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Project Risk Management

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On February 7, 2018, Mike Madigan and Jason Rhodebeck with Turner Construction Co. discussed Project Risk Management as part of Central Ohio’s Builders Exchange Field Leadership Excellence Series (BXFlex).

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Project Risk Management

  1. 1. z February 7, 2018 PROJECT RISK MANAGEMENT
  2. 2. z Introductions Jason Rhodebeck, Turner Construction Company Mike Madigan, Kegler Brown Construction Attorney
  3. 3. z Different Perspectives On Risk Management We Want Hear About Your Perspective
  4. 4. z THE AGENDA 1st Hour: Preparing Yourself to Meet Expectations 2nd Hour: Key Contract Provisions, Project Documentation + How it All Affects You 3rd Hour: Other Risks to Focus On
  5. 5. z Preparing Yourself to Meet Expectations 1st Hour Understand the Scope Study the Estimate + Track Production Know Key Deliverables
  6. 6. z Bid Package Scope of Work
  7. 7. z Understand the Specific Items Included in Your Scope
  8. 8. z Understand the Estimate
  9. 9. z
  10. 10. z Compare Your Progress to the Pay Applications
  11. 11. z What are the Key Deliverables?
  12. 12. z External Expectations: Have you check in upstream?
  13. 13. z Take the time to walk the job with the project superintendent before mobilizing
  14. 14. z Don’t Show Up UNPREPARED
  15. 15. z Collaborate to mitigate problems before they arise in the field
  16. 16. z Importance of Constructability Reviews… catch the design team’s mistakes
  17. 17. z Where do you fit in with the overall schedule + key milestones?
  18. 18. z Site Logistics Plan
  19. 19. z Introduce real life scenario $10 million office building
  20. 20. z Early excavation + foundation delays
  21. 21. z Steel fabrication/ erection was delayed by 2 weeks
  22. 22. z Pre-Glazed Windows are NOT on site
  23. 23. z Roofing materials have NOT been ordered due to submittal problems
  24. 24. z Access Problems
  25. 25. z Weekly Superintendent Meeting
  26. 26. z
  27. 27. z Key Points to Discuss From Real Life Scenario
  28. 28. z Key Contract Provisions, Project Documentation + How it All Affects You 2nd Hour
  29. 29. z Proceeding without a change order or written direction is risky
  30. 30. z If you expect to be paid extra…
  31. 31. z Avoid Sticker SHOCK
  32. 32. z Protect Your Company “Unless you indicate otherwise, we will proceed with the additional work as we were directed in the progress meeting earlier today, and this email shall serve as continued notice of our intention to receive additional compensation for this change.”
  33. 33. z What happens when a subcontractor is awarded the project… but his bid excludes certain items
  34. 34. z Most subcontracts include an integration clause “The subcontract represents the entire and integrated agreement the parties hereto and supersedes prior negotiations, representations or agreements, either written or oral”
  35. 35. z What Does This Mean? Bid exclusions or items discussed at the scope meetings do NOT matter Subcontract must reference the bid or attach the scope review minutes Live or die by the four corners of the contract
  36. 36. z Grounds to Terminate for Cause Often dependent on the quality of project schedule Can you pin delays on party being terminated?
  37. 37. z Reasons Why Terminating is Rarely Straightforward What does “commence and continue to correct defective work” mean?
  38. 38. z Supplementation is Easier If the subcontractor fails within 48 hours to fully correct the default following receipt of the contractor’s notice, the contractor, without prejudice to any other rights or remedies, shall have the right to take reasonable steps it deems necessary to correct the deficiencies and charge the cost to the subcontractor These reasonable steps shall include supplementing the subcontractor’s workforce by others
  39. 39. z Avoid Your Zombie Subcontractors Recently gone out of business + now working under a new name
  40. 40. z Evaluations
  41. 41. z Avoid This at All Costs
  42. 42. z Defective Work Claim Fundamentals They All Start With An Unhappy Owner
  43. 43. z Most Defective Work Claims Arise From Building Envelope Problems
  44. 44. z If You Receive a Termination/ Supplementation Notice
  45. 45. z Don’t stick your head in the sand – respond in writing!
  46. 46. z Project Documentation
  47. 47. z Workforce Daily reports are helpful when they consistently include: Equipment Description of Day’s Events Areas Where Crews are Delayed
  48. 48. z Identify Labor Force + Equipment On-Site
  49. 49. z No delays or problems identified Common Problems Nothing listed for equipment What was previously agreed upon in meetings
  50. 50. z Writing daily reports takes time away from running the work Create a “Check the Box” Daily Report Delays Encountered Inefficiencies Encountered Take Photos Identified by Date
  51. 51. z Daily reports are helpful to further reinforce that the notice requirements of the contract were satisfied But in most cases if the notice provisions have not be satisfied with specific notice letters, the strength of the claim is significantly reduced
  52. 52. z Progress Meeting Minutes Often times progress meeting minutes do not reflect the discussions that took place
  53. 53. z Progress Meeting Minutes Provide written notice that minutes are NOT accurate
  54. 54. z The Project Schedule is KEY
  55. 55. z
  56. 56. z It is important to provide input – your silence will later be construed to equal acceptance
  57. 57. z Examples of Helpful Photos
  58. 58. z
  59. 59. z Other Risks to Focus On 3rd Hour
  60. 60. z Claim AvoidanceKnow the owner, architect + construction manager – have you worked with this team before? 1 Be on guard when the owner has changed architects or CMs 2
  61. 61. z Claim ManagementProvide written notice your work is being delayed/affected 1 State your damages2 Back it up with project documentation3
  62. 62. z The value of the claim decreases the longer you wait to provide notice and quantify the claim
  63. 63. z NEXT STOP Claim Process Embarking on the claim process should be a company decision Inform project manager extra work is being performed – ask: do we need to provide written notice?
  64. 64. z Don’t turn a blind eye to the notice requirements and be left holding the bag with your boss
  65. 65. z Notice Requirements on Public Projects “The Occurrence” 10 Days After Rejection/reduction of a change order proposal of field work order Receiving an RFI response Differing site condition determination
  66. 66. z AIA Notice Requirements on Private Projects
  67. 67. z From the Subcontractor’s View Important to finish – walking off rarely ends well Make sure everyone knows you’ll be seeking extra dollars Be careful about signing changes, progress payment waivers + schedules Respond to letters, take pictures + document
  68. 68. z From the CM’s View Continue to pay for undisputed amount Holding contract balance ransom is not helpful Find ways to shrink the claim amount Respond to letters + think about whether to pass claim upstream to owner
  69. 69. z Last Word About Notice + Filing Claims Call the other side before you fire off a notice letter or claim State your commitment to getting the job done Agree to disagree for the moment
  70. 70. z Reasonable Conduct Think about the other side’s perspective – agree to disagree Emails Think about how it would look on the front page of the paper Meeting/ Conversation Recordings Is it permissible? We live in a time where more and more is being captured on video
  71. 71. z Don’t lose sight of it Listen to your gut Speak up + document when site safety plans are not followed Don’t run off the cliff with the group
  72. 72. z Can’t Turn a Blind Eye to Bad Behavior
  73. 73. z Diversity Will Continue to Play an Increasing Role In Who Gets the Contract
  74. 74. z