Driver Trett Digest | Issue 20 - Magazine - Page 11
DIGEST | ISSUE 20
As a result, this employer's claim against its contractor is woefully short
of details and backup, yet our client, the employer, has kept good, even
exemplary records. The employer knows it has issues with tracking
down the records but is unable or unwilling to empower anyone within its
organisation, or an external consultancy like ours, to go and find the missing
material. All the evidence indicates that cost records were kept in detail
and that progress and activity reports were made regularly and timely, as
part of the management of the project. The foundations of a solid claim are
there, but the claim will founder because the energy to find and analyse the
material cannot be mustered up.
Another client, who is a contractor, has similar difficulties with its claim
against a major blue-chip employer. Again, the story is that:
1. All the project managers involved have left; most of them under a cloud.
2. The site reports were not maintained regularly or have got lost.
3. Personnel and resources on site were not fully and regularly recorded.
4. The baseline schedule was not regularly updated and issued.
5. Site money was spent out of petty cash to local contractors, without
Records,
Why so shy?
detailed records.
Andrew Miller, Associate Director, Driver Trett, London
Employers and contractors
alike produce records, but
sometimes it seems as
though they are reluctant to
preserve them for future use
- even when it means that
valid claims go unsupported.
Why are they so shy?
Recently, we have come across
both employer and contractor
organisations who proudly insist
that they have no available records.
Our clients are either pursuing or
defending claims for some millions
of pounds. All the advice they have
paid for, or been given, including
from the responding parties,
makes it clear that there is a sound
basis of claim if the time and cost
can be substantiated with records.
The employer organisation, in one
case, has a number of reasons
why they are unable to produce
substantiation:
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1. The business unit responsible for the project has an internal conflict with
the business unit responsible for pursuing the claim, resulting in a general
lack of ownership and cooperation.
2. The financial system that captures internal personnel costs has been
changed and the relevant records may be accessible in another country;
but no-one is quite sure, or much inclined to find out.
3. A significant part of project costs are captured, in detail, by an outsourced
service contractor who (potentially) was short staffed, abroad and has no
skin in this game.
4. Other project costs are captured in the SAP system, but records are not
complete. Some contracts could have been awarded by a partner organisation
before the formal commencement of the project, and are thus, lost to sight.
5. The project kept detailed reports recording site activities and progress daily reports, monthly reports, shift handover bullet reports, daily discipline
reports, HSE reports – but, the shared folder containing 'all' the project
info has massive voids in these records and includes only fragmentary
records of the primary construction activities. This is because the group
responsible for finishing and commissioning did not file their reports in the
same folder. No one knows where the missing items are, but they are good,
very good. Occasionally, an example shows up, attached to a supplier’s
invoice as supporting documentation. It contains an hour by hour record
of site activities, contractor interactions, personnel in the discipline team
- the lot.
The employer has said, in fairly straightforward language, that it expects
the claim to be presented with detailed cost and planning analysis and
with records supporting the items claimed. It has clearly intimated that
there are some valid heads of claim but that no settlement can be reached
without a properly substantiated statement of claim. This seems an
entirely reasonable position taken by the employer, and is consistent with
contractual requirements.
In practice, the site operations were closely scrutinised by the employer and
its site representatives. Due to the technical nature of the work, employer
representatives signed off completion and testing records for very small
discrete pieces of work. These records are available to the contractor but
have not been analysed to establish the dates and locations of particular
activities, nor their connection to the baseline and actual programmes and
critical paths.
The site operations required the workforce to be bussed to work locations,
but the records from the bus company of how many trips were made, with
how many passengers, to what locations, have not been analysed to support
resource utilisation.
The major construction sub-contractor was paid on a time and cost basis
and kept records of personnel and equipment deployed. These records
have not been made available for analysis.
So, we have again a situation where the records required to support a claim
have been kept but either cannot be found, or are not being provided, for
analysis.
In the contractor’s case, there is no doubt, an evaluation is to be done on
the cost of carrying out records recovery and analysis. This work can be
completed in whole, or in part, by the contractor’s staff, or by external
consultants, like Driver Trett. For a multi-million-pound project, the price of
finding and analysing records is inevitably time consuming and costly. It is,
however, a necessary precursor to establishing a cost and schedule claim,
and winning the dispute.
A
successful
claim
needs to be built on
solid foundations. Don’t
go there [court] unless
you have the time and
cost records buttoned
up and on your side.
The contractor takes the view that
the recognition by the employer
of some entitlement means that
the claim can be settled by horse
trading, based on round-sum
amounts, loosely based on the
global cost overruns incurred.
Reminiscent of Robert the Bruce
and his spider (or possibly
Einstein's alleged definition of
insanity) this contractor has
submitted substantially the same
claim in substantially the same
form three times, with exactly the
same outcome.
Our proposals to re-build the claim
on a sound footing were roundly
rejected, probably because of
the expectation that the exercise
would be expensive and that
further resubmissions of the same
material would eventually work.
Robert's spider managed it, but
our contractor would be unwise to
follow the same course.
From the outside, it seems
glaringly obvious that a successful
claim needs to be built on solid
foundations. The courts are littered
with claims that have fallen apart
under cross examination in the most
embarrassing circumstances for
the delinquent party. Don't go there
unless you have the time and cost
records buttoned up and on your
side. There may be complications
and internal difficulties that make
it hard to pull together the data
but to proceed without either belt
or braces carries a serious risk of
exposure.
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