2010 AACEi Great Debate - Approval of Schedule Revisions

The Great Debate
Should Schedule Revisions Require
Owner Approval?

Should Schedule Revisions Require Owner Approval?

• The Debaters:

• Pro position debated by the team of Chris Carson and Mark Boe
– affectionately called “The Naysayers”
• Con debated by the other team of Mark Sanders and Carmelita
Thorndike – just call them “The Manipulators”

• Now, for those that are unenlightened enough that they don’t
know these famous orators, a few biographical facts:

2

Carmelita Thorndike
• The SCL COO, Contractor Rep (you want what? when?)
• Represents the Contractor viewpoint

3

Mark Boe, P.E., PSP, all around good guy
• Master of the “it depends” response (Partner in charge of RFIs)
• Represents the Owner viewpoint

4

Mark Sanders, P.E., PSP, CCE
• Contractor – friendly consultant (ohhh, the poor contractor!)
• Represents the Contractor viewpoint

5

Chris Carson, PSP, CCM, PMP
• Pure and Subjective Owner CM (never met a change order he liked)
• Represents the Owner viewpoint

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• NOTE:

• The Pro position is that revisions should require Owner
approval
• The Con position is that revisions should be allowed without
approval and should not require Owner approval

• The terms come from shortening of the Latin phrase, “pro et
contra” which means “for and against”

• Now for some background to frame the debate…

• These slides look like they were designed by the cost engineers.

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• Definitions
– Schedule Revisions
• Any change to the schedule except for progress updates
• Serious changes to network logic and/or durations
– Schedule Updates
• Progress only
• No changes to any logic, durations, calendars, lags, constraints, or other
software settings

• And we choose:
– Schedule Revisions
• Serious changes to network logic and/or durations
• Minor changes to accommodate project management minor changes to
plan are included in schedule updates

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• Available Owner Actions
– Silence (as Donald calls it) of the owner – receipt only, no response to schedule
submission
• Owner anticipates that the schedule will meet the schedule specifications
• Owner does not provide any response to the schedule
– Review and acceptance
• Owner acknowledges schedule contains no conflicts with their needs
(milestones, Owner responsible work, access)
• Owner checks to see that schedule meets schedule specs
• Owner review comments on issues with the statement above
– Review and Approval or Rejection
• Owner reviews for technical accuracy, and agrees that the project is
constructible as represented in the schedule
• Owner review comments clarify approval of constructability
• Owner review comments on any technical issues, generally providing
deficiencies and best practice violations (hopefully separately)

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• Available Contractor Actions for Submissions
– Contractor language indicating silence is approval (Donald)
– Failure to submit schedule
– Failure to respond to Owner’s comments
– Rebuttal of Owner’s comments
– Build claim

10


• Legal positions concerning approval (see end):
– o Does it matter where a schedule is approved or not?
– o How does it affect time extension requests?
– o How does it affect forensic claims?

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• When a schedule is approved there is a rebuttable
presumption of correctness or reasonableness of the
schedule. Santa Fe, Inc., VABCA No. 2168, 87-3 BCA ¶
20,104 (1987).
– Because of this rebuttable presumption of the reasonableness of the
schedule where an approval is in place, many Owners are afraid of
approving any schedule much less an early completion schedule.
– However, the approval process is the only chance for the Owner to
weigh in on overly aggressive or erroneous schedules (with all float
removed, defective logic, unauthorized inclusion of constraints,
unrealistically short approval cycles, etc.).

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• Case law holds that even where a schedule has been
approved it will be thrown out if it contains unrealistic
logic and/or durations.
– See e.g. Neal & Co. v. United States, 36 Fed. Cl. 600 (1996); Hensel
Phelps Construction Co., ASBCA No. 49270, 99-2 BCA par 30,531 (1999).

13


• Owners and/or their Construction Managers will
occasionally refrain from approving or acting upon a
Contractor’s proposed schedule because they fear that
their response can later be used by the Contractor as
acceptance of the schedule and the Owner’s
responsibility under the schedule.
– In many cases, this type of forbearance is unsuccessful. Courts have
imposed implied obligations upon Owners with regard to the schedule
despite the Owner’s silence.
– In one case, when an Owner even orally disclaimed parts of the
schedule but failed to actually reject the Contractor’s initial proposed
schedule, the Owner was held to be bound to time durations contained
in the submitted schedule. Fullerton Constr. Co., ASBCA No. 12275, 69-2
BCA ¶ 7876 (1969). See also G. Blindzius Contractors, Inc., ASBCA No.
37707, 90-2 BCA ¶ 22,835 (1990).

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NOW, ON TO THE DEBATE!

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• Doesn’t the Contractor own the schedule?
– Pro – Project is for the use of the Owner

16


– Con – Contractor has risk of performance

17


• Shouldn’t the Schedule model the project plan?
– Pro – Updated schedules will be the basis for future Time Impact Analyses

18


– Con – Nimble project management requires that the Contractor make changes
constantly to keep up with field decisions and deviations

19


• Didn’t the Owner already review and approve the original
baseline schedule?
– Pro – Why should new revised schedules escape this scrutiny?

20


baseline schedule?
– Con – Update is a different condition; owner already knows means and methods

21


• Isn’t the approval process difficult?
– Pro – Analysis must be done anyway, just another step

22


– Con – Adds another cycle or requires dual schedule submission, and what
happens when Owner wants to reject revisions?

23


• How to handle time frame for review/comment/approve?
– Pro – Can be done easily during update review

24


– Con – Takes too much time away from management

25


• Doesn’t the Owner provides a double check that all
scope is included?
– Pro – Raises quality of schedule & ensures that predictions of completion are
more accurate

26


• Doesn’t the Owner provides a double check that all
scope is included?
– Con – Scope and performance risk is up to Contractor

27


– Pro – Project is for the use of the Owner

28


– Con – Contractor has risk of performance

29


– Pro – Updated schedules will be the basis for future Time Impact Analyses

30


– Con – Nimble project management requires that the Contractor make changes
constantly to keep up with field decisions and deviations

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baseline schedule?
– Pro – Why should new revised schedules escape this scrutiny?

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baseline schedule?
– Con – Update is a different condition; owner already knows means and methods

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– Pro – Can be done easily during update review

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– Con – Takes too much time away from management

37


• Isn’t there a risk of claims positioning in revisions?
– Pro – Owner must have ability to enter into discussion about claims positioning

38


• Isn’t there a risk of claims positioning in revisions?
– Con – Claims only happen when there is an impact event or productivity drag

39


• Shouldn’t the Owner must have input into how its work
interfaces with schedule changes ?
– Pro – Contractor often does not include Owner responsible work, such as review
time, or Owner-furnished equipment delivery

40


• Shouldn’t the Owner must have input into how its work
interfaces with schedule changes ?
– Con – Schedule has milestones and information for Owner to use

41


• Don’t changes in the schedule make it harder to monitor
and compare?

42


• Don’t changes in the schedule make it harder to monitor
and compare?

43


• Shouldn’t the Owner have an expectation that the
Contractor will build according to submitted baseline?
– Pro – Owner’s plans are based on baseline schedule, any deviations must be
reviewed

44


• Shouldn’t the Owner have an expectation that the
Contractor will build according to submitted baseline?
– Con – Owner can watch the schedule and must be flexible enough to allow
progress, including changes in plan

45


• Shouldn’t the Owner have an opportunity to run risk
management on the revised schedule?
– Pro – Risk management is a serious need and requires constant review

46


• Shouldn’t the Owner have an opportunity to run risk
management on the revised schedule?
– Con – Risk of performance is Contractor’s

47


• Aren’t there Liquidated Damages for late completion?
– Pro – Goal is for the project to finish on time, not to earn LDs

48


• Aren’t there Liquidated Damages for late completion?
– Con – Risk of LDs should be enough control for Owner

49


• Shouldn’t the Owner be allowed to protect against early
completion schedules produced during updates?
– Pro – Float is generally available to first need, early completion schedules can be
a Contractor’s attempt to take possession of float

50


• Shouldn’t the Owner be allowed to protect against early
completion schedules produced during updates?
– Con – Good progress will cause this situation anyway

51


• Doesn’t the Owner have a right to ensure schedule
includes resource planning and availability?
– Pro – Failure to continue to plan for resource availability will ensure failure of
project

52


• Doesn’t the Owner have a right to ensure schedule
includes resource planning and availability?
– Con – Risk and resource availability is up to Contractor

53


• Can’t the Owner reject the submitted revised update
schedule anyway?
– Pro – Better to know it immediately than later when it causes a problem

54


• Can’t the Owner reject the submitted revised update
schedule anyway?
– Con – Exactly, if Owner disapproves, schedule is worthless to Contractor for
management

55


• Doesn’t the process of review and approval result in
better negotiated schedule changes?
– Pro – This is a good thing, better to negotiate than to wind up in a claim situation

56


• Doesn’t the process of review and approval result in
better negotiated schedule changes?
– Con – Just increases the burden on an already overworked project manager and
field staff

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• This Debate is Terminated for Convenience!!

You have just the skills we need in a consultant

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• In the 2005 AACE International Transactions, Pat Galloway
states in her paper on “CPM Scheduling and How the Industry
Views Its Use”,
– “Owners have a variety of reasons that they specify revisions in their
specifications. The largest response as to why a schedule revision was required
was equally shared, 72 percent between:
• Project behind Schedule
• Change Orders.
– The next major reason cited was critical path changes, 56 percent.
– Other reasons noted by Owners for requiring schedule revisions included:
• Resource changes for either manpower or equipment.
• Logic changes/duration changes/or Contractor sequence changes.
• When requested by the Owner.
• When time extensions are approved.”
• All these reasons might result in a revision, no matter whether
the Owner requested them or not

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• In the 2005 AACE International Transactions, Jim O’Brien
and Earl Glenwright state in their paper, “Contemporary
Controversies – Circa 2005”
– “A schedule cannot be continuously changed if the project is to be
completed 'as scheduled'.”
– “Deviations from the 'planned' schedule will always occur for no other
reason than the planned durations and resource performance are
estimates. The deviation must be watched as a sequence of activities is
accomplished.
– When the deviation[s] become a problem then corrective action must be
taken but the planned schedule is not changed. The corrective actions
are taken to put the project back on the planned course.”
• This position supports not keeping the schedule model
current with the plan, following this philosophy, revisions
would not be an issue.
• Reactions?
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• How do today’s schedules with resource and/or cost
loading deal with full or partial acceptance by Owner?
(suggestion by Donald McDonald)

• Assuming cost and resource loaded schedules, does that
change the argument?
– Pro – No, it gets even more important that Owner has ability to review and
approve
– Con – No, it just increased the complexity and time involved in allowing the
Owner to review and comment

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• So, what’s the answer? Approve or not?

• VOTING TIME!

• Should Schedule Revisions Require Owner Approval?

– Yea -

– Nay -

• And the winners are:

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2010 AACEi Great Debate - Approval of Schedule Revisions

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