CE07.44 Communication & Negotiation Skills For PMs - Document Management-002 Documentation For Claim Management

CE70.
44 Communication & Negotiation Skills for PMs

Document Management
Part 2:
ROLE OF DOCUMENT MANAGEMENT IN CLAIM
MANAGEMENT/NEGOTIATION
CE70.44 Communication & Negotiation Skills for PMs 1

COMMUNICATION AND NEGOTIATION
DESIGNER THE EMPLOYER AUTHORITY
CONTRACTOR
Project Design and Finance and
Procurement Document
Management Engineering Site Accounting
Department Controller
Department Department Department
Communication and Negotiation between parties
Communication and collaboration between

SUPPLIERS SUBCONTRACTORS Project Team
Claim/Dispute negotiation

Impacted Claim Analysis Process
Analyze Analyze
Loss of Impact of Perform
Perform Productivity Specific Fact-finding &
Claim issues
Preliminary Technical
Analysis Analyze Time-Impact Issue
(Delay) Analysis
Determine Prepare Conduct

Summarize
Causation& Claim Report Meetings
&
Assign With To discuss,
Calculate
responsibility Backup & Negotiate,& settle
compensation
Exhibit The claim
CORE PROCESS: Impact Claim Analysis Process
CE70.44 Communication & Negotiation Skills for PMs

1. Perform preliminary analysis
“Get understanding of key project records &

Claim documents”

1. Perform preliminary analysis
INPUT PROCESS OUTPUT
Review contract
Contracts
document
Counter parties’ submittal Understand Counter

claims parties’ submittal claims
Identify Hot issues & List of Hot issues &

Staff Interview
damage damages problematic areas
Prioritize issues
Preliminary issue summary Preliminary issue reports

Sample of Preliminary Analysis
• Curtain wall Delay

• Difference Site Condition
• Water Leakage
• Veneer Damage

2. Analyze Time Impact
“Demonstrate accurately the impact of event

upon the project schedule and overall project
completion”

2. Analyze Time Impact (Delay)
Level of detail in WBS

Analyze/Adjust the
As-planned schedule
baseline schedule
Appropriateness
of logic & duration
Develop As-built
Updated schedule
Schedule
Apply appropriated
delay analysis methodology
Critical path
Identify major-minor
project delay
Determine
Critical delays
critical delays

Type Delay Claim

Standard delay evaluation techniques
• As-planned vs. As-built

• Impacted As-planned
• Time Impact Analysis
Depend upon the availability of Project

records/Documentation

General Delay Analysis Methodology
“Time Impact Analysis” methodology
• The Society of Construction Law (“SCL”) is a noted international

authority which provides guidance on common issues that arise with
construction contracts. The SCL states* that the “Time Impact
Analysis” methodology “is based on the effect of Delay Events on the
Contractor’s intentions for the future conduct of the work in the light
of progress actually achieved at the time of the Delay Event...”
*The Society of Construction Law, Delay and Disruption Protocol: October 2002 (October2004 reprint)@¶4.8 p.47

General Delay Analysis Methodology
“Time Impact Analysis” methodology
• The SCL provides guidance as to how to perform a “Time Impact Analysis.”
• The SCL states* that the amount of EOT is obtained by using the Updated
Programme and that the steps to be taken are as follows:
• the Programme should be brought fully up to date (as to progress and the
effect of all delays that have occurred up to that date, whether Employer
Delays or Contractor Delays) to the point immediately before the
occurrence of the Employer Risk Event;
• the Programme should then be modified to reflect the Contractor’s realistic
and achievable plans to recover any delays that have occurred, including
any changes in the logic of the Programme proposed for that purpose;
• the sub-network representing the Employer Risk Event should then be
entered into the programme; and,
• the impact on the contract completion dates should be noted.
*The Society of Construction Law, Delay and Disruption Protocol: October 2002 (October2004 reprint)@¶3.2.7 pp.43-44

Schedule Analysis
AS-BUILT SCHEDULE
Multiple Prime Contractors

Schedule Analysis
DELAY RESPONSIBILITY
Curtainwall Installation

Disruption Analysis
ASIAN INSTITUTE OF TECHNOLOGY 19 MAY – 01 JUNE 2013

3. Analyze Loss of Productivity Claim
“Compare the labor productivity on similar

work during period of No Impact with labor
productivity during period of Claim Impact”

3. Analyze Loss of Productivity Claim (Disruption-
Acceleration)
Level of detail in WBS

Analyze/Adjust the
As-planned schedule
baseline schedule
Appropriateness
of logic & duration
Develop As-built
Updated schedule
Schedule
Apply appropriated
delay analysis methodology
Critical path
Identify major-minor
project delay
Determine
Critical delays
critical delays

Disruption Analysis
MEP Planned vs. Actual Man-hours through 31Dec07
Planned Manhours Actual Man-hours by System through 31Dec07
Plumbing
Actual Manhours
Electrical
HVAC
19 MAY – 01 JUNE 2013

4. Analyze Impact of Specific Issues
“Change Order, Submittal, and RFI”

4. Analyze Impact of specific issues
Perform change Graphic Change

Change order log
order analysis order analysis
Identify significant Significant Change order

change order caused delay
Perform submittal
Submittal log Submittal Analysis
Analysis
Identify significant Significant submittal

change order caused delay
RFI log Perform RFI analysis Graphic RFI analysis
Identify Significant RFI

significant RFI Caused delay

Submittal Analysis- Submittal Response Time

Submittal Analysis: Submittal Approval Status

Submittal Analysis: Cumulative Drawing Submission

Submittal Analysis

RFI Analysis- RFI Timeline

RFI Analysis

5. Fact Finding & Issue Analysis
“Perform based on a list of Hot Issues&

Damage Problematic Area acquired from
the Preliminary Analysis”

5. Perform Fact finding & Technical issue analysis
• Correspondence •Perform fact finding &

• Meeting minute Issue analysis Issue files
• Daily inspection report
• E-mail
• Fax transmittal
• Photo,Video •Perform technical Brief summary of
issue analysis each issue
List of Hot issues & • Cause of Delay

damages problematic areas • Owner directive to
accelerate the work
• Owner disruption
Preliminary issue reports
Significant over-under
resource utilization
Significant Change order,

submittal,RFI caused delay
Critical delays

Fact Finding

Issue Analysis
Issue Curtain Wall

Issue Analysis
#1
ASIAN INSTITUTE OF TECHNOLOGY 19 MAY – 01 JUNE 2013

31

6. Assign Responsibilities
“Identify the cause of delay since any

parties involved in construction may be a
source of delay”

6. Determine causation & Assign responsibilities
Brief summary Determine causation

& Allocate delay responsibilities Issue files
of each issue
• Owner caused delays

•Significant Change order Analyze concurrent delays
• Contractor caused delays
•,submittal,RFI caused delay & individual delays
• Concurrent delay
Prepare schedule-delay Schedule –delay

Critical delays
analysis in graphic Analysis (Timeline)
This Step could be done concurrently with Time Impact Analysis

6. Determine causation & Assign responsibilities
Disruption Claim
Brief summary Perform Disruption: Cause Disruption: Cause & Effect
of each issue & Effect Relationship Relationship
Significant over-under resource

utilization & loss of productivity
Constructive Acceleration Claim

Brief summary Check with five conditions of proving
a constructive acceleration claim
of each issue
Significant over-under resource

Perform Constructive Acceleration: Constructive Acceleration:
utilization & loss of productivity
Cause & Effect Relationship Cause & Effect
This Step could be done concurrently with Time Impact Analysis

Assign Responsibilities
DELAY RESPONSIBILITY
Curtainwall Installation

Assign Responsibilities
1996 1997 1998 1999 2000
J A S O N JD F M A M J J A S O N D
J F M A M J J A S O N D
PROCUREMENT
Structural Steel
7/19 -49
56 CD ERECT FABRICATE
(GAIN) Structural Steel MEP Penthouse
57 CD -77 -22 -31
(GAIN) PROCUREMENT
Building Curtain Wall
-44 -21 -15 -55 -56 -32 -61 -35
FINISHES
Courtroom Millwork
6/9
ERECT Bldg
Building Curtain Wall Complete
-15 -55 -56 -32 -61 -35 6/16 -5 8/7
36
SUMMARY OF CRITICAL DELAYS TO PROJECT COMPLETION:
DELAYS PARTIES RESPONSIBLE FOR CRITICAL DELAYS
TIME FRAME CRITICAL WORK DESCRIPTION TRADE ISSUES IMPACTS AND (GAINS)
10/08/96 PROCUREMENT OF
STEEL SHOP DRAWING PROCESS 49 CD General Contractor / SS Subcontractor
01/13/97 STRUCTURAL STEEL
01/14/97 STRUCTURAL STEEL EARLY 56 CD
05/07/97
ERECTION OF STRUCTURAL STEEL STEEL
START (GAIN)
General Contractor / SS Subcontractor
CONCRETE PLACEMENT OF BASEMENT MODIFICATION #45 / SLAB 57 CD
05/08/97
SLAB ON GRADE
CONCRETE
ON GRADE (GAIN)
General Contractor / Owner
FABRICATION OF 5TH – 11TH FLR
05/08/97 ERECTION OF STRUCTURAL STEEL STEEL
EAST STRUCTURAL STEEL
99 CD General Contractor / Subcontractor
05/08/98 PROCUREMENT OF BUILDING CURTAIN INABILITY OF METRO PANEL TO
WALL
C/W
KEEP THEIR ENG’G SCHEDULE
65 CD General Contractor / CW Subcontractor
05/09/98
01/08/99
FABRICATION OF PENTHOUSE MEP MEP LATE START OF FABRICATION 31 CD General Contractor / MEPS Subcontractor
05/09/98 PROCUREMENT OF BUILDING CURTAIN
C/W
LATENT BLDG CURTAINWALL &
254 CD
General Contractor / CW Subcontractor
08/08/99 WALL & ERECT COMPLETION INSTALLATION AND REPLACEMENT CONTRACTORS
08/09/99
08/07/00
BULIDING FINISHES FINISHES RETROFIT / FINISH WORK 5 CD General Contractor / Finish Subcontractor
390 CD
12.81 Mos.

7. Calculate Compensation
“Evaluate and Demonstrate that increase

cost were actually been incurred”

Treatment of Direct Cost
• Direct Labor
– Direct labor overrun
– Wage Escalation
– Loss Productivity
• Direct Material
• Direct Equipment

Direct Labor

Total Direct Labor Overrun Calculation

1. Direct Labor Overrun
“The additional labor hours expended in performance of the contract which
exceed the labor hours originally estimated for performance”
Causes and Reasons Documents Department Information
Payroll record Human resource
Daily labor report Project Management Additional work hours
Other supporting documents Document control

Owner-caused delay,
Acceleration, directive to Union contract (Wage rate) Finance& Account
Applicable wage rate
perform work outside the Account record (Wage rate) Finance& Account
scope of contract
Labor burden record (Taxes,

Workers’ compensation, Insurance, Finance& Account Labor burden
Benet& Supervisory cost

Direct Labor Overrun Calculation
Direct labor cost overrun = Additional labor hours * Applicable wage rate
Sample of Total Direct Labor Overrun Calculation
For example, if additional labor hours are 31,500 hrs and applicable wage rate
is $17.50. Once the hours, wage rates, and labor burdens percentage are
determined, calculating direct labor overrun calculation is as
Direct labor cost overrun = Additional labor hours * Applicable wage rate
Direct labor cost overrun = 31,500 hrs * $17.50/hr = $551,250

2.Labor Burdens
“a Cost directly related to the employment of individuals but not reflected in
the employees’ wage”
Man-loading schedule Project Management Period in which labor

hour were expended
Labor timesheet Construction
Daily report Construction
Actual wage rate
Payroll record Finance& Account
Delay, Changes, Other acts
of the owner which push Union wage rate Project Management
performance of the contract Original wage rate
into a higher rate
Original wage rate Project Management

Workers’ compensation, Insurance, Finance& Account Labor burden
Benet& Supervisory cost

Labor burden Calculation
Labor burden = Direct labor overrun * Labor burden percentage
Sample of Labor Burden Calculation
For example, if employee-related expenses are $627,394 and total labor costs
including burden are &$1,575,000.
Labor burden percentage = Employ-related Expense/ [Total Labor Cost

including burden - Sample of Direct Labor Overrun Calculation] * 100
Labor burden percentage = $627,394/ [1,575,000-$627,394]*100 = 66.21%
Labor burden = Direct labor overrun * Labor burden percentage

Labor burden = $551,250 * 66.21% = $364,983

Total Direct Labor Overrun Calculation
Total Direct Labor Overrun = Direct labor cost overrun + Labor burden
Total direct labor overrun = Direct labor cost overrun + Labor burden
Total direct labor overrun = $551,250+$364,983 = $916,233

Wage Escalation

Wage Escalation
Man-loading schedule Project Management Period in which

labor hour were
Labor timesheet Construction expended
Daily report Construction
Actual wage rate
Payroll record Finance& Account
Delay, Changes, Other
acts of the owner
which push Union wage rate Project Management
performance of the Original wage rate
contract into a higher Original wage rate Project Management
rate

Workers’ compensation,
Finance& Account Labor burden
Insurance, Benet&
Supervisory cost

Sample of Wage Escalation Calculation
Sample of Wage Escalation Calculation
For example, if additional labor hours after wage increase are $2,500 hrs and
Difference between anticipated and actual rates are $3.5/hr
Wage Escalation Cost = Hours worked after wage increase * Difference

between anticipated and actual cost
Wage Escalation Cost = 2,500 hrs*$3.5/hr = $8,750
Labor burden = Wage Escalation Cost * Labor burden percentage

Labor burden = $8,750*66.21% = $5,790
Total Wage Escalation Cost = Wage Escalation Cost + Labor burden

Total Wage Escalation Cost = $8,750+$5,790 = $14,543

Loss of Productivity

Loss of Productivity
Job cost record report Construction
Finance& Actual cost

Pay requisition during impacted
Account
Delays, Change, period (Ex. Work
Acceleration Inspection report Construction
hour per linear
orders, foot/Labor cost
Deceleration per sq. foot)
orders, and Daily job log Construction
weather condition
Master plan
Project Baseline/Planne
(Baseline/Planned
Management d productivity
productivity)

Direct Material

Claim for Direct Material Cost
• Additional material
• Material Escalation

Additional material
Causes and
Documents Department Information
Reasons
Original BOQ & Original
Project
Defective Unit Rate (Bid quantity of
Management
Specification, Estimate) material
Owner- Actual
directed Finance& quantity and
Supplier’s invoices
change Account cost of
material

Material Escalation
Original Unit Rate (Bid Project

Estimate) Management
Original unit
rate/Material cost
Material cost (Engineering Project
Owner-caused delay new record) Management
Actual unit
Supplier’s invoices Finance& Account
rate/Material cost

Direct Equipment

Claim for Direct Equipment Cost
Amount of time
Payroll records of operating
Finance& Account equipment was being
engineer
operate
Hour& activities by cost

Equipment timecard (timesheet) Construction code for each individual
piece of equipment
Defective Specification,
Owner-directed change
Project master plan-Equipment Estimated equipment

Project Management
schedule hours
Bid estimate-Internal equipment Internal rate of

Project Management
rate equipment
Actual cost of
Invoice from third-party vendor Finance& Account
equipment

Head Office Overhead

Head Office Overhead
“Overhead generally consists of all other company costs that
cannot be directly attributable to a particular project. This would
include company management, home office ownership costs or
rent, and home office support staff and functions”

Eichley Formula
[Total Contract Billings] / [Total Company Billings for Contract Period] * [ Home Office
Overhead for Actual Contract Period ] = Home Office Overhead Allocable to the
Contract
[ Home Office Overhead Allocable to Contract] / [Actual Days of Contract

Performance] = Daily Home Office Overhead Allocable to Contract
[Daily Home Office Overhead Allocable to Contract] * [ Number of Days of Delay] =

[Extended Home Office Overhead]

8. Prepare Claim Presentation
“Claim presentation should be

logically built up, well organized,&
factually convincing”

Prepare claim report with backup & exhibit (Claim
presentation)
Compensation for delay Develop claim

, acceleration, and disruption presentation strategy
Schedule –delay Write claim summary

analysis (Timeline) report & presentation
Prepare backup & exhibit Claim report

9. Meeting, Negotiation, and Settle Claim
Determine “What they must have” &

“What they are willing to give”

Conduct meetings to discuss, negotiate, & settle claim
Determine minimum compensation

Claim report required to settle the claim •Negotiating goal
Select
negotiating team •Negotiating team
Setup meeting
& prepare agenda
Present the claim
Settle
the claim Dispute
• Compensation
Make the deal
• Time of payment

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CE70.

44 Communication & Negotiation Skills for PMs

CE70.44 Communication & Negotiation Skills for PMs 1

DESIGNER THE EMPLOYER AUTHORITY

Communication and Negotiation between parties

Communication and collaboration between

CE70.44 Communication & Negotiation Skills for PMs 2

Determine Prepare Conduct

CORE PROCESS: Impact Claim Analysis Process

CE70.44 Communication & Negotiation Skills for PMs

“Get understanding of key project records &

CE70.44 Communication & Negotiation Skills for PMs

Counter parties’ submittal Understand Counter

Identify Hot issues & List of Hot issues &

Preliminary issue summary Preliminary issue reports

CE70.44 Communication & Negotiation Skills for PMs

• Curtain wall Delay

CE70.44 Communication & Negotiation Skills for PMs

“Demonstrate accurately the impact of event

CE70.44 Communication & Negotiation Skills for PMs

Level of detail in WBS

CE70.44 Communication & Negotiation Skills for PMs

CE70.44 Communication & Negotiation Skills for PMs

• As-planned vs. As-built

Depend upon the availability of Project

CE70.44 Communication & Negotiation Skills for PMs

“Time Impact Analysis” methodology

• The Society of Construction Law (“SCL”) is a noted international

CE70.44 Communication & Negotiation Skills for PMs 11

CE70.44 Communication & Negotiation Skills for PMs 12

CE70.44 Communication & Negotiation Skills for PMs

CE70.44 Communication & Negotiation Skills for PMs

ASIAN INSTITUTE OF TECHNOLOGY 19 MAY – 01 JUNE 2013

CE70.44 Communication & Negotiation Skills for PMs

“Compare the labor productivity on similar

CE70.44 Communication & Negotiation Skills for PMs

Level of detail in WBS

CE70.44 Communication & Negotiation Skills for PMs

Planned Manhours Actual Man-hours by System through 31Dec07

19 MAY – 01 JUNE 2013

CE70.44 Communication & Negotiation Skills for PMs

“Change Order, Submittal, and RFI”

CE70.44 Communication & Negotiation Skills for PMs

Perform change Graphic Change

Identify significant Significant Change order

Identify significant Significant submittal

RFI log Perform RFI analysis Graphic RFI analysis

Identify Significant RFI

CE70.44 Communication & Negotiation Skills for PMs

CE70.44 Communication & Negotiation Skills for PMs

CE70.44 Communication & Negotiation Skills for PMs

CE70.44 Communication & Negotiation Skills for PMs

CE70.44 Communication & Negotiation Skills for PMs

CE70.44 Communication & Negotiation Skills for PMs

CE70.44 Communication & Negotiation Skills for PMs

“Perform based on a list of Hot Issues&

CE70.44 Communication & Negotiation Skills for PMs

• Correspondence •Perform fact finding &

List of Hot issues & • Cause of Delay

Significant Change order,

CE70.44 Communication & Negotiation Skills for PMs

CE70.44 Communication & Negotiation Skills for PMs

Issue Curtain Wall