AACE International Online Store
Calendar of Events

Cost Engineering Nov Dec 2013