the dynamics of float, logic, resource allocation, and delay timing in forensic schedule analysis and construction delay claims

The Dynamics of Float, Logic, Resource Allocation, and Delay Timing in Forensic Schedule Analysis and Construction Delay Claims By Long Duy Nguyen KY SU Ho Chi Minh City University of Te

The Dynamics of Float, Logic, Resource Allocation, and Delay Timing in

Forensic Schedule Analysis and Construction Delay Claims

By Long Duy Nguyen

KY SU (Ho Chi Minh City University of Technology, Vietnam) 1999

M.ENG (Asian Institute of Technology, Thailand) 2003 M.S (University of California, Berkeley) 2005

A dissertation submitted in partial satisfaction of the

requirements for the degree of Doctor of Philosophy

in Engineering-Civil and Environmental Engineering

in the Graduate Division

of the University of California, Berkeley

Committee in charge:

Professor C William Ibbs, Chair Professor Glenn Ballard Professor Frederick Collignon Professor Arpad Horvath

Fall 2007

The dissertation of Long Duy Nguyen is approved:

The Dynamics of Float, Logic, Resource Allocation, and Delay Timing in

Forensic Schedule Analysis and Construction Delay Claims

Copyright 2007

by

Long Duy Nguyen

Abstract The Dynamics of Float, Logic, Resource Allocation, and Delay Timing in

Forensic Schedule Analysis and Construction Delay Claims

By Long Duy Nguyen Doctor of Philosophy in Engineering-Civil and Environmental Engineering

University of California, Berkeley Professor C William Ibbs, Chair

Delay claims in construction projects present various tough and controversial issues How to prove the three elements, namely entitlement, causation, and quantum in the

“triad of proof” is an onerous task The analyses of schedule delays and their associated damages especially concern claims analysts, project parties, courts, Boards of Contract Appeals, and so forth On the one hand, the industry has employed various forensic schedule analysis techniques to support delay claims Paradoxically, schedule-related factors such as float, logic, and resource allocation are frequently ignored even though they can affect project completion time and delay responsibility, too On the other hand, the current “one-size-fits-all” methods for calculating financial consequences undermine the relative importance of delayed activities and the fluctuating nature of overhead levels The effects of the context of a delay in terms of the timing of the delay and degree of suspension should be therefore paid attention in quantifying delay damages

Accordingly, this research develops novel techniques for analyzing causation and calculating damages in construction delay claims They address the dynamics of float,

logic, resource allocation and the delay context in forensic schedule analysis and delay claims Several published and hypothesized case studies are used to illustrate their applications

Among other things, this research proposes: (1) an enhanced window analysis technique considering resource allocation; (2) an activity-specific overhead allocation process (ASAP) for quantifying field-overhead damages; (3) FLORA as a novel forensic schedule analysis technique that can capture the dynamics of float, logic, and resource allocation; and (4) a framework which integrates FLORA and ASAP for analyzing schedule delays and their field overhead damages in a real-time and interactive manner Through the applications, comparisons, and evaluations in case studies, these developments really overcome various limitations of the available techniques and practices currently used in forensic scheduling and delay claims

This research recommends that the schedule-related factors should be captured in forensic schedule analysis In addition, the quantification of delay damages should emphasize the context of a delay This also enables equitable apportionments when concurrent delays occur ASAP and FLORA developed in this research are able to tackle these issues

Professor C William Ibbs Dissertation Committee Chair

To my Mom and Dad guyen Thi goc Lan and guyen Van Quy

Kính Tặng Ba Mẹ guyễn Văn Quy và guyễn Thị gọc Lan

Table of Content

Table of Content ii

List of Figures ix

List of Tables xi

Acknowledgements xii

Abbreviations xiv

Symbols xvi

Chapter 1 1

Introduction 1

1.1 Background 1

1.2 The Need for Research 2

1.3 Problem Statement 6

1.4 Research Objectives 7

1.5 Scope of Work 8

1.6 The Structure of the Dissertation 9

Chapter 2 11

Literature Review 11

2.1 Scheduling Practices in Delay Claims 11

2.1.1 Types of Schedules 12

2.1.2 The Use of the Critical Path Method 13

2.2 Roles of Project Change in Delays and Disruptions 14

2.2.2 The Extent of Project Change 15

2.3 Delay, Disruption, Acceleration, and Delay Concurrency 16

2.3.1 Delay, Disruption, and Acceleration 16

2.3.1.1 Delays 16

2.3.1.2 Delay versus Disruption 17

2.3.1.3 Delay versus Acceleration 19

2.3.2 Causes and Costs of Delays 22

2.3.3 The Types of Delays 23

2.3.4 Concurrent Delays 25

2.3.4.1 The Concept of Concurrent Delays 26

2.3.4.2 Conditions for Occurrence of Concurrency 27

2.3.4.3 Apportionment of Concurrent Delays 28

2.4 Float and Criticality in Project Schedules 32

2.4.1 Float 32

2.4.2 Float versus Criticality 33

2.4.3 Float Ownership 34

2.4.4 Alternatives to Float Distribution and Management 35

2.5 Process of Forensic Schedule Analysis 37

2.6 Forensic Schedule Analysis Techniques 39

2.6.1 Global Impact Method 41

2.6.2 As-Planned vs As-Built Method 41

2.6.3 Impacted As-Planned Method 42

2.6.4 Collapsed As-Built Method 43

2.6.5 Schedule Window Analysis 44

2.6.6 Time Impact Analysis 45

2.6.7 Other Schedule Analysis Techniques 46

2.6.8 Criticism of Available Schedule Analysis Techniques 48

2.7 Delay Damages and Commonly Applied Methodologies 49

2.7.1 Overview of Delay Damages 49

2.7.2 Owner’s Delay Damages 50

2.7.3 Contractor’s Delay Damages 51

2.7.3.1 Types of Recoverable Damages 51

2.7.3.2 Equitable Adjustments 52

2.7.3.3 Field Overhead Damages 52

2.7.3.4 Extended HOOH versus Unabsorbed HOOH 54

2.7.3.5 Methodologies for Calculating HOOH Damages 55

2.8 Summary of the Literature Review 62

Chapter 3 63

Research Methodology 63

3.1 Research Framework 63

3.2 Bases, Tools, and Techniques 66

3.2.1 Current Forensic Schedule Analysis Techniques 66

3.2.2 CPM, Linked Bar Charts, and Resource-Constrained Scheduling 67

3.2.3 Scheduling Software Packages 67

3.2.4 Project Overhead Allocation 67

3.2.5 Research Evaluation 70

3.3 Data Sources 71

Chapter 4 72

Impacts of Resource Allocation on Forensic Schedule Analysis 72

4.1 Introduction 72

4.2 Motivating Case 73

4.3 Window Analysis under the Effect of Resource Allocation 75

4.4 Case Study 78

4.4.1 Case Overview 78

4.4.2 Analysis of Delays 79

4.5 Discussion 84

4.5.1 Possible Extended Effect of Delays 84

4.5.2 Positive/Negative Effect of Resource Allocation on Delay Responsibility 85

4.5.3 Legal Acceptability 85

4.5.4 Implications of Applying the Enhanced Window Analysis 86

Chapter 5 89

Delay Damages and Schedule Window Analysis 89

5.1 Introduction 89

5.1.1 Delay Context versus Delay Responsibility 90

5.1.2 Field Overhead Damages 94

5.2 An Integrated Approach 95

5.3 Hypothetical Case Study 98

5.4 Discussion 104

5.4.1 Estimated FOH versus Actual FOH 104

5.4.2 Degree of Suspension 104

5.4.3 Apportionment for Concurrent Delays 105

5.4.4 Float Ownership 106

5.4.5 Statistical Implications 107

5.4.6 Difficulties in Using the Proposed Method 108

5.5 Summary 109

Chapter 6 111

Novel Forensic Schedule Analysis Technique 111

6.1 Introduction 111

6.2 Issues in Forensic Schedule Analysis 113

6.2.1 Float and Float Ownership 113

6.2.2 Hard Logic vs Soft Logic 117

6.2.3 Resource Allocation 118

6.2.4 The Dynamics of Float, Logic, and Resource Allocation 119

6.3 Novel Forensic Schedule Analysis Technique 120

6.4 Case Study 124

6.4.1 Day 2: One-Day Contractor-Caused Delay on Activity A 125

6.4.2 Day 4: One-Day Owner-Caused Delay on Activity B 127

6.4.3 Day 5: One-Day Concurrent Delays, Contractor- and Owner-Caused, on Activities B and C 128

6.4.4 Day 6: One-Day Concurrent Delays, Owner- and Contractor-Caused, on Activities C and D 130

6.4.5 Days 7 and 8: Two-Day Third Party-Caused Delay on Activity D 131

6.4.6 Days 10 and 11: Two-Day Owner-Caused Delays on Activities E and G 132

6.5 Discussion 134

6.6 Summary 137

Chapter 7 139

Integrated Framework of Schedule and Damage Analyses 139

7.1 Introduction 139

7.2 Framework Description 140

7.3 Case Study 142

7.3.1 Applications of the New Framework to a Case Study 142

7.3.2 Discussion 145

7.4 Summary 145

Chapter 8 146

Conclusions and Recommendations 146

8.1 Conclusions and Contributions 146

8.1.1 The Effect of Resource Allocation on Forensic Schedule Analysis 146

8.1.2 The Enhanced Schedule Window Analysis Technique 147

8.1.3 ASAP as a New Approach for Quantifying Field Overhead Damages 147

8.1.4 FLORA as a Novel Forensic Schedule Analysis Technique 148

8.1.5 New Integrated Framework for Analyzing Schedule Delays and Damages 149

8.2 Recommendations 150

8.2.1 Schedule Analysis Considering Resource Allocation 150

8.2.2 Schedule Analysis Capturing the Dynamics of Float, Logic, and Resource Allocation 150

8.2.3 The Context of a Delay Addressed in Calculating Delay Damages 151

8.2.4 Apportionment for Concurrent Delays 151

8.2.5 Applications of ASAP and FLORA in the Industry 152

8.3 Limitations and Future Research 152

References 155

List of Figures

Figure 1.1 Extended “triad of proof” in delay claims 6

Figure 2.1 Delay versus acceleration 20

Figure 2.2 Delays: responsibility, liability and recoverability 24

Figure 2.3 Delay concurrency scenarios 27

Figure 2.4 Generic methodology for analyzing delay claims 38

Figure 2.5 Mapping of forensic schedule analysis techniques 40

Figure 2.6 As-planned vs as-built method 42

Figure 2.7 Contractor’s cost breakdown structure 52

Figure 2.8 Application areas of percentage markup versus Eichleay formula 61

Figure 3.1 Research framework 64

Figure 3.2 Types of effort and overhead costs 69

Figure 3.3 Contactor’s overhead costs 70

Figure 4.1 Schedules of the motivating example 74

Figure 4.2 As-planned resource-constrained schedule 79

Figure 4.3 Hypothesized as-built schedule 80

Figure 4.4 Traditional window analysis: window #1 81

Figure 4.5 Enhanced window analysis: window #1 82

Figure 4.6 Traditional window analysis: window #2 83

Figure 5.1 The context of delays versus delay responsibility 92

Figure 5.2 As-planned schedule 99

Figure 5.3 As-built schedule 100

Figure 5.4 Time plot for time-related field overhead versus week 103

Figure 5.5 Histogram of per-week time-related field overhead 108

Figure 6.1 The dynamics of float, logic, and resource allocation 115

Figure 6.2 FLORA process flowchart for “real-time” analysis 123

Figure 6.3 As-planned schedule 124

Figure 6.4 Analyses for the contractor-caused delay on activity A at day 2 126

Figure 6.5 Analysis for the owner-caused delay on activity B at day 4 128

Figure 6.6 Analysis for concurrent delays on B and C at day 5 129

Figure 6.7 Analysis for concurrent delays on C and D at day 6 130

Figure 6.8 Analysis for the third party-caused delay on D at days 7 and 8 131

Figure 6.9 Analyses for the owner-caused delays on E and G at days 10 and 11 132

Figure 7.1 Integrated framework for schedule and damages analyses 141

List of Tables

Table 2.1 Divergent and inconsistent perspectives on concurrent delays 29

Table 2.2 Comparative results of schedule analysis methods 48

Table 2.3 Formulas for calculating home office overhead 56

Table 2.4 Allowed markup for home office overhead 59

Table 3.1 Criteria for evaluating forensic schedule analysis techniques 70

Table 4.1 Step-by-step schedule window analysis 76

Table 4.2 Schedule analysis summary 84

Table 5.1 ASAP’s steps for quantifying field overhead damages 97

Table 5.2 Project cost estimate (in dollars) 99

Table 5.3 Distributed activity-specific field overhead (in dollars) 102

Table 5.4 Field overhead delay damages (in dollars) 103

Table 6.1 FLORA’s rules for time impact analysis 121

Table 6.2 Delay events and their secondary effects 125

Table 6.3 Summary of forensic schedule analysis 134

Table 7.1 Activity-specific allocation of field overhead (in dollars) 143

Table 7.2 Field overhead delay damages (in dollars) under different methods 144

Acknowledgements

I would like to thank many people for helping me during my graduate study and doctoral research at Cal I would particularly like to thank my research advisor, Professor William Ibbs, for his invaluable guidance He has advised me to research practical and interesting areas He also took a lead in securing my graduate assistantship in the last few years I

am truly appreciative for the constructive comments of the other dissertation committee members, Professors Glenn Ballard, Frederick Collignon, and Arpad Horvath I would also like to thank Professors Sara Beckman and Iris Tommelein for their exceptional critiques and suggestions before and during my qualifying exam

I extend many thanks to my sponsor, officers, friends, and colleagues I owe a special note of gratitude to VEF for financially supporting me in the first two years in the United States I would like to express appreciation to E&PM students at Cal for our valuable discussion and interaction Among them, I especially thank Kofi Inkabi, Martin Chandrawinata, Sebastien Humbert, Tai-Lin Huang, Ying-Yi Chih, and Zofia Rybkowski I am very grateful for the generous support of the CEE Department staff, especially Ms Shelley Okimoto I would also like to thank my Vietnamese seniors and friends in Berkeley and the United States I have had opportunities to chat, play, and share with my personal and professional hobbies, feelings, failures, and successes

I would like to express my thanks to my former professors, teachers, and friends, especially Professor Stephen Ogunlana, Do Thi Xuan Lan, Luu Truong Van, and Nguyen

would like to thank Dung for her lovely patience and sharing for many ups and downs of our love over the past seven years Though I do not have her anymore, I hope she is always happy

Finally, I would like to thank my family I am especially grateful to my parents for their eternal sacrifice I always miss and love you, Mom Even you no longer live in this world to see your son growing up, I wish you and Anh Quyen are happy in the heaven We never forget your smiles, Anh Quyen Special thanks to Anh Quang for his endless support to our home and family I wish you all have happy and wonderful lives

Abbreviations

AACEI : The Association for the Advancement of Cost Engineering

ASAP : Activity-specific overhead allocation process

ASBCA : The Armed Services Board of Contract Appeals

BCA : Board of Contract Appeals

CDM : Continuous delay measurement

CPAT : Contemporaneous period analysis technique

CPM : Critical path method

C/SCSC : Cost/Schedule Control Systems Criteria

DDV : Daily delay values

DOD : The U.S Department of Defense

DOT : The Departments of Transportation

EBCA : The Department of Energy Board of Contract Appeals

EFC : Early finish cost

ENG BCA : The Army Corps of Engineers Board of Contract Appeals

EVA : Earned Value Analysis

EVMS : The earned value management system

FLORA : A new forensic schedule analysis technique

FOH : Field office overhead

FS : Finish-Start

G&A : General and administrative expense

GSBCA : The General Services Board of Contract Appeals

HOOH : Home office overhead

IDT : Isolated delay type

JLARC : The Joint Legislative Audit and Review Commission

LFC : Late finish cost

LOE : Level of effort

NCHRP : National Cooperative Highway Research Program

P3 : Primavera Project Planner

TIA : Time impact analysis

TRB : Transportation Research Board

VABCA : The Veterans Affairs Board of Contract Appeals

Symbols

ATF : Allowable total float

Ba : Total billings for actual contract period

Bc : Contract billings

Be : Contract billings for extended period

Bo : Total billings for original contract period

CD : Cost driver value for the whole contract

CDi : Cost driver value for activity i

Di : Duration of activity i

Da : Actual days of contract performance

De : Days of owner-caused delay

Do : Original days of contract performance

DDj : The delay day(s) for the jth analysis

DP : Delay period identified by a window analysis

∆TF : Difference in total float that an activity has after and before the

occurrence of the corresponding event and analysis FOH : Field overhead

FOHn : Non-time-related field overhead

FOHni : Non-time-related field overhead for activity i

t

FOHti : Time-related field overhead for activity i

FOHC : Total compensable field overhead damages

(FOHC)Wj : Compensable field overhead damages in window Wj

HOOH : Home office overhead

i : ith activity or activity i

iD : Critically delayed activity i

iDo : Owner-caused critically delayed activity i

La : Total labor costs: actual period

Ld : Labor costs: delay period

Ma : Actual HOOH: entire period (%)

Me : Actual HOOH: delay period (%)

Mp : Planned HOOH and profits at time of bid

Oa : Total overhead during actual contract period

Oc : Overhead allocable to contract

Oo : Total overhead during original contract period

PDD : The number of days that the party delays on the affected activity path

Rd : Daily overhead allocable to contract

RDD : The number of delayed days that a party is held responsible

TDD : The total delayed days of the entire project

TFC : Contractor’s total float

TFO : Owner’s total float

uFOHni : Non-time-related field overhead for activity i per time unit

uFOHti : Time-related field overhead for activity i per time unit

uFOHtiD : Time-related field overhead for critically delayed activity i per time unit uFOHtiDo : Time-related field overhead for owner-caused critically delayed activity i

per time unit

Vo : Original contract value

Wj : jthwindow period or window j

to handle (Hughes, 2003a) As a result, forensic schedule analysis3 or the identification and analysis of delays become essential (Finke, 1999) They are however onerous tasks Contractors are prone to view most delays as the responsibility of the owner while owners frequently attempt to tag delays as contractor-caused, third party-caused or concurrent (Zack, 2001) Consequently, delays may lead to some form of dispute resolution alternatives, from negotiation to litigation, which may be expensive and a

1

A proverbial expression

2

Claims in this context are defined as the seeking of consideration or change, or both, by one of the parties

to a contract based upon an implied or expressed contract provision (Diekmann and Nelson, 1985)

3

“Forensic scheduling analysis refers to the study and investigation of events using CPM or other

recognized schedule calculation methods for potential use in a legal proceeding” (AACEI, 2007).

crapshoot There is a recent increase in both the number and size of construction claims (Schone, 1985; Pinnell, 1998).

In addition to evaluating and apportioning responsibility for schedule delays, the quantification of the damages caused by delays is also an extremely challenging job.Most professionals agree that measuring and demonstrating evidence on the damages are the most arduous part of many delay claims and construction cases (Overcash and Harris, 2005) All parties more consider the cost of delay and impact, are more sophisticated in their scheduling techniques and tools, have tighter budgets that cannot afford delay or impact, and are more contentious (Pinnell, 1992) As such, more appropriate approaches for the analysis and determination of schedule delays and associated financial consequences are imperative in today’s “claims-oriented” construction business

1.2 The #eed for Research

The fact that the construction industry is unable to properly address scheduling and delay problems has led to a “chronically sick building industry” (Sweet and Schneier, 2004) In addition, “most public and private construction contract disputes touch on the issue of delay” (Calkins, 2006) Responding to such a challenge, practitioners and researchers have created and employed many schedule analysis techniques The level of acceptability of each technique depends on its credibility and the court or board ruling the corresponding delay claims However, schedule-related issues such as float, float ownership, soft logic, and resource allocation can cause delays yet their effects are typically neglected in those techniques For instance although a number of studies have

focused on scheduling with resource allocation (e.g., Wiest, 1967; Davis, 1974; Willis, 1985; Fondahl, 1991; Bowers, 1995; Hegazy, 1999; Kim and de la Garza, 2003; 2005; Chua and Shen, 2005), none of them addressed resource allocation in forensic scheduling Recent studies have tried to consider float ownership in delay analysis but they only deal with this issue or provide unrealistic alternatives No research holistically captures the dynamics of float, logic, and resource allocation in forensic schedule analysis

Analysis of delays is more complicated if concurrent delays occur There are two major problems encountered in scrutinizing delay concurrency4 They include (i) how to properly separate competing causes of delay and (ii) how to equitably apportion damages incurred by concurrent delays between the parties Though success varies, researchers have tried to tackle the first problem (i.e., Kraiem and Diekmann, 1987; Arditi and Robinson, 1995; Reynolds and Revay, 2001; Kim et al., 2005) There has been little research on the second problem

The context of a delay in terms of the timing of delay and degree of suspension potentially affects delay responsibility This dissertation defines degree of suspension as the proportion of work under a contract that is delayed, suspended, or interrupted in a certain period of time; i.e partial or total suspension Project expenses, both direct and indirect costs, change over time The argument therefore concerns whether it is the level

of overheads during the extended period that should be paid or whether it should be the

4

Delay concurrency is when two or more events are concurrent in their causation of the project delay

level of overheads at the time of the delaying event (Scott and Harris, 2004) This implies that the time a delay arises matters in apportioning delays and damages In addition, damages caused by concurrent delays on different critical activities may not be the same For instance, if two critical activities, “roofing” and “landscaping,” are simultaneously delayed by the contractor and the owner, respectively, it is difficult to accept that their effects on the project costs are similar These issues have not been considered properly in the current practice

Although courts, boards, practitioners, and researchers have various perspectives on the determination of monetary damages, project parties normally bear their own costs when concurrent delays exist That is, the industry tends to follow the doctrine of contributory negligence and is simply loath to accept the doctrine of comparative negligence in solving consequences of concurrent delays In view of the modern tendency toward comparative negligence, the grounds for such continued acceptance of contributory negligence are rather perplexing (Hughes and Ulwelling, 1992) Some courts (i.e., William F Klingensmith, Inc v United States, 1984; cited in Kutil and Ness, 1997) have required the contractor, as the party claiming delay damages, to provide a logical rationale for apportioning the effects of the concurrent delays between the owner and the contractor A systemic approach that supports comparative negligence analysis in concurrent delay scenarios is necessary This research aims at developing such an approach

Figure 1.1 illustrates the extended “triad of proof” in delay claims, including entitlement, causation, and resultant damages (quantum5) Like proving who is responsible for a delay (causation), the process of proving the amount of damages is challenging The quantum is controversial and a major source of construction disputes The fact that project delay should continue to create controversy is “strong evidence that there is a flaw in the concept of quantifying the damages to the contractor regarding its capacity utilization disrupted by delay of work” (Kenyon, 1996) Zack (2001) claimed that there is

no standard accepted method of calculating home office overhead (HOOH) incurred by delays The author added that “most contractors want to use formulas to calculate their damage Most owners, on the other hand, want to see ‘real damage’ based on some sort

of audit – ‘prove that your overhead increased as a result of my delay!’” Unfortunately, the process of measuring the actual costs of construction delays is a mess (Overcash and Harris, 2005)

The National Cooperative Highway Research Program (NCHRP, 2003) in the Transportation Research Board (TRB) of the National Academies revealed that one of the more controversial issues influencing the development of transportation infrastructure projects is that of delay claims The above issues should inspire more extensive research

in quantifying monetary consequences in delay claims

Figure 1.1 Extended “triad of proof” in delay claims

1.3 Problem Statement

The industry has employed various schedule delay analysis techniques to support delay claims Paradoxically, schedule-related factors are frequently ignored even though they can affect project completion time, too A part of this dissertation addresses the dynamics of float, logic, and resource allocation in forensic schedule analysis That is, these factors and others such as acceleration, pacing delays6, concurrent delays, and real-time analysis are captured in forensic scheduling analysis

Entitlement, causation, and resultant damages are the three elements in the “triad of proof” in delays claims (Figure 1.1) Parties find it difficult to agree on issues related to causation and resultant damages of schedule delay The logic measure of damages on construction contracts is frequently more complicated to approach than entitlement (Overcash and Harris, 2005) In addition, the existing techniques seem to neglect or at least underestimate the effect of the context of a delay on delay responsibility The new method for quantifying delay damages approaches this issue Though the Eichleay formula7 and similar methods of calculating HOOH remain a controversial issue for the project parties, the courts, and the Boards of Contract Appeals (BCAs) (Love, 2000), HOOH may less depend on the context of a delay which is project- and activity-specific Field office overhead (FOH) however is significantly time-varying thus its damages can

be impacted by the delay context This research attempts to explore this impact

1.4 Research Objectives

This research proposes to improve the methodologies for analyzing schedule delays and quantifying associated damages in construction delay claims The specific objectives of this research are:

1 To identify the effect of resource allocation on forensic schedule analysis and to enhance the window analysis technique by embedding necessary steps that deal with the practice of resource allocation in its analyses;

7

This formula was drawn in a case – Eichleay Corp., ASBCA No.5183, 60-2 BCA ¶ 2688 (1960) – held by the Armed Services Board of Contract Appeals (ASBCA)

2 To propose a new approach for quantifying and apportioning delay damages under the impacts of the context of a delay in terms of the timing of delay and the degree of suspension during the course of a project;

3 To develop a new forensic schedule analysis technique that addresses the dynamics of float, logic, and resource allocation;

4 To propose an integrated framework for analyzing delays and damages in delay claims under the dynamic impacts of float, logic and resource allocation and the context of a delay; and

5 To evaluate the proposed approaches compared to the current forensic schedule analysis techniques and damages-quantification methodologies using hypothetical and available published case studies This objective is achieved by evaluation of the individual proposed approaches

1.5 Scope of Work

Schedule delays and delay claims occur in a variety of industries such as defense, construction, and software engineering This research concentrates on delay claims in the construction industry In addition, only delay claims between contractors and owners are

in the scope of this research As the research objectives suggested, this dissertation only addresses two elements, namely causation and resultant damages of the “triad of proof”

in delay claims (Figure 1.1) In the “causation” element, forensic schedule analysis is focused to improve its credibility In the “resultant damages” element, problems in quantifying FOH damages are solved since they potentially depend on the schedule-related factors Finally, this research primarily considers forensic schedule analysis for

construction projects employing the critical path method (CPM) scheduling CPM is the most dominant application in project scheduling and forensic scheduling for other scheduling techniques (i.e., line of balance) can be quite different

1.6 The Structure of the Dissertation

This dissertation contains eight chapters The first three chapters present the background, literature, and methodology of the research The next four chapters demonstrate how the research objectives are achieved and present findings The last chapter summarizes major research findings, discusses research limitations, and recommends future research The detail of the dissertation structure is as follows:

Chapter 1 is Introduction It presents the background, the need for research, the problems, objectives, and scope of this research and dissertation

Chapter 2 reviews literature related to this current research They include schedule delays, forensic schedule analysis, the calculation of delay damages, and so forth

Chapter 3 formulates research methodology which is research framework, bases, tools, and techniques for which this research stands, and data sources used for this research

Chapter 4 presents the initial investigation of the impacts of resource allocation on forensic schedule analysis An enhanced schedule window analysis is also proposed in this chapter

Chapter 5 proposes an activity-specific overhead allocation process called ASAP for quantifying field overhead damages when a delay occurs

Chapter 6 develops a novel forensic schedule analysis technique called FLORA that captures the dynamics of float, logic, and resource allocation (FLORA) in its analysis

Chapter 7 integrates ASAP and FLORA to form a new framework for analyzing schedule delays and their financial consequences in delay claims

Chapter 8 discusses conclusions and recommendations drawn from this research

Chapter 2

Literature Review

This chapter presents literature relevant to the research The aim is to describe current paradigms and reveal unsolved issues that motivate this research The major topics include:

a Scheduling practices in delay claims;

b Roles of project change in delays and disruptions;

c Concepts of delay, disruption, acceleration, and delay concurrency;

d The state-of-the-practice management of float and criticality in CPM project schedules;

e Process of forensic schedule analysis in delay claims;

f Forensic schedule delay analysis techniques used in delay claims; and

g Delay damages and methodologies for quantifying them

2.1 Scheduling Practices in Delay Claims

Project scheduling is a very broad topic An understanding of scheduling concepts and acquaintance with tools and techniques for analyzing and explaining scheduling problems and their cost impact is helpful in any kind of construction schedule dispute (Pinnell, 1992) The interface between scheduling and delays creates the conditions for all delay claims (Wigal, 1990) Extensive review of project scheduling concepts and techniques is beyond the scope of the present research This section therefore focuses only on

pertinent scheduling issues that are normally and currently used in forensic schedule analysis and construction delay claims

2.1.1 Types of Schedules

Project schedules are an effective means for planning, monitoring, and controlling project time performance There are various types of schedules In the project time management perspective, schedules are classified as master schedules, detailed schedules, and so forth

In the delay claims context, Finke (1999) categorizes project schedules into three major types as follows:

a As-Planned Schedule: defines a contractor’s original plan for performing the entire scope of work at the onset of a project It shows how and when the work would have been undertaken had there been no changes or delays

b As-Built Schedule: defines how a contractor actually performed the work It embraces the impacts or effects of all changes and delays that occurred during the course of the project

c Entitlement Schedule: illustrates when the project would have been completed had certain types of delays not occurred Entitlement schedules can be either extended or impacted as-planned schedules (e.g., the as-planned schedule with certain types of delays added) or but-for or collapsed as-built schedules (e.g the as-built schedule with certain types of delays removed) A schedule analysis will eventually compare an entitlement schedule to the pertinent baseline schedule (some version of either the as-planned or as-built schedule) to find out the extent

of delay and apportion delay responsibility

2.1.2 The Use of the Critical Path Method

The critical path method (CPM) is a technique for scheduling a project It produces valuable information about the project such as the shortest duration, the critical path(s), and the float (Kim and de la Garza, 2003) The application of CPM has been more widespread with the aids of scheduling software such as Microsoft Project, Primavera Project Planner, and SureTrak CPM scheduling has obtained prominence in the construction industry as the method for scheduling projects of all sizes (McCullough, 1999) Also, the U.S government has required CPM for major projects since the mid-1960s The California Department of Transportation has required its construction contractors to use CPM for progress schedules since 1992 (Rouen and Mitchell, 2005) Extensive introduction to CPM can be found in any project management-related text

In the construction claims world, CPM is the best available option for schedule delay analysis Owners increasingly require CPM schedule impact analysis on change orders and time extension to provide evidence that the contractor is entitled to an extension of time and corresponding cost impact (McCullough, 1999) Contractors should also consider the relationship between their cost elements and the activities in their CPM schedules since this can be crucial, especially for evaluating the impact of delays on the work (Overcash and Harris, 2005) Boards and courts have also recognized the importance of CPM to assess the impact of delays and disruptions (Wickwire and Ockman, 1999) The Department of Energy Board of Contract Appeals (EBCA) in Lamb Engineering and Construction Company (1997) noted that bar charts can provide an understandable illustration of main project tasks, but they do not provide the best

mechanism for analyzing delays on sizable projects, without additional supports such as models or expert testimony However, the use of CPM schedule analysis in resolving delay claims has raised various issues (Wickwire and Smith, 1974; Wickwire et al., 1989; Wickwire and Ockman, 1999):

a Which project party owns extra time or float?

b When and how should delay be analyzed and measured?

c How is the need to award time extensions on a real-time basis (update-to-update) settled with the need to know and prove those delays that in fact delayed completion of the project?

d What role do resources play in assessing and granting time extension requests and determining owner-caused delay?

e Who owns the additional float generated by delays to other tasks?

f What is the importance of approval by the owner of the project schedule?

g How and when can a contractor recover for the incapability to finish the project early?

2.2 Roles of Project Change in Delays and Disruptions

2.2.1 The Concept of Project Change

Change is normally defined as any event that results in a modification of the original scope, execution time, cost and/or quality of work (Ibbs and Allen, 1995; Revay, 2003) There are generally five types of changes: change in scope; differing site conditions; delays; suspensions; and acceleration The types of changes have been discussed by researchers such as Orczyk (2002)

Change may not only directly add to, subtract from, or change the type of work being performed in a particular area but also affect other areas of the work for which the change order has not accounted (Jones, 2001) The Armed Services Board of Contract Appeals (ASBCA) once stated that the costs of performing changed work consist of both (i) those costs directly related to the accomplishment of the changed work and (ii) those costs arising from the interaction between the changed work and unchanged work (Triple “A” South) This was also used by the other Boards of Contract Appeals such as the Veterans Affairs Board of Contract Appeals (VABCA) in Coates Industrial Piping (Coates Industrial Piping, Inc., 1999)

2.2.2 The Extent of Project Change

The degree of project change is frequently significant An overall additive change rate for 22 federally funded and administered projects during the 1979-1983 period was six percent on the dollar due to design errors, owner initiated changes, differing site conditions, etc (Diekmann and Nelson, 1985) Among 24 construction projects in Western Canada, project costs increased by at least 30 percent and 60 percent for more than half and a third of projects, respectively (Semple et al., 1994) Several projects suffered delays over 100 percent A study of the Joint Legislative Audit and Review Commission (JLARC, 2001) on approximately 300 road construction projects in Virginia revealed that average project change in dollars was more than 11 percent

The amount and timing of change are also significant factors affecting productivity From 90 construction disputes in 57 independent projects, Leonard (1987) demonstrates a

significant correlation between percentage of change order hours to contract hours and percentage of lost productivity Ibbs (1997 and 2005) found that: (i) the greater the amount of change, the less the efficiency; and (ii) late project change more adversely affects labor productivity than early change This finding was also confirmed by later studies (e.g., Hanna et al., 1999)

2.3 Delay, Disruption, Acceleration, and Delay Concurrency

This section reviews the literature on key issues related to delays in construction projects, namely delay, disruption, and acceleration, differences between delays and disruptions, causes and types of delays, and delay concurrency

2.3.1 Delay, Disruption, and Acceleration

Delay, disruption, and acceleration are components of changed work that are difficult to pin down (Rishe, 1973) Although this research focuses on delay-related issues, clear differentiations among these three concepts in the contractual context are therefore necessary

2.3.1.1 Delays

The Oxford Advanced Learner’s Dictionary (Oxford, 2007) defines a delay as “a period

of time when somebody or something has to wait because of a problem that makes something slow or late, as a situation in which something does not happen when it should, and as the act of delaying.” Four definitions are found for the term delay in the Merriam-Webster Online Dictionary (Merriam-Webster, 2007) They are: (i) the act of

delaying, (ii) the state of being delayed; (iii) an instance of being delayed; and (iv) the time during which something is delayed

In the project management context, a delay is about the time during which the project cannot proceed as scheduled (Lovejoy, 2004) It is defined as an effect to the completion date of the project or effect to the project’s critical path(s) (Zack, 2000) It is an act or event that extends the time necessary to finish activities under a contract (Stumpf, 2000)

In the legal sense of the term, “delay” can involve several different circumstances that present different legal claims and defenses (Hughes, 2003a) Unless otherwise stated differently, the term delay in this dissertation means a cause that extends the duration of contract work

2.3.1.2 Delay versus Disruption

Delays and disruptions and their corresponding claims, namely delay claims and disruptions claims, are different concepts Disruption is “the act of rending asunder, or the state of being rent asunder or broken in pieces” (Answers, 2007) In terms of contract claims, disruption is an activity-specific loss of productivity caused by changes

in the working conditions under which that activity was carried out (Fink, 2000) Gavin (2001) stated that delay damages are caused only by delays to overall project completion; disruption damages are caused by changes in working conditions that can occur regardless of whether the project end date changes