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Written by James D. Hollyday, Partner, Pepper Hamilton, LLCRepublished with permission. This article was orginally published in the May 2015 issue of AGC Law in Brief.
The Massachusetts Superior Court (County of Worcester) held in Coghlin Electrical Contractors, Inc. v. Gilbane Building Co. and Travelers & Surety Company of America decided on June 24, 2014 that a Construction Manager at Risk (CMR) assumed responsibility for design changes (1) based on the Construction Manager's duty under the contract to review design documents during the preconstruction phase of the Project and (2) based on the broad indemnification provision in the contract. The case is now on direct appeal to the Massachusetts Supreme Judicial Court, Docket No. SJC-11778. Oral argument was held on March 2, 2015.
The case has far-reaching implications because if the decision is upheld, a Construction Manager at Risk in Massachusetts will assume much if not all of the liability for the design of the project, even though the design is furnished by a third party Designer under contract with the Owner. The upshot of this is that either there will be fewer bidders on construction management at risk contracts, or bidders will include a substantial premium in their bids to account for the additional risks.
The article Complexity is Often the Culprit in Cost Overruns and Delays was published last year in the MDCAdvisor® (March, 2014) and garnered much feedback. In today's article we will revisit the Complexity and Systems Thinking topics and foster additional discussion of how and why project failures are driven by complexity. Complexity often arises to frustrate even the best efforts of Architects, Engineers and Contractors working to complete projects on time and budget.
Many of the comments generated addressed broader implications of the application of both Systems Thinking concepts and an understanding of complexity to problems in society in general and to government programs directed at solving specific problems. We have included these observations although our expertise at MDCSystems® is primarily focused on preventing, understanding and resolving Architectural, Engineering and Construction failures.
by Michelle N. Delehanty, PE, PMPMDCSystems® Consultant
According to the farmer's almanac, this upcoming winter is predicted to be more severe than last year, which already seems as if it were one for the record books. For many regions throughout the United States, that means a multitude of storms, extreme cold, and potential closings to schools, offices, and, most problematic, construction sites. These closings of construction projects can lead to schedule delays, change order requests, and ultimately claims. In order for a contractor to justify to the owner that there is indeed a weather-related construction delay, they must demonstrate four specific things: (1) that the delay is within the terms of the contract (2) that the activity delayed had a direct effect on the project end date (was on the critical path), (3) the weather event occurred in excess of the "normal" weather for the season, and (4) there is documentation of which specific activities were delayed on each weather occurrence.
Contract Weather Delay, Notice, and Recovery
Every construction contract is unique, but most projects will experience a weather event of some sort, and accommodations should be made in the contract to outline just what to do when this occurs. It is customary for the delay clause in the contract to define two things. First, exactly what a contractor will get if a weather delay occurs – a time extension only (noncompensable delay), time and monetary damages (compensable delay), or a combination of the two after a certain number of days. The compensability of the delays will be laid out in the contract, and will depend on the importance of the completion date, liquidated damages, or other factors.
MDCSystems® has performed building exterior envelope investigations for over forty years on all types of residential, commercial and industrial buildings. Some of these investigations have included unique aspects of work concerning:
Substantial Completion. These two words can change the course of history. Well, the course of your project or payment history, anyway. Many contracts contain that phrase as a key indicator of a major project milestone for the release of retainage, but there are other key elements of a project which can be impacted by the crossing the marker line of substantial completion even when you can't be sure when it's 'done.' New processes, requirements and performance objectives can greatly impact when a building is 'substantially complete' and with that many of the key acceptance elements that flow from that completion.
So what is Substantial Completion?The term is bandied about regularly, but you would be surprised at how varied the interpretations are from project to project. In some cases, it is used interchangeably with "mechanical completion," which to many contractors is a phrase with major significance. Often, mechanical completion is the point at which the "punch list" inspection (punch listing) can begin and a contractor can hopefully see the light at the end of the project tunnel. BUT, a project being 'mechanically complete' is not the same as being substantially complete (unless most of the scope is "mechanical") because there are often other components in a project which are necessary to make it truly functional and useable in accordance with the design intent but are not mechanical (i.e. finish trades, doors, locks, flooring, etc.)
Risky Business: The Economic Risks of Climate Change to the United States
This information was reposted from www.riskybusiness.org
The U.S. faces significant and diverse economic risks from climate change. The signature effects of human-induced climate change—rising seas, increased damage from storm surge, more frequent bouts of extreme heat—all have specific, measurable impacts on our nation's current assets and ongoing economic activity.
To date, there has been no comprehensive assessment of the economic risks our nation faces from the changing climate. Risky Business: The Economic Risks of Climate Change to the United States uses a standard risk-assessment approach to determine the range of potential consequences for each region of the U.S.—as well as for selected sectors of the economy—if we continue on our current path. The Risky Business research focused on the clearest and most economically significant of these risks: Damage to coastal property and infrastructure from rising sea levels and increased storm surge, climate-driven changes in agricultural production and energy demand, and the impact of higher temperatures on labor productivity and public health.
Our research combines peer-reviewed climate science projections through the year 2100 with empirically-derived estimates of the impact of projected changes in temperature, precipitation, sea levels, and storm activity on the U.S. economy. We analyze not only those outcomes most likely to occur, but also lower-probability high-cost climate futures. Unlike any other study to date, we also provide geographic granularity for the impacts we quantify, in some cases providing county-level results.
Robert C. McCue, P.E., Consulting EngineerStephen M. Rymal, P.E., Esq., Consulting EngineerMDCSystems®
Critical Path Method (CPM) schedules and formalized methods of analyzing schedule impacts started to enter mainstream construction management practice in the early 1980's. At that time, the industry recognized a need to accurately and scientifically measure schedule delays and conversely the affects of acceleration in real time during construction and also retrospectively after the work was completed. The ability to determine which party ultimately bore responsibility for schedule delays became the main focus on many projects as the assessment of liquidated damages or granting compensable time extensions became critically important to both owners and contractors. Just as the Rosetta Stone provided scholars with a means to translate Egyptian hieroglyphics into Greek text, Time Impact Analysis (TIA®) provides users with the means to translate Critical Path Method (CPM) activities into understandable schedule impacts.
Critical Path Method (CPM) methods were originally developed using manual computations and later expanded with the augment of powerful, repetitive mainframe computers. As Critical Path Method (CPM) schedules matured into complex relationships a simple but unbiased method of measuring schedule delays was needed. Recognizing the shortcoming of many methods being applied at the time and based upon ongoing analytical experience with manual and computer driven schedule calculations, David M. Lee, a Vice President of MDCSystems® published an article introducing the more rigorous schedule delay analysis concept of Time Impact Analysis (TIA)®. This article discussed the systematic application on a wide range of projects. Project complexity and availability of reliable documentation were identified as key features to be considered as the starting points in such analysis.
By Robert C. McCue, PE and E. Mitchell Swann, PEConsulting Engineers, MDCSystems®
Can a Designer or Owner shift responsibility for design errors and omissions by requiring an enhanced effort for construction coordination drawings by contractors?
To answer this question we will recount an example project that was bid as Design-Bid-Build where the fundamental element of the dispute was design defects with regard to spatial arrangement and sizing of system features. Responsibility for system sizing and coordination and to what standard it is performed are key elements of this example.In this example the Owner tried to obtain support for their defense to design errors by making a series of Design Build and performance specification arguments regarding the Contractor's responsibility to find and correct these errors.The popularity of the Design Build model and the additional freedom it provides to Owners may be subtly influencing the types of practical project execution Owners are employing regardless of the actual contract mechanism in use.The project concerned an institutional building located in a foreign state. The contracts were written and let as a Design-Bid-Build and the Owner had separate and independent contracts with the Design Professionals and the General Contractor\Construction Manager. The Designers provided bid and issued for construction documents. The issued for construction documents contained system configurations and equipment that did not comply with the local building codes or standards. Failure to comply with code is typically prima facia evidence of failure to meet the applicable standard of care. However, in this particular instance there were some questions as to what extent a "foreign" owner has to comply with local codes. However, that said, it is still incumbent upon a designer to satisfy the code, or advise an owner to obtain a variance1.
by David LaPenta, Vice President, Remington Group, Inc.
We have never met an Owner who was happy to hear, "We need a change order." What we've learned over the years is that even though change orders are facts of life in construction, there are strategies to help you avoid them.
Change orders (CO) fall into two categories – owner driven and non-owner driven. Both can be mitigated.
Owner driven change orders happen when Owners change their minds, adding a window here or changing the carpet there. We've even seen buildings moved and floors added mid-project, which leads us to the first CO avoidance strategy:
1. Get the Program right! Number of people, building function, institutional culture, growth projections; get this right before a Designer puts anything into CAD. Work with your Designer to develop a well-defined Program. Get stakeholder and influencer buy-in on the Program before thinking about room size and amenities.
2. As the design is developed, confirm that you are within your budget. Keep stakeholders and influencers in the loop to eliminate design changes in the Construction Phase. Non-owner driven changes include things like unforeseen conditions, force majeure and bad drawings, i.e. things that are out of your control. The time to protect yourself from these COs is before you sign a contract, when you still have leverage.
Viewpoint, Project Delays and Cost Overruns as published in ENRBy Robert C. McCue, PE, MDCSystems® Consultant
View PDF of articleView Article in ENR
Our long history and experience is that the failure rate for projects in general has remained high. Why haven't the advances in project management science, computers technology and communications been effectively brought to bear on the engineering and construction business? What about the advertised beneficial impact of 3-D computer-aided design, computerized critical path methods schedules and building information modeling? Are today's engineers not as good as those who built the mega project of yesteryear like the Panama Canal, Empire State Building or Hoover Dam?
Owners, architects, engineers and contractors have been unable to deliver on-time, on-budget projects because of the complexity of capital projects and the inherent instability created by the contractual structure of the participants, which contain incentives/disincentives to proactively solve problems and seek to avoid blame.
In his book, "The Black Swan," Nassim Nicholas Taleb recounts in detail the "modern" statistical approach to determining the likelihood of an event. As he points out, we simply discount the rare and infrequent events because they may not happen in a normal lifetime. However, when they do occur, they disrupt the business environment in such a way that all of the underlying assumptions used to develop the project plan and execution strategy are revised and the reactions to and/or effects of the event are disproportionate and transient. Normalcy may not be quickly recovered and the resulting secondary interactions of the event/events further confuse and distort matters.
Design-Build Delivery can create new responsibilities for designers where they would not exist in traditional Design-Bid-Build delivery situations and require new awareness on the part of contractors to the iterative and uncertain world of conceptual design. These new responsibilities require a paradigm shift for both Designers and Contractors as the realities of working together challenge the leadership of the organizations.
For designers the change requires them to abandon their traditionally "client only" focused advice and consent role and adopt a new paradigm of working for, or with, the contractor to deliver an acceptable and profitable product. For the contractor working with and supporting the designer changes the very nature of their previous working relationship. The contractor is now working with and for the people they are all too often at odds with concerning project delivery.
The following situation is illustrative of the evolving nature of construction in the Design Build world.
MDC's client was a building contractor who wanted to bid on a public project being offered as a Design-Build (DB) opportunity. In order to prepare a bid the contractor had to team with a designer and develop the bid from what were advertised as 30% complete preliminary design documents – bridging documents or a "two step" design-build process. In our example the contractor retained a design firm as a sub-contractor. In selecting his design partner, the contractor looked for a firm with significant experience in the region and with the agency soliciting the work. A number of similar DB ventures formed and provided competing bids for the work. The agency soliciting the work provided a bid preparation design fee reimbursement in recognition of the design effort required of the DB teams to prepare the bids. On award the designer was retained to prepare the construction documents as part of the team.
As the contractor/designer team prepared their bid, the contractor looked to his designer to provide technical guidance on interpreting the 30% bid documents and conceptualizing and quantifying bid quantities which formed the basis of the contractor developed unit prices and overall estimate. As the project entered the construction phase, it became evident that there were major features of the project that had not been fully developed in the agency issued bid documents; but those documents were not defined as being a "100% complete" document set. The requirements and constraints for and on the project were described, if not detailed. To be fair there were potential risk items identified by the designer in preparing the bid documents and quantities. But the contractor did ask for guidance from his design sub-consultant on these issues and there was an extension of the bid submission deadline which would have ostensibly created an opportunity to make some adjustments.
In recent articles1, MDCSystems® has examined the Fukushima Dai-Ichi nuclear plant explosion and meltdown disaster. Recently a Japanese investigative report2 has provided new insight into the cultural conditions which precipitated the disaster and contributed to the expanse and breadth of the effects of the continuing radiation contamination. While it is well-known that a tsunami generated from a powerful undersea earthquake initiated the incident, what has been difficult to understand is how a modern society with very sophisticated engineering and management skills ignored established nuclear industry standards and practices (Design Basis Events) and safety guidance (Station Blackout) norms and failed to anticipate the events that occurred leading to the nuclear plant meltdown conditions.
As discussed in MDC's previous articles1 on the Fukishma disaster, the most obvious site engineering failure was the design elevation specified for units one through four. In addition, well-established accident scenarios such as station blackout conditions and nuclear safety related emergency power system design criteria were apparently ignored and directly contributed to immediate and long-term effects of the nuclear incident. The delayed and ineffective Tokyo Electric Power Company (TEPCO) response to the initial event exacerbated the already serious and deteriorating plant conditions and likely contributed to the ongoing deadly effects of the radiation releases.
The report3 to the Japanese parliament stated that "The Fukushima nuclear plant accident was the result of collusion between the government, the regulators and TEPCO and the lack of governance by said parties." The report goes on to state, "We believe that the root causes were the organizational and regulatory systems that supported faulty rationales for decisions and actions." In his introduction Chairman Kurokawa said that "cultural traits had caused the disaster." The Chairman continued his criticism by saying that "What must be admitted - very painfully - is that this was a disaster 'Made in Japan.' Its fundamental causes are to be found in the ingrained conventions of Japanese culture: our reflective obedience; our reluctance to question authority; our devotion to 'sticking with the program; our groupism and our insularity."
By Michelle N. Delehanty, PE, PMPMDCSystems® Consulting Engineer
In our last Advisor issue, we discussed stucco on residential homes and common issues found in those built over the last two decades. If you are the owner of one of these types of homes you should be aware of typical signs that there may be water infiltration and take the steps discussed below to prevent potential problems in the future.
As detailed in our previous article, water can get into the exterior building envelope, including the stucco wall system through cracks, improper sealants, improper flashing, and high-sitting plant beds. Keeping up with the maintenance of your home in these areas is the easiest way to prevent moisture issues. Performing a simple visual inspection of the exterior of the wall system on a regular basis (once or twice per year) for holes, significant cracks, or separations as well as noting changes from your previous observations is a great way to keep yourself abreast of potential issues.
You should also take some time during or immediately following a heavy rainstorm or the melting of a large snowfall to observe the reaction of your walls. If there is water getting into your house or your stucco system, this is when it will be obvious. On the inside, pay close attention to the areas where the walls meet the ceilings as well as around windows. At the exterior of the home, telltale signs of moisture are sustained darkened spots on the stucco, usually found under windows. If the water marks don't lighten up after a few days, the wall system in that area is having a hard time drying out.
Preventing Water Infiltration and Retention
Surface cracks should be noted during your routine inspections and compared to previous observations. If they are noticeably bigger than previously seen, moisture testing in that area should be conducted. In the meantime, a breathable clear coat should be applied to the surface of the stucco to prevent moisture infiltration into the microscopic cracks. If cracks that are found exceed around an eighth of an inch, you should have a contractor perform a proper restoration. This restoration typically involves either the crack being cut out and patched or the installation of a control joint.
Julian Toneatto, Ph.D., PE and E. Mitchell Swann, P.E. testified on 1 August 2013 at a City of Philadelphia City Council hearing looking into techniques, technologies and guidelines to improve building demolition practices within the city. [Background: On 5 June 2013, a building under demolition experienced an uncontrolled collapse which fell onto an adjacent retail property which was occupied at the time. There were 6 fatalities and 14 injuries, several of them critical. Wikipedia reference, 2013 Philadelphia Building collapse.
Julian and Mitch came to the role of testifying based on an inquiry to The Engineers Club of Philadelphia and their Technical Advisory Council (TAC). The Club had been contacted by the Chief of Staff of the City Councilman chairing the hearings and requested the TAC's input. Mitch is the current President of The Engineers Club and one of the initiatives he has instituted is the development of a Technical Advisory Council (TAC).
The intent of the TAC is to provide a 'neutral source' of high level technical advice to institutions like The City of Philadelphia on technically driven issues that are vital to the City's efficiency, effectiveness, economic vitality and public health and safety. At the hearing, Julian focused on structural, civil and foundation engineering issues and Mitch focused on MEP system and utility interfaces and the potential for airborne hazards.
The day's proceedings also included testimony from code officials, contractors, building owners, attorneys and other science and engineering experts. Philadelphia's City Council intends to gather input from numerous sources and to develop an improved Philadelphia standard for the submission, approval and execution of demolition plans in the City. New guidelines are expected to be rolled out by 1 January 2014. In the interim, on site monitoring has been stepped up to hopefully prevent any repeats of the 5 June 2013 collapse.
By Robert C. McCue, PE and Donald Keer, PEMDCSystems® Consulting Engineers
Process Plant profitability depends in large part on operational continuity or up-time. MDC® has recently become aware of a developing technology to detect and then prevent unplanned shutdowns due to up-set operating parameters in process plants. This capability results from the real time collection and analysis of all reportable operating data…"BIG DATA."
Process Plants typically produce more data than can be efficiently collected and reviewed by the operators. A plant with 320 tags (equipment items with associated data collection points such as pressure, temperature, flow etc), recording at 5 second intervals, will produce 5 million data readings per day. That is a billion data points over six months. Buried in this cascade of information are subtle leading indicators of up-set operating conditions.
In order to unlock the information computer processing of the ongoing data stream is required. Essentially using the plants operating signature through the data history allows for the identification of negative trends which have previously been a precursor of the developing up-set operating condition.
The Seven Deadly Sins of a Construction Project that Regularly Lead to Claims(And How to Avoid Them)By Michelle N. Delehanty, PE, PMPMDC® Consulting Engineer
From a project's inception, an owner will typically have a vision of how they imagine their project will end. A ribbon cutting on a bright sunny day, surrounded by contractors, architects, and engineers alike all happy with the project's outcome, on time and under budget, with motivation to continue on to additional shining successes in the future. Typically, this vision begins to fade as reality sets in, perhaps delays occur and cost issues come rolling in. In actuality, as long as the project closes out with no lingering disputes or potential claims, most parties will feel they succeeded and come out of the project in one piece.
In order to strive for the former and end with the latter, there are a few pitfalls that must be avoided along the way. The project team should make every effort to circumvent these 7 deadly sins of a construction project which commonly lead to disputes and possibly claims.
1. Excessive Requesting or Denial of Change Orders (Greed)Any project, even the seeming perfectly designed ones, will have change orders. It is an inevitable fact of construction. How the parties handle the change orders will affect whether or not the project will end with unresolved disputes leading to claims. If an owner rejects all change order requests outright, the contractor will respond with more requests, incomplete work, and, at the end of the project, claims. If a contractor is "nickel and diming" the owner for every little thing, the owner will be more resistant to approve large ticket legitimate changes leading to claims at the end of the job.
To curb greed of excessive change orders from both sides, the owner should first ensure that there is some contingency in the contract for scope changes, design errors & omissions, and unforeseen conditions. Change orders submitted by the contractor should be reviewed on a regular basis and any approvals needed should be made prior to the affected work being complete. Agreements should be made whether they are fixed price or T&M. The owner should recognize that there will be a need for change orders and should reasonably approve those necessary. Conversely, the contractor should also have a built-in contingency in their own budget for minor items they may have missed at bid time, but legitimately own so that they are not overwhelming the owner with petty things; therefore making it more likely to get their valid change orders approved with little or no fuss.
2. Owner – Induced Scope Creep (Gluttony)You find some extra money in the budget as you begin to let your contracts. Enthused by this discovery, you realize you'll now be able to upgrade to the state-of-the-art ornate elevators that you previously value-engineered out. To go with that, you add to the building's structure in order to fit the new elevator cabs and adjust the power requirements as well. Pretty soon, you're dipping into the contingency to upgrade the millwork in the elevator lobbies so that they coordinate with the cabs. Over time, this scope creep will lead to delays, budget problems, and ultimately claims.
In September 2012 the Technical Director of the Pennsylvania Department of Environmental Protection Bureau of Laboratories testified in a deposition that the office had only reported 8 of 24 metals found in a water sample associated with a case over well water contamination by hydraulic fracturing (frack) chemicals. What are the requirements for disclosure and professional responsibility of the director for disclosure of the lab results?
The case is a dispute between seven residents of Washington County, PA and Range Resources plus over a dozen contractors over alleged contamination of local drinking water wells with chemicals used in fracking. Samples were taken in June 2011 and January 2012 and analyzed in accordance with the Environmental Protection Agency's Method 200.7 which tests for 24 metals. The Technical Director points out that only 8 metal results were requested by the Oil and Gas Division and the other results were not above the EPA standards for safe drinking water. This dispute follows allegations that test results reported to the DEP in September 2011 by Range omitted high concentrations of nitrate (a carcinogen which can originate in fertilizer run off, septic tank overflow as well as frack operations) plus fracking fluid, flowback water, uranium and silicon. The site in question is part of a Congressionally mandated $1.9 million study scheduled for completion ion 2014.
It must be noted that the named plaintiff operates a junkyard on his property which could be the source of a number of the contaminants. Studies by Penn State University indicate that contamination of certain metals in municipal biosolids are 100 to 100,000 times higher than shale gas waters. This situation complicated the causation issue and blurs the ability to provide a definitive answer to the source of contamination.
by E. Mitchell Swann, PE, MDC® Consulting Engineer
So originally the intent was for me to write something about green buildings and sustainability. However, in the context and aftermath of Hurricane Sandy, the many faceted world of sustainability got laser beamed into a narrower frame – survivability and resiliency. To be able to "sustain" one must be able to survive; and to survive with resilience is a valuable trait. In the world of engineering, construction and projects, survivability is a term more often than not applied to military or defense systems; resilience (and\or redundancy) to data centers and other critical systems. But as has been illustrated by Ms. Sandy, survivability and resiliency should not be considerations for just the hardened operations set.
Many a project has been postured as "world class" and "iconic" – a project that will stand the test of time. Hurricane Sandy has removed a bit of the mental varnish that we've lacquered onto our assessments of just how 'good' our projects are … and in the process, what passes for real value in a project. You might expect that right now on some hospital project, someone is recalculating the 'value' of the cost premium of mounting emergency gen-sets well above a basement level to protect against flooding; or someone else is ordering a small emergency gen-set for a gas station to power its pumps in the event the grid is down.
Of course, hindsight is 20/20. So let's turn our laser corrected vision forward to get a better view of the road ahead. Are there tools and techniques that can be used to help handle the inherent (and varied!) risks in a capital project or on-going operation? The most common approaches are to eliminate it; transfer it; mitigate it or manage it. Certain risks cannot be eliminated. Nor can they always be transferred – and it is not always wise to do so. The last two approaches typically involve making an immovable object to withstand some undetermined irresistible force. This might also not be the best or most feasible solution either.
There are a number of different risk assessment tools or techniques that one can apply to projects. There are two approaches which I think can work very well to help clarify the implications of a particular risk and to help unpack the interrelationships between systems (both inside and outside the project) that can create unexpected risks.
by Robert C. McCue, PEMDCSystems® Consulting Engineer
Fully two weeks after Hurricane Sandy, the recovery efforts are still frustrated by the lack of fuel and communication. There must be a better way to truly prepare for these events and to avoid the familiar storm after effects.
In my personal experience, gasoline lines (fuel shortages) and communications problems have been predictable after effects of major storms for fifty years. My first storm recovery effort was Hurricane Agnes in 1972. At the time I was a student at Penn State University (recently released from four years of active duty) and a Captain in the Pennsylvania National Guard based out of Lewistown, PA. During the storm we performed rescue and evacuation work in and around Lewistown and then food distribution and fuel delivery to local municipalities on the I - 80 corridor from Altoona to Scranton. Many roads were destroyed in Central Pennsylvania and many bridges were missing resulting in isolation for many communities.
A significant problem in coordinating logistics was the lack of communications between the various state and local governments. We had supplies at point A but the folks at Point B could not request what they needed. We attempted to solve this problem using mini-convoys of National Guard trucks and fuel tankers. We also escorted commercial semi-trailers of foodstuffs to communities along our supply routes. In order to report situations along the route we utilized emergency phones on the Interstate system or stopped State Police cruisers. The State Police would relay messages to our headquarters and provide us with new directions and orders to serve additional communities and locations. Following the storm the State of Pennsylvania received a large grant to improve emergency communications across the state and rebuild damaged facilities.
Michelle Delehanty, P.E., PMP
One of the biggest components in successfully managing your capital program is a strong risk management plan. A project risk assessment is usually performed during project kickoff with all stakeholders contributing to the list of risks because the earlier in the project you plan for certain events, the lower the chances of the associated risks tend to be. In order to successfully mitigate risks, they must be prioritized based on their overall effect on the project. If every item that poses a potential risk to the project is considered high-priority, then the result is that nothing is a high priority because everything is considered equal. The major keys to reducing the impact of any risk to a project are to recognize, prioritize, and control.
Recognizing Risk Any event, large or small, can be considered a risk to a project if there is a chance it will impact the scope, schedule, or budget. It is important to examine all programs that are running concurrent with your project as well as within the project itself for any effects they may have. Common ways that project management veterans recognize potential future risks is to look into the past, starting with lessons learned. The lessons learned list is usually comprised of items that may not have been considered during the previous project planning but affected the outcome of that project in some way. Remembering the effect these issues had on previous projects and preparing for similar outcomes will keep you from repeating comparable missteps on project after project.
Accepting that despite the best laid plans, unforeseen conditions, design errors and omissions, and owner scope revisions will occur is imperative during the risk recognition process. Experience working with the different stakeholders on various types of project will enable the team to assess the areas where this may happen. Force Majore events, though not occurring on every project, are also occasions that must at least be considered while planning for project risk. Although typically unpredictable and unlikely, adding these risks to the Risk Matrix can help address liability and responsibility ahead of time rather than waiting for a risk to become an actuality.
Written by E. Mitchell Swann, PE
MDCSystems® has recently become aware of a number of large projects exhibiting major problems despite the 'spectacular' abilities of Building Information Modeling (BIM) and other project technologies. Some of these projects have been highlighted in recent industry publications and legal filings. These issues often fall into several common areas which are summarized below.
• Implementation of the Building Information Modeling (BIM) technology• Development of the base BIM model• Failure to maintain the BIM model as work progresses• The "irrational exuberance" of 'computer-world' accuracy (aka "false precision")• Insufficient data development (thin content or 'dumb light' models)• Real to virtual drift - failure to as-built the model (reduces the effectiveness of the BIM model for life cycle asset management)
Any of the above cited areas can result in unexpected (and under budgeted) changes in the project resulting in a cascade of further uncoordinated changes in the field impacting construction efficiency, time and quality and ultimately cost in both "bricks and mortar" and operations (and sometimes hair or sleep).
Written by Donald Keer, PE
In light of the ongoing drought in the Midwest which is affecting food production, transportation and industry operations, a review of Federal recommendations is appropriate. Not only is corn production stunted but the Mississippi River was closed so it could be dredged to ensure a 9' draft for shipping. Lastly, the availability of water for industrial processes such as cooling, cleaning and production must be modified to improve efficiency. The Federal Government has established two sets of recommendations, one addressing Federal Agencies and the other addressing the private sector.
The Federal Energy Management Program (FEMP) established best management practices for water efficiency. Federal laws and regulations require Federal Agencies to reduce and improve water efficiency (Federal Order 13423, Energy Independence and Security Act of 2007, Executive Order 13514).
Written by E. Mitchell Swann, PE, LEEDMDCSystems® Consulting Engineer
June 2012 - The City of Philadelphia has unanimously passed two new pieces of legislation (Bill No. 120056 and Bill No. 120428) which will help the City, and both its business and residential communities, to better understand their energy and water use. This process should ultimately help to reduce the City's overall eco-footprint.
Residential Real Estate Energy DisclosuresBill 120056 requires that a good faith estimate of "a year's worth of energy costs" is provided whenever a residential property owned by the City of Philadelphia, or related agency, is transferred to a new owner. If the property is subsequently transferred from an "intermediary" (let's say a developer), an annual energy cost record must also be transferred to the final owner/occupant. This represents a major step forward in the transparency of a residential real estate purchase. Energy costs can be a significant recurring cost for a homeowner. Providing the annual energy cost to a prospective homeowner will enable better decision making and result in more fiscally prudent purchases. The initial legislation was written to use either a year's worth of actual energy bills or the Energy Information Agency's Residential Energy Consumption Survey. The EIA's Consumption Survey will provide typical energy usages for a property of similar size in a similar weather zone. In many instances, however, the City owns a property that it intends to transfer and has been unoccupied, or sparingly occupied, for an extended time period prior to transfer. In that instance, actual usage bills can be artificially low. Clearly, as detailed above, the EIA's Consumption Survey is not a perfect benchmarking tool.
By E. Mitchell Swann, PE, LEED
Well, actually I'm from Philadelphia - the home of good cheesesteaks and good lawyers (good engineers too!). But for the sake of this article, I join a growing segment of design and construction industry experts who are figuratively from Missouri when it comes to building performance. Missouri is known as the "Show Me" state. This means that you can't just 'talk the talk' about some grand scheme or claim, you've got to 'walk the walk' – you've got to show me and prove it. "Show me" is becoming the de jour response to claims of superior "performance" by green or high-performance buildings. Owners, operators, tenants and even the design/construction community are looking for hard data and reliable metrics to verify claims of superior energy performance, low resource use, good indoor environmental quality and occupant comfort and satisfaction. This is a good thing.
Rating Systems, Design Guidance and Performance Measurement/VerificationConcomitant to the development of green building ratings systems such as LEED1 (Leadership in Energy and Environmental Design) and Green Globes2 , there has been a growth in both design guidance and performance measurement and verification of green building metrics so that buildings might be more readily 'compared' in terms of energy and resource use as described above. There are also other comparative tools that are not related to any specific rating system but comparing your building to industry norms for similar building types.
Fukushima - The Rest of the Story[1] ( AKA Paul Harvey )By Robert C. McCue, P.E.July 2012
The complete Japanese investigation of the Fukushima Daiichi Nuclear Plant disaster of 2011 was recently released in a 641 page report ( the "Official Report") with the conclusion that "The accident was a manmade disaster caused by poor regulation and collusion between the government, the operator and the industries watchdog." [2] (The Guardian, Thursday, 5 July 2012)
As discussed in the April 2012 MDC Advisor, the multiple failures at the plant following the earthquake and tsunami revealed that safety systems and procedures common in U.S. nuclear plants were not employed by the operator, Tokyo Electric Power (TEPCO), nor were they required by the Japanese regulators.
The serial failures of the design, construction and regulation are summarized below:• Base elevation of Plants 1 thru 4 were lower than historical tsunami levels;• Flawed concept of sharing power between plants (station black-out criteria);• Only one diesel generator per plant (single failure criterion ignored);• Diesel Generator and emergency switchgear located below flood level (emergency planning);• Hydrogen vent valves inoperable due to lack of AC Power (single failure criteria and station black-out); and• Emergency planning and late/deficient response by TEPCO and the Japanese government in providing emergency/evacuation information and electrical power generation units to allow for the venting and cool-down of the units and the cooling of the spent fuel pools to avert additional releases of radioactive gases into the environment (emergency planning deficiencies).
Is the Solution for our "Fracking Mess" Dilution or Concentration? 1(Waste Reduction and Pollution Minimization)
By Written by Don Keer, PE and Robert C. McCue, PEMDCSystems® Consulting Engineers
The ProblemThe recovery of natural gas from tight rock formations, such as shale, has presented the oil and gas industry with serious environmental challenges. Quite possibly the most significant issue is the use and treatment of the large volumes of water required to fracture a gas well to make the production volumes viable. In tight rock formations the shale substrate porosity is not significant enough to allow large volumes of natural gas to flow into a relatively small diameter well bore. The geology requires pressurized water to create fractures in the shale which are intended to extend hundreds of feet away from the well bore itself. During the fracture of the shale (the "fracking" process) the drillers add chemicals to weaken the shale formation, reduce the friction of the water entering the rock, increase the downhole pressures and initiate the required fractures. Once the fractures open, a "propant" such as sand is pushed into the formation with water to keep the fractures open, creating a significantly greater flow surface for hydrocarbon production. In many instances, but particularly in the case of Marcellus shale gas, the only way to make a well viable is to frack it.
The amount of water necessary for each well can vary but is generally in the 2 million to 9 million gallon range. Each well site may support up to twenty individual well bores. After the fracking process is complete, 10% to 50% of the water used flows back to the surface and is known as "flowback". Most of the flowback occurs during the first 10 days after completion of the fracking process, but flowback may continue for 60 days or more. During this time the well also produces small amounts of natural gas and other volatile organics which have traditionally been either flared or vented.
Written by E. Mitchell Swann, PEPrincipal of MDCSystems®
One of the big outgrowths of the green building movement is a new focus on actual building performance. This isn't just the individualized performance of a singular system at a point in time ("the lights come on when you flip the switch - check"), but the overall performance of the whole building over some extended period of time (annual energy consumption per square foot of building). Green buildings have touted their superior energy or resource efficiency and while there have been some success, there have also been some less than tremendous performances by allegedly high performance buildings. As a result – and in this engineer's opinion, a logical outcome – there has been a movement towards adding a "measurement and verification" (M&V) requirement to the ratings systems. Taking the two ''biggest dogs in the park," the USGBC's LEED system and the EPA's Energy Star program, there are two slightly differing frameworks. LEED requires a performance target that is better than what would be predicted using "normative" energy conservation standards (i.e. ASHRAE Std. 90.1) and it requires that an energy model be developed for the project. After construction, the M&V mandate requires that the owner submit annual energy bills (for 5 years) to the USGBC and to compare the actual usage to the modeled usage. In short, it is a check to see if you are doing what you said you would do. This is valuable! It dampens the urge to succumb to "irrational optimism" when developing a model and it offers a good indication of things not running quite as planned. However, while nothing has been cast in stone that says the USGBC will yank a building certification for poor performance, it does seem reasonable to conclude that if you are going to collect actual and you are going to compare actual to modeled, then there is a strong likelihood that at some time you will need to do a reckoning between expectations and reality.
Preliminary Analysis of an Industrial Photovoltaic System and Comparison of Its Performance with a Wind Energy System and a Fuel Cell Power SystemBy Amal Kabalan, LEED A.P.; MDCSystems® Consulting Engineer
The purpose of this article is to test the feasibility of installing a Photovoltaic (PV) System on an industrial facility and then compare its costs to both a Wind Turbine and Natural Gas Fuel Cell system. A model that predicts the energy which a Photovoltaic (PV) System can generate in a certain location based on insolation data and shading will be used. The model also calculates the savings and the pay-back period based on current state subsidies and federal tax incentives. The article will start by describing the project and will simulate the energy expected from the solar panels. The article will then proceed to compare the power output and the cost of a Photovoltaic System to that of a Wind Energy System and a Fuel Cell Power System.
Solar System AnalysisThe example industrial location is located in Pottstown, Pennsylvania, which is 40 miles west of Philadelphia. Due to its proximity to Philadelphia, it is reasonable to consider that it has the same latitude, longitude and weather conditions to that of Philadelphia for the purpose of the analysis. Latitude is 39.88 and longitude 75.25. Elevation is 6 meters. Figure 1 shows the location of the facility (B) in correspondence to Philadelphia (A). The facility has south and north exposures. The orientation is shown in Figure 2 (above).For the complete article, in pdf form, click here.
Written by Don Keer, PEMDCSystems® Consulting Engineer
The Marcellus Shale natural gas deposit is currently the focus of intense exploration and development that could provide energy for the entire U.S. for the next 100 years. As with any development of an energy source the level of activity is dependent on the ultimate retail price of the delivered energy. In recent months the supply of natural gas has outstripped the demand resulting in a slight slowdown in activities in Ohio, Pennsylvania, New York and West Virginia. As with other energy sources, eventually the economics will again favor aggressive development of this resource.
Despite the attractiveness of natural gas the development of the Marcellus Shale deposit is limited by the ability of developers to manage the large quantities of water required to complete the wells. The issue has such a high public profile that the EPA is aggressively conducting studies and analysis together with other federal, state and local agencies to determine the impact and options for water treatment.
Hydrofracturing ("fracking") is a well completion process by which the surface area between the oil or gas producing geologic formation and the well is increased. With an increased surface area the oil or gas is able to enter the well bore easier thus increasing production. Fracking is normally accomplished by pumping water under extreme pressures with additives that help stress the underlying formation to the point that the rock cracks and fractures. Once a fracture occurs the completion company will typically add sand to the water to keep the fractures open. The entire process could result in three to eight million gallons of water being pumped into the well and the surrounding rock formation.
By Robert C. McCue, PEMDCSystems® Consulting Engineer
Tsunami triggers destruction of nuclear reactors, JapanOn the afternoon of March 11, 2011 a magnitude 9.0 earthquake struck the coast of Japan triggering a massive tsunami that ravaged the country's northern coast. The images of the water moving at a rate of 500 miles per hour inland carrying boats, cars and entire buildings were gut-wrenching. In the path of the destruction were six nuclear reactors at Fukushima. The reactors were automatically shut down (SCRAMMED1) on the sensing of the earthquake and the installed emergency shutdown systems operated to allow the reactors to begin the process of cool-down.
About 40 minutes after the shutdown, the tsunami waves2reached the Fukushima complex. The waves engulfed the plants with over 18 feet of water sweeping over Units One, Two, Three and Four. Units Five and Six were constructed after One through Four and they were sited about 15 feet higher in elevation, resulting in about three feet of water covering those units at grade level. At the time of the earthquake Units One, Two, and Three were operating; Units Four, Five, and Six were previously shut down for maintenance and refueling. 3
The immediate effect of the tsunami was a loss of all AC 4 power at all units as the high voltage transmission systems were destroyed, followed by the on-site emergency diesel generators and switchgear rooms being flooded. The tsunami had destroyed the transmission lines which normally could be relied upon to bring power to the plants and this loss essentially isolated them from any off-site sources of power. Initially battery power was used to provide minimum power and cooling to all units, while the operators were evaluating damage and attempting to restore on-site AC power systems and emergency generator systems. The damage to the switchgear and emergency generators was complete and could not be repaired for Units One through Four.
Mitchell Swann, PE, a principal at MDCSystems®, was featured in Philadelphia's Green Economy Task Force newsletter, Green Economy Leaders, which is excerpted below.
"I like Philadelphia—good points—bad points. Family is here." In his clipped way of speaking and without any fanfare, Mitch Swann (pictured here on the left), who grew up in Germantown, lets you know he's proud to be a Philadelphia native and plans to stick around the 'hood giving back whenever he can..Mitch, who is a Partner with MDC Systems in Paoli—a firm that provides clients with comprehensive assistance in effectively navigating complex engineering and construction projects—traveled to South Philadelphia to share his time and expertise with students who are training for jobs in green construction, energy efficiency and solar installation. "We discussed the LEED program and what that means, why the marketplace is concerned about [sustainable buildings], trends, expectations for the future, ways people can get involved, an overview of green economy types of issues." The diverse group of students, who are immersed in a nine-week course that will upgrade math and reading levels as well as prepare them for a green career, had plenty of questions for Mitch, who holds a degree in mechanical engineering from Drexel. Some were construction-related. Some trainees wanted to understand how the green industry relates to public policy, to their lives, to their community, to society. And, of course, they wanted to know, 'ok, how do I position myself to be employed in this field?'
Written by Don Keer, PEMDCSystems Engineer
On February 9, 2012 the New York Times published the following article: "As 'Yuck Factor' Subsides: Treated Wastewater Flows from Taps." (http://www.nytimes.com/2012/02/10/science/earth/despite-yuck-factor-treated-wastewater-used-for-drinking.html) This article reviewed the operation of a water reuse plant in San Diego, CA. As water stresses increase around the world it is increasingly clear that effective solutions must combine both technology and public perception education. Water stresses exist in both developed and undeveloped countries. Some areas have surface waters available that are subject to chemical run off and other pollution. The use of surface sources can affect others downstream and the rate at which subterranean waters are renewed. Other regions have no surface sources available but have subsurface resources. Subsurface water could take years to renew or could be subject to surface effects or salt water intrusion. So, no matter the source, water is a limited resource.
Washington — To Amal Kabalan and her fellow entrepreneurs, the plight of schoolchildren in Guinea presents a fairly basic need that inspired a simple but creative business response. Guineans don't have much access to energy for light. Kids wear backpacks. Why not attach a solar-powered device to the backpacks, collect energy on the walk to school, and then use the stored energy to power lamps so the children could study at night?
The idea earned the 27-year-old Lebanon native $3,000 in seed money to start the venture with her new business partners — people she had met just days before and who had been selected by Athgo International, a nonprofit organization that sponsored the competition in partnership with the World Bank Speakers Bureau.
Amal Kabalan, LEED A.P.MDCSystems, Consulting Engineer
The purpose of this article is to test the accuracy of a photovoltaic system model. The model predicts the energy that a solar system can generate in a given location based on insolation data and shading. It also calculates the savings and the pay-back period based on market installation prices, current state subsidies and federal tax incentives. The model will be tested by comparing the modeled values of a solar system to actual data. The article will start by describing the project and will simulate the energy expected from the solar panels. It will then compare the simulated values with actual recorded values.
Solar System AnalysisThe example residence is located near Malvern, Pennsylvania which is 22 miles west of Philadelphia. Due to its proximity to Philadelphia, it is reasonable to consider that it has the same overall weather conditions to that of Philadelphia for the purpose of the analysis. Latitude is 39.88 and longitude 75.25. Elevation is 6 meters. Figure 1 shows the location of the house (B) in reference to Philadelphia (A). The house has south and north exposures. The orientation is shown in Figure 2.
E. Mitchell Swann, P.E., of MDCSystems® & James W. Haile Jr., C.P.M., of JWH & Associates
Over the past 9 – 12 months or so many parts of the world have been rocked by unforeseen events – "black swans" – which have called into question some of the ideas or principals we've centered much of our business planning around. Most notable of these in my mind is the Tohoku Japan earthquake and tsunami and the resulting Fukushima Nuclear Plant meltdown. One of the things that Tohoku did was take out a significant swath of Japan's specialty automotive parts industry as the earthquake and tsunami affected regions were noted for being a hub for auto parts manufacturing for both Japanese and global car companies and those parts manufacturers were off line. What this means is that their link in the supply chains of an important global industry was cut. In the aftermath, many manufacturers have re-evaluated their supply chain strategies and are considering a broader diversity of suppliers both in number and regions. Many are also looking at the potential impact of 'just in time' production strategies and their supplier matrix. Last year MDC published in its Advisor an article written by James Haile on the importance of having a robust supply chain and how to consider the various aspects of same. In light of the Tohoku earthquake and how it put a glaring spotlight on the sensitivity of global economic productivity to what are local or regional impacts, MDC felt that it might benefit our readers to re-publish that article. Nothing teaches like experience and the Japanese earthquake, tsunami and power plant meltdown provided a very teachable moment (more like 6 months of moments) on the impact of black swans and the value of systems-based thinking.
Stephen M. Rymal, P.E., Esq.MDCSystems®Consulting Engineer
In the construction industry, there are several alternative dispute resolution (ADR) methodologies designed to provide a means to resolve disputes without resorting to formal litigation in court. Some projects set up dispute resolution boards (DRBs) to address disputes in real time before the parties harden their positions and carve them into stone. The advantage of DRBs is that they meet regularly with the parties to recognize and address disputes at their earliest stage when the inherent risks can be truly estimated, appreciated, and shared.
E. Mitchell SwannMDCSystems®Consulting Engineer
Yup, yet another "sustainability" article. It seems that this subject just won't die. No, it won't. But organizations that don't deal with the subject just might experience that result.
If you haven't been keeping up on it, sustainability is about a lot more than eating nuts and berries, wearing wool sweaters and wearing sensible shoes. It's about survival. That may sound rather stark – harsh even. But sustainability doesn't have to be and if you think through it, it shouldn't be. You can survive at many levels – from "just barely" to "high on the hog". One is undesirable; the other is, well...unsustainable. So if you want your 'going concern' to continue going you need to consider how best to position and prepare yourself for a changing world.
Robert C. McCue, P.E.MDCSystems®Consulting Engineer
If you are seeing a rise in problem projects and difficult work-outs, take steps now to inoculate your project team for success and profitability. Basic PMBOK training is certainly necessary but not entirely sufficient to ensure success in today's fast-paced project environment.
Your team should be alert for the following warning signs of impending project trouble:
Date: 1/12/2011 to 1/15/2011 Location: Walt Disney World Swan Hotel - Orlando, FL View event details
Robert C. McCue, P.E.MDCSystems®Consulting Engineer
MDCSystems® has been providing Forensic Project Management (FPM®) services for over forty years for industrial, transportation and institutional capital projects. Using this extensive knowledge base, MDC®, develops and conducts seminars for the public and private sectors on many topics including the topics of Complexity and Systems Thinking, Sustainability, CPM scheduling, Claims Avoidance and Green Buildings.
Most of those working in the construction contract claims business are familiar with 1960 decision by the Armed Services Board of Contract Appeals (ASBCA) in the Eichleay Corporation Case which recognized a contractor's right to recover unabsorbed home office overhead for owner caused delays and work stoppages.
View as PDF
Donald R. Keer, P.E., Esq.MDCSystems®Consulting Engineer
MDCSystems® has been providing Forensic Project Management (FPM®) services for over forty years for industrial, transportation and institutional capital projects. Using this extensive knowledge base, MDC®, develops and conducts seminars for the public and private sectors on many topics including the topic of Complexity and Systems Thinking.
"No damage for delay" clauses continue to divide the country and the courts on their application and interpretation. Although owners and prime contractors insist on enforceability, the net result typically shifts the risk onto the party least likely to negotiate fair limits, to control events on the jobsite and absorb the ultimate cost. Nevertheless, these clauses are found in most construction contracts in some form or another.
In recent years there has been increased discussion on the risk aspects of green or 'high performance' buildings and how the industry might address those risks. I gave my first presentation on the subject at a joint CIBSE/ASHRAE conference in September 2003 in Edinburgh, Scotland. While final case law and court decisions regarding green buildings are still limited at the time of this writing, prudent practice would recommend that designers, contractors and owners consider the potential risks, arrive at some appropriate factors or strategies to address those risks and act accordingly.
James W. Haile Jr. C.P.M., of JWH & AssociatesApril 2010
Over the last several years, supply management professionals have been spending a majority of their time in creating, implementing and managing Business Continuity Planning (BCP) for critical products, materials and services. BCP is a strategic management process that focuses on insuring continuity of supply. The main objective is to identify and minimize or eliminate business interruptions in the event of a catastrophic event or major incidents occurring within the supply chain that can lead to adverse consequences for your business. Ten to twenty years ago, supply disruptions were caused by major snow storms, truck breakdowns, labor strikes, fire or explosions, electrical outages, machine breakdowns or even a truck driver making an unscheduled social visit. In today's global business environment, business supply disruptions have greatly expanded in scope. They now include and are not limited to the following:
Donald R. KeerMDCSystems®Consulting Engineer
As companies strive to improve energy consumption, promote environmental responsibility and improve the use of sustainable fuel sources to either generate revenues or improve their bottom lines the risks are not always in the determination of capital budgets, project scheduling or execution but in the gaps between technology unit operations. Renewable energy facilities can have a dozen or more process unit operations, each with proven technologies yet at the unit interfaces the process can break down leading to reduced efficiencies, higher than expected start-up costs and lost profits.
Peter L. Mansmann, Esq.Precise, Inc.
120,000 emails, 9 months. I recently counted the number of emails I either sent or received in a single day. I was surprised at the number: 67. If you multiply that by a 10 person operation, over the course of a 9 month project, you have a total of over 120,000 emails sent and received during that time period. Add onto this Excel files, electronic schedules, digital photos, drawings, etc… and you have quite a large data set. The construction industry today, like most businesses, has entered an age where a staggering amount of electronic data, files and emails are created during the course of a project. Managing this amount of information can be a challenge in the course of everyday business. If litigation results from the project, this large body of electronic information can create an expensive problem.
E. Mitchell Swann, P.E., LEED APMDCSystems®Consulting Engineer
The Growing Importance of Energy Modeling
As a strong component of the sustainability initiative in buildings, energy use is rightfully taking its place as a leading metric in evaluating a building's performance. Further emphasizing the importance of performance measurement is the expected roll out of an industry wide "Building Energy Performance" label which is intended to provide an objective comparison of energy use between buildings. Rating systems like Energy Star along with model energy codes look at both predictive energy use models and actual usage as crucial to determining a building's true performance and rating. The USGBC's newly issued LEED v3.0 rating system requires the initial certification, recertification and by extension the possibility of decertification of LEED buildings to be tied closely to comparisons of modeled and measured energy use over time.
Recently, MDC® made the jump from Primavera P3 (version 3.1) to P6. However, the landing was a little rough- initially, erroneous information was received from a Primavera representative and then outside IT consultants had to be brought in to resolve issues with the server installation. If the installation experience is any indicator, it seems likely that P6 will require more IT overhead on an ongoing basis. This is in addition to the learning curve for the new features and capabilities of P6.
Robert C. McCue, P.E., Consulting EngineerRobert Kennedy, P.E., Former Consulting EngineerMDCSystems®
The purpose of the Critical Path Method (CPM) schedule (A scheduling technique whose order and duration of a sequence of task activities directly affect the completion date of a project)is to assist in the cost effective management of the project, anticipate problem areas, and allow the project team to mitigate the impact of unforeseen conditions. What a tool! Without this tool, the project management team is simply reacting to a crisis of the moment and their hurried reaction may exacerbate an already difficult project by doing harm in the response to the disaster of the moment.
E. Mitchell Swann, P.E., LEED APMDCSystems®Consulting Engineer
Green is going away. Not the color, so your kid's next box of Crayola crayons is safe. Not cash, dough, moolah or whatever other shorthand for US dollar bills you use despite all the stories predicting its demise throughout the years. Within 5 to 7 years the term 'Green' used to describe buildings, processes or industries will, like Monty Python's dead parrot, "cease to be". This is not because the issues that have given rise to the current wave of Green building will have gone, been solved or no longer matter but almost due to the exact opposite being the case. Green or sustainable buildings have emerged in part because of and as a response to 'not Green' buildings.
Amal Kabalan, LEED A.P.MDCSystems®Consulting Engineer
Engineering and Financial Analysis
In the article "Pennsylvania Solar Energy Rebate on Hold: How Consumers Can Still Save Energy" published in the February 2009 edition of the MDCAdvisor®, the steps that homeowners can take in order to reduce their energy consumption were outlined. This article discusses a case study that shows the effect of implementing two of the mentioned suggestions namely: increased attic insulation and powered, thermostatically controlled roof ventilation. Moreover, since the Pennsylvania Solar Energy Rebate program has been funded, a detailed analysis of costs and benefits of installing a solar power system on a residential house will be outlined and whether such a project is a viable option in light of all the federal and state incentives will be discussed.
Selwin BriggsMDCSystems®Former Consultant
The Advanced Energy Design Guide was developed to provide contractors and designers with a simple approach to exceed energy savings of ANSI/ASHRAE/IESNA Standard 90.1-1999 by 30%. Without resorting to time consuming analysis, the guide offers a means for construction professionals to provide owners with more value through a combination of optimized process and proven design practice. Written for office buildings no greater than 20,000 square feet, the guide is meant as a supplement to the 90.1 standard, with an outline that reads more like a textbook than code specification. The energy saving goals and means are broken down by building component; envelope, lighting, HVAC, service water heating, and more. Hour-based energy analysis software verified the 30% savings in energy. This guide provides detailed tables, climate zone-specific examples, and stepwise methodology.
Daniel J. SporerMDCSystems®Consultant
You are a month and a half into construction of a planned one year project. It's a new client and if you do well, you are in line to construct his future projects. However, the Engineers' drawings don't quite match the existing site conditions; there is already an inordinate amount of Requests for Information (RFIs), and the Client is very involved with your construction means and methods. No change orders have been written because 1: You "worked-around" the site layout problems; 2: There is still time to resolve the unanswered RFIs and 3: The finish milestone on the project has not been affected because you used float in the schedule. In any event, you don't want to "nickel and dime" the new client.
Amal KabalanMDCSystems®Former Consulting Engineer
How Consumers Can Still Save Energy
Last July Pennsylvania state officials announced the $100 million consumer and small business solar energy rebate program -- part of a $650 million Alternative Energy Investment Fund -- when it was signed into law. Recently the residential solar energy tax rebate program was put off. Given the current credit market conditions, it was deemed a "bad time" to float the government bonds needed to fund the $100 million program. "Anything that is tied to Commonwealth Financing Authority ... bond issue is on hold because of the Wall Street financial meltdown,'' said John Nikoloff, a principal with Energy Resources Group of Harrisburg, who has been following the program. Much of the program, including a solar energy rebate that was promoted as paying for up to 35 percent of the cost of installation of solar panels, was to be funded through Pennsylvania bond issue.
Today there is a lot of dialogue about 'being green', 'energy efficiency', and 'carbon footprints'. One of the main promises of campaigning politicians is investing in renewable energy technology. Every other commercial on TV or in a magazine speaks about green energy. Solar power is a major component of the renewable energy mix. By now, most people know that solar energy is a pollution free technology; it has the potential to reduce your carbon footprint and provide clean energy for future generations. In 2010 state imposed rate caps on electricity are set to expire, and utilities are positioning themselves for massive rate increases in Pennsylvania. Before deregulation, Pennsylvanians paid 15 percent more for their electricity than the national average. With current caps those customers are paying 2 percent less than the average. Amid all these promises and buzz one would think that it is time to invest in solar energy.
E. Mitchell Swann, P.E., LEED A.P.MDCSystems®Consulting Engineer
A day doesn't go by without hearing of the next new green building project in almost all sectors - from major owners to the one-off office park on the highway. Everybody wants to be 'in,' but it is important to understand what one is getting into before one is deep into it. Not recognizing the landscape can lead to problems, misunderstandings, and claims. A common thread in the analysis of construction claims is a comparison of 'the work done' by one participant with what a 'comparable' practitioner would do on a similar project. This is commonly referred to as "custom and practice," or the Standard of Care.
View as PDF Thomas Hundertmark, Andre Olinto do Valle Silva, and Jeff A. Shulman June 2008
E. Mitchell Swann, P.E.MDCSystems®Consulting Engineer
Mold cases have become almost as prolific in the legal world as the little fuzzy devils themselves in the real world. Mold is a hot topic and claims associated with mold, mildew and related IAQ issues including EIFS leaks and failures have multiplied at an exponential rate. When faced with a mold claim, there are some basic steps that should be taken before dispatching the chlorine bleach strike force. You must keep in mind that mold is ubiquitous in the environment – it is the types and concentration levels that are key. The extent to which any given person will react negatively to a mold is extremely variable as well.
Jeff Yick, Esq.Zetlin & De Chiara LLP
A no-damage-for-delay clause attempts to contractually bar recovery by a contractor or subcontractor in the event project delays result in damages or extra costs. A sample no-damage-for-delay clause is as follows:
The Contractor agrees to make no monetary claim for delays, interferences or hindrances of any kind in the performance of this Contract occasioned by any act or omission to act of the authority of any of its Representatives and agrees that any such claim shall be fully compensated for by an extension of time to complete performance of the work.
Document discovery is to be anticipated and disliked on every construction litigation effort. By their nature, construction projects are paper and electronic data generation machines. How can the litigation team quickly and efficiently navigate through the voluminous and redundant files while collecting the most important documents?
The Importance of Systems Thinking and Integration in Project Delivery
Recently the global marketplace has been buffeted about by news of the recall of children's toys by several major manufacturers and by the collapse of the subprime lending market including its investment derivatives and related impacts on credit and capital markets worldwide. These items might seem completely unrelated to each other, not your typical project management or construction topic. Try this; think about each scenario as a portrait of a system and consider the impact on a project if the system components are misaligned.
The World's First "Green" Semiconductor Manufacturing Facility
The construction world has been abuzz with green homes, green condos and green cars aplenty this year, but little attention has been paid to some of the more esoteric projects whose impact per square foot can be enormous. Texas Instruments (TI) recently completed the first LEED certified semiconductor manufacturing facility (wafer fab) in the world.
In our last edition of the MDCAdvisor® we talked about BIM (Building Information Modeling) Systems and the impact of that technology on the way projects are done and the way team members relate to each other. We are going to climb the tree a bit higher to see what changes in the landscape make BIM possible - beyond really neat computers.
View as PDF Anil Verma and Serge Lambermont June 2007
This is the second Quarter, 2007 Edition of the MDCAdvisor®. Spring has sprung in fits throughout much of the East Coast. Weather was 70 ºF on April 2nd and 30ºF by April 8th.
Much like the weather, there are issues afoot in the building industry which are moving in a herky jerky fashion but seem to be moving toward an inevitable conclusion. These are the issues of greenhouse gases and sustainability, and some sort of rational response to same. While the political world is still a bit topsy-turvy with debate on the subject, the building industry has been keen to push forward on a number of fronts – some driven by climate change and others driven by a desire to deliver better buildings for their owners and occupants. Unless you have been living in a cave (which actually would be pretty 'green') you have heard of the LEED® Green Building Rating SystemTM from the US Green Building Council and 'green' buildings.
Construction is as timeless as the pyramids. As a result, the most common construction risks have already been identified and allocated in the terms and conditions of standard form contracts. These are published by a multitude of professional associations such as the Construction Management Association of America (CMAA) and the American Institute of Architects (AIA). This article discusses the practical aspects of risk management and how to convert a potential problem to work to your advantage.
Anyone who has read Thomas Friedman's "The World Is Flat" might glean an idea of where this article is going right away. If you haven't read the book, it is a good one. About 2 years ago MDCSystems® presented at the London Construction Superconference on some of the benefits, challenges and issue associated with the use of 3D and 4D modeling technologies in the design, documentation and delivery of capital projects. Since that time, there have been even more developments – not just in the nature of the technology, but also in the level of accessibility or breadth of application. This expanded modeling regimen has come to be called Building Information Modeling or BIM.
Robert N. Kennedy, P.E. MDCSystems® Former Consulting Engineer
Leigh Erin Schmeltz, Esq. October 2006
As demonstrated by the popularity of CBS's television show CSI: Crime Scene Investigation, the intriguing field of forensic science is capturing the attention of many across the nation. Beyond entertainment and education, however, forensics plays a very real and crucial role in civil investigations, using technology to investigate and establish facts in the civil courts. Evidence that illustrates wrongdoing, negligence and malfeasance through photographs, detailed reports, and testing can mean the difference between an adverse judgment and a complete discharge from liability. Every detail can help tell a story. Whether the detail is a stress fracture of an improperly driven pile, an e-mail or a letter, the challenge is to preserve the evidence for later interpretation and examination. The intentional or negligent destruction or significant alteration of such evidence, or the failure to preserve property for another's use as evidence, in pending or future litigation, is called spoliation [Black's Law Dictionary (8th ed. 2004)].
Ronald F. Parisi, P.E.Former MDC® Project DirectorAugust 2002
Owners involved in ongoing construction projects are virtually unanimous in recognizing the need to minimize the number and amount of change orders as a way to keep the project costs within budget. In viewing change orders with only this in mind, however, owners may tend to overlook the benefits that the change order process offers to owners. The primary benefits afforded by the change order process are that it allows owners the flexibility to respond quickly, to capitalize upon opportunities and to mitigate problems — both of which frequently arise during the course of construction.
A journey of one thousand miles begins with the first step. However, any journey carries with it some element of risk and possible pitfalls along the way. To better your chances of reaching your desired destination, it is important that the first step be a step in the right direction. Design is often the first major step in executing any project. As that 'first step', design is a key component of a project's overall risk potential. Following is a discussion of some risk elements in the design process.
Interview with Joe Gionfriddo, Global Construction Process Owner of Proctor & Gamble
MDC®'s Mitchell Swann met with Joe Gionfriddo at this year's McGraw-Hill Global Construction Summit in Beijing, China in April 2006. Mr. Gionfriddo, the Global Construction manager – Corporate Engineering at P&G, was a part of a Panel Program entitled "What Do Global Owners Need?" which featured speakers form a number of global owners. We thought his comments and viewpoints were very insightful and would be of value to our Advisor readers. Below is a short interview we conducted with Joe Gionfriddo.
In previous editions of the MDCAdvisor®, our contributors have addressed risk issues relative to budgeting and cost estimating as well as overall risk considerations. A key contributor to almost all of the potential project risk scenarios is the conception, development and execution of the design process for the project.
A hot topic in the world of ADR (Alternative Dispute Resolution) is the extent to which 'neutrals' should be qualified and what type of qualifications they should have. Often, the first reaction is that the neutral should have legal training as their predominant skill and some experience with the subject matter of the case. As part of the program at the American Bar Association's ADR Section Meeting in Los Angeles in April 2005, MDCSystems®, along with the other contributors to this article, discussed the use of technical experts as neutrals in ADR proceedings. Below is a summary of the key issues, ideas and opinions addressed and presented by the panel. The panelists come from varied backgrounds but all have participated in ADR proceedings in one form or another.
Using Project Management Modeling Tools to Quantify, Analyze and Reduce Exposure to Risk
Some project histories are very complex and traditional schedule and damage analysis methods are not able to quantify the impacts of events that have occurred over the life of the project. In these situations MDC® has relied upon more sophisticated mathematical and system based models to attribute impacts to particular events. The usual methods of determining and reducing risk on construction projects include schedule forecast, cost forecasts and change review analysis performed by the project team. However, sometimes these techniques do not allow for an overview that properly adds the effects of many individual events. On these occasions the project team needs more powerful and sophisticated tools that can include multiple project factors including resource availability, site conditions, environmental factors and productivity levels for both planned and actual conditions on the project to date, all factors that cannot be completely comprehended by the project manager without the aid of analysis.
John P. Sieminski, EsquireBurns, White & Hickton, LLCDecember 2005
Information Explosion
Risk and risk sharing means different things to different people. It may not be possible to eliminate all risk in undertaking capital projects. Owners will attempt to shift risk onto contractors through contract provisions, while contractors will attempt to share risk among the subcontractors and suppliers. Nevertheless some risk remains for all and cannot be eliminated. However, it is possible to recognize and limit risk for the overall project by implementing effective planning and execution strategies during the conceptual stage of the project.
Robert N. KennedyMDCSystems®Former Consulting Engineer
The benchmarking process is one where a project's general scope using key metrics is compared to other similar projects. This general metric/scope includes such items as total gross square feet, net square feet, rentable square feet, net-to-gross ratio, number of occupants, the number of particular spaces (i.e. number of rooms in a hotel), general configuration (footprint and/or number of stories), location of project, and timeframe. If this initial comparison doesn't illuminate a projects cost and/or schedule similarities or peculiarities, then one must delve deeper into the project scope to determine any or all differences. This means the stakeholders must understand the projects detailed scope parameters such as type of structure, assumed number of interior spaces, the level of finishes and specialties, the vertical transportation needs, the requirements of the mechanical and electrical systems, and site specific differences (roads, utilities, parking, etc.). Once this type of comparison is completed, a proposed facility should be fully benchmarked against its peers.
Daniel J. SporerMDCSystems®Consultant
Donald R. Keer, P.E., Esq.MDCSystems®Consulting Engineer
The pressure is growing on local municipalities to consider privatization of their water and wastewater systems. Both the EPA and the Bush Administration favor privatization as a way for local municipalities to meet ever tightening regulations. These systems are critical to public health and economic development. Despite the critical nature of these systems maintenance and upgrades have lagged as the quality standards have increased.
How can a large, well-funded capital project fail to achieve its technical, cost and performance goals and why is this still a common outcome? These projects are typically undertaken by teams of personnel from the Owner, Architect and Engineer firms and Contractors. How can such a collection of talent, carefully selected based upon experience and references, fail to deliver? The answer lies in part in the inherent instability1 in the contractual structure of the participants which results in incentives/disincentives to proactively solve problems and engage in CYA activities. Systems Thinking provides a new way to understand and thereby avoid these problems.
James M. McKay, AIA, P.E.Former MDC® Project ManagerAugust 2002
Construction is, to a great extent, a paper business. In addition to a completed building project, an end result of the construction process is reams of documents. From initial project concept through completion, an extensive paper trail is generated.
Francis J. Brennan, P.E.August 2002
A construction project in default is an emotionally charged situation, with many parties exposed and a lot of money at risk. The owner's use of the facility will be delayed. The contractor's work on the project and perhaps years in business may come to an end. The designer's envisioned project is on hold. The surety faces an uncertain exposure.
Michael C. Loulakis, Esquire, Wickwire Gavin, P.C.(Originally printed in Legal Trends)
Under "pay-if-paid" clauses a subcontractor is not entitled to payment if the owner fails to pay the general contractor, regardless of whether the subcontractor was at fault. General contractors use these clauses to assign to their subcontractors the risk of owner nonpayment.
Design professionals can play an important role in properly setting the course for the construction project, especially in minimizing the likelihood of claims and disputes. For example, not only can the architect serve as the master builder, but also as the master of dispute prevention and resolution.
The primary goal in construction recordkeeping is to manage crucial information to facilitate decision-making. A secondary goal is to document key aspects of the project to provide an audit trail or comply with legal or regulatory documentation requirements. Frequently project participants lose sight of these two important goals; and resort to "wall-papering" the project office with reams of useless documents.
Contracts for the construction of new ships have many key differences from contracts for ship repair. The most obvious difference concerns the type of work (new versus repair) but other important differences exist concerning the nature and extent of changes, scheduling, engineering and contract claims. Attorneys and others involved in contract administration and dispute resolution need to understand these important differences.
When faced with a default on their projects, many owners have unrealistic expectations concerning the surety's obligations under the performance bond. Owners feel frustrated when the surety does not aggressively step in to complete the work. However, under most performance bonds, if the contractor/principal is in default, the surety may discharge its obligations by any one of the following alternatives: (1) finance the contractor/principal to complete the work; (2) obtain a new contractor to complete the work under a direct contract with the owner/obligee; (3) complete the work with a new contractor under a contract with the surety; (4) permit or require the owner/obligee to obtain a new contractor; and (5) do nothing and wait for the owner to take action against the bond. As discussed in the lead article on page 1, deciding which option to exercise requires prudent management decisions often based upon reliable, accurate, and expeditious investigations by an experienced consultant.
October 2000
Shipyards that are building or repairing ships operate in a very complicated marketplace where costs are carefully monitored. Often, claims are submitted requesting additional costs above the stated contract amount because problems beyond the shipyard's control resulted in disruption of their as-planned flow of work. All too often, the alleged problems follow a pattern that becomes apparent when analyzing such claims. Common allegations of disruption include excessive owner changes, delays in approving changes, late responses to inquiries and problems, defective design, late or defective information or equipment supplied by the owner, and over-inspection. Such allegations form the basis for requests for equitable adjustments, claims, and lawsuits. However, many claims overlook problems that may be the responsibility of the shipyard such as underbidding the costs, rework due to poor performance, management and planning inadequacies, detail design errors, procurement problems and labor difficulties.
John E. Osborn and Eric L. GuhringOriginally printed in ©2000 The Metropolitan Corporate Counsel, Inc., Volume 8, No. 4, April 2000
Corporate owners and tenants who build in urban centers such as New York City are an "at risk" group. Getting everything "on line" quickly is expensive. Difficulties encountered during a failure in design or construction can be catastrophic if practical solutions are not developed promptly to get things back on track.
John E. OsbornOriginally printed in ©2000 The Metropolitan Corporate Counsel, Inc., Volume 8, No. 2, February 2000
Our law firm's practice concentrates in representing commercial and residential property owners on construction and environmental law matters. Our practice also includes advising clients on selecting architects, engineers, consultants and contractors, developing the bid process and drafting and negotiating construction and environmental contracts.
In addition to helping our clients obtain the best price under the best contract terms, we are increasingly asked by clients who are property owners to "check out" the financial stability and integrity track record of contractors, design professionals and other participants in the construction process.
John E. Osborn and Eric L. GuhringOriginally printed in The Metropolitan Corporate Counsel, October 1999
Cost effectiveness and success in the resolution of construction disputes is determined by a recipe. The recipe is different for each dispute because the characteristics and ingredients of each construction project and the participants and their quality vary widely. It is clear that the quality of inhouse counsel significantly affects the cost and success of the dispute resolution.
John E. OsbornOriginally printed in The Metropolitan Corporate Counsel, April 1999
When legislation passed Congress 15 years ago, requiring schools to be inspected for asbestos, a new industry was born. Surveying the nation's schools was a big task, performed in the public eye. This article looks at the evolution of trends and public perception relating to asbestos abatement in management, abatement methods, pricing, competition, health risk, legal liability, and court precedent. Before a property is purchased or renovated, an evaluation of asbestos risk is essential. With advance planning and practical strategies, the asbestos detriment can be turned into a benefit: discounts in the purchase price of commercial real estate is common when asbestos is present, if you know when to ask for those discounts. The same theory applies to the long term lease. Significant real estate tax roll-backs through use of the tax certiorari process can be worth millions when asbestos is present.
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