COMMUNICATION AND NEGOTIATION SKILLS
FOR PMS-DOCUMENT MANAGEMENT
Assignment
Lecturer: Sarsinatt Khriwaphun
Submitted by Aung Thi Ha (119904)
A. Brief of issue
I. Differing site condition
Differing site conditions can increase construction costs, and can also delay the
projects schedule. Normally, differing site conditions will be found during the first
weeks of the project, affecting the complete project schedule and causing
unanticipated delays and problems. While many contracts have specific contract
clauses trying to avoid differing site conditions, the reality is that it is really hard to
prove that the contractor was aware of the situation. Many legal decisions have
stated that these conditions are really unexpected conditions and even the most
expert contractor will face.
A contract adjustment is not automatic, and differing site conditions must be
proved by the affected contractor. The contractor must provide solid evidence
showing that the construction schedule has been altered and that those conditions
were inevitable. The purpose of a differing site condition is to apportion that risk,
not find fault. By including a differing site condition provision, the owner assumes
a part of the risk of such conditions with the expectation that the contractor will
not include a contingency in its bid.
ii. Force Majeure (Act of God)
A Force Majeure clause (French for "superior force") is a contract provision that
allows a party to suspend or terminate the performance of its obligations when
certain circumstances beyond their control arise, making performance inadvisable,
commercially impracticable, illegal, or impossible. The provision may state that the
contract is temporarily suspended, or that it is terminated if the event of force
majeure continues for a prescribed period of time.
The list of events to be included is a matter of negotiation between the parties. A
typical list of force majeure events might include war, riots, fire, flood, hurricane,
typhoon, earthquake, lightning, explosion, strikes, lockouts, slowdowns, prolonged
shortage of energy supplies, and acts of state or governmental action prohibiting
or impeding any party from performing its respective obligations under the
contract.
iii. Specification change
A project manager must begin working on a project with the expectation that the
customer will request change at least once, perhaps several times, regarding the
project outcome(s). The project manager must be prepared for the possibility that
a task leader or an external subject matter expert will discover and present a new
or better way to perform tasks after the completion of the task list. If the proposed
change occurs during the project planning period, it can be accommodated by
backing up the planning process and re-planning with the change(s) in mind. Before
this is done, however, the project manager must create a new, revised specification
statement and clear it with the customer, appropriate subject matter experts, and
key team members. The project must always be working toward one clear goal, and
all prior specifications must be destroyed. Specification change notice shall be
prepared to claim for payment.
iv. Stop work due to safety
A Stop Work Order is initiated when an imminent danger has developed, a hazard
issue is discovered. Observed activity appears to represent imminent danger, or
individuals cannot resolve a hazard issue in an acceptable manner.
Stop work for unsafe behaviors or unsafe conditions, which can cause danger to
people, equipment or environment. It is requested to stop the work immediately.
Therefore, it is important to have a defined process for conflict resolution in case
opinions differ in regards to the validity of a stop work action, corrective actions or
the decision to resume work. HSE manager plays an important role on safety
program and he shall responsible to keep the site to be in safe condition.
v. Government change in regulation/law
Governments establish many rules and regulations that guide businesses.
Businesses will normally change the way they operate when government changes
these rules and regulations. Government economic policy and market regulations
have an influence on the competitiveness and profitability of businesses. Business
owners must comply with regulations established by federal, state and local
governments. The government can implement a policy that changes the social
behavior in the business environment. For example, the government can levy taxes
on the use of carbon-based fuels and grant subsidies for businesses that use
renewable energy. The government can underwrite the development of new
technology that will bring the necessary change. Imposing on a particular sector
more taxes or duties than are necessary will make the investors lose interest in that
sector. Similarly, tax and duty exemptions on a particular sector trigger investment
in it and may generate growth.
vi. Additional work/Change by owner
During the construction, owner may instruct to change or add scope of work or to
delete some work either by written or by a request for the contractor to submit a
proposal for addition or deletion of a work. The contractor shall execute the work
instructed by owner and additional cost and time shall be entitled by the contractor.
B. Identify key document for change /claim analysis and negotiation.
In order to prevail on a claim it is necessary to prove that the contractor is entitled
to prevail on the claim (entitlement) and then prove the additional costs incurred
as a result of the claim (quantum) . Typically, entitlement and the quantum aspect
of the claim are proved by reviewing how the contractor planned on building the
project (as-planned), as well as how the anticipated costs relate to the actual
conditions and costs that were encountered during construction (as-built). While
oral testimony is admissible evidence, greater weight is given to documentary
evidence. Thus, the existence of as-planned and as-built project documentation are
necessary to prove a claim.
Many government construction contracts require a contractor to maintain
complete project cost records. Those records may be subject to audit in the event
of a claim for a change order. In light of the increasing tendency of government
agencies to respond to delay claims with liquidated damages and/or false claims of
statute violations, the existence of detailed records are the only viable method of
countering such defenses.
C. How to use key document/information to prove change /claim.
The following checklist includes the basic project documentation that will be
necessary to prepare and prove, or conversely disprove, a construction claim. The
size and type of a project will obviously impact the amount of documentation that
will be maintained for each project. Larger projects require greater care in the
preparation and maintenance of project documents, while smaller projects cannot
economically support such extensive documentation. However, before a project is
commenced, a claim-savvy contractor will review this basic checklist and set in
place a project documentation policy.
1. Construction Contract and Purchase Orders
2. Bid Documents
3. Change Orders and Change Order Logs
4. Plans, Specifications, Shop Drawings, Requests For Information and Submittals
5. Job Cost Reports and Estimates
In most contracts there are claims notice requirements. All correspondence and
memorandums that prove that notice of a claim was given in a timely manner
should be maintained. Similarly, notices that the contractor is proceeding under
protest should be maintained. Another category of documents are meeting
minutes. Such minutes can be from weekly meetings with the owner, general
contractor and/or the design team. Ideally, those minutes reflect completion of
prior activities and open activities.
It is the claimant's obligation to prove its claim. If he cannot do so, he will not prevail.
Alternatively, complete records will be necessary to defeat an owner's delay claim.
The lack of complete business records can result in additional costs in proving or
disproving a construction claim. If the documents are complete and well organized,
the claimant's consultant will spend less time preparing and documenting the claim,
thus reducing the cost of presenting the claim.
2. Explain 5 problems associated with Document (Claim and project life cycle) and
how to improve document management.
Due to poor construction management, lots of construction claim and dispute has
been increasing and has become a burden. Claim documentation focuses on the
contractor’s record keeping system. It is important for contractor to submit claims
according to eh steps stimulated in the contract and present with adequate
evidence. Document management is an unavoidable part of the work, which can
minimize dispute among the parties especially in the construction industry and
plays a vital role throughout project life cycle (conceptual, design, construction,
project closeout). Good documentation creates an accessible history of the project
that facilitate in project planning, monitoring, warning as well as aiding in resolving
dispute. All supporting document needed including drawings, specification,
written instruction, records, notification, RFI should be complied together.
Problem in documentation of claims are verbal instruction by owner, ineffective
record-keeping system, No standard form used to record the data during
construction, some information/ instruction is not kept in writing (meeting,
discussion) and no computerized documentation system , etc contribute to the
problem in claim. Verbal instruction by owner and ineffective record keeping
system are the main problem in claim process. If the contractor receives verbal
instruction from owner, the contractor shall request RFI to support his claim.
Contractor shall not perform the work without getting approval from owner.
The doucments are related to various project manageemnt/ construction
supervision activites and they all need to be well managemd and avaliable for all
parties concerned. Documents generated in the project implemenation have to be
managed to improve the conduct of project implemenation in an ordely, effective
and effecient manner. Besides, it need to compliance with standard and
specification specified in the contract and to construct well defined structure (to
be qualifed).
To mangement construction claims process , following points are important.
Identification
Determine the source of potential claim. For example, design error/omission, scope
gap, documentation conflict, hidden/differing site conditions, abnormal weather,
and so on.
Legal compliance check
Determine whether or not the claim has any basis in the PPP contract or in law.
Consult legal resources on the matter.
Evaluate merit
Determine potential success of claims based on established legal precedent and
contract documentation.
Evaluate magnitude
Determine worst case and best case magnitude from each party’s perspective.
Strategy development
This may range from a settlement agreement to following the dispute resolution
process. Even with contract management systems working well, it is possible that
some claims or notices of relief or compensation events will be received. The
contract management team should have the resources and processes to permit
good claims management.
Claims management allows claims and potential claims to be identified and
evaluated. By assessing their merit early on, claims or potential claims can be
avoided or resolved quickly. Alternatively, the decision can be made to pursue
other routes to resolution.