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Acceleration to mitigate risk?

6 replies [Last post]
Mon, 2009-01-05 12:34
Ian Mackrell
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Joined: 15 Jul 2008
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Groups: Petro-Chem / Oil & Gas
People of all planning knowledge,

As the client, we are in an ongoing situation for EOT, whereas we, the client are accepting approx 60% of the risks (i say ongoing because they shall argue the 40%). Just a simple question, by paying for acceleration which mitigates over 60% of the risk, have we mitigated our risk? therefore the remaining risk to be recovered by the contractor against the target cost (NEC B)?

The reason i ask, is because the contractor is refusing to reschedule the programme for recovery i.e progress activities concurrently. I suspect that they re-priced the tender based on programme to win the job, but at their risk in my opinion.

Cheers

Ian
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Replies

Fri, 2009-01-09 11:54
#1
Ian Mackrell
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Joined: 15 Jul 2008
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Groups: Petro-Chem / Oil & Gas
Mike,

Thanks for your reply. The acceleration is double shifting, which is simple enough (critical activities only of course!)

The contractors arguement is that it would have cost implications to reschedule certain activities due to extra equipment needed even though they have budgeted for all acitivities in the first instance. After looking at the budgets, all activities have the required men/plant/materials to complete the activity in the given baseline programme duration, however, looking at the rates it seems a little light for certain equipment(having had more experience on the contractors side).

As i mentioned earlier, my thought is that they have re-priced the job on the programme of works, eg hiring 3 sets of equipment or buying one set of equipment to complete the 3 activities. By doing this has left their project team figthing fire from the very beginning. Although by doing so at their own risk. Now we are instructing them to submitt a recovery plan. We have agreed to adjust the target cost for acceleration of critical activities, which would only bring in the end date so far, but they must reschedule other activities, with no adjustment to the TC. This is what they refusing to do! btw the LD’s are pittance!!!
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Fri, 2009-01-09 04:14
#2
Mike Testro
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Hi Ian

One thing I forgot to mention.

Only accelerate on critical activities.

Best regards

Mike Testro
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Fri, 2009-01-09 03:58
#3
Mike Testro
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Hi Ian.

Firstly you do need to run an Impacted as Planned delay analysis to check the current delay situation.

If the delay events are excusable then it is reasonable to consider acceleration.

Also bear in mind that the contractor is obliged to mitigate all delays - provided it has no cost implications.

I have been involved in a number of acceleration claims from the contractor’s side.

In every case the Contractor had hidden slack time in his programme that was to be released when an acceleration deal had been done.

The methods used are not easy to spot unless you have an electronic copy of the programme but the most common one is to have a work pattern of - say - 7.5 hours 5 days a week in the calendar and then change it to 9 hours a day 5.5 days a week.

Instant acceleration at very little cost.

You need to check that this scam is not being used.

Re-linking to concurrent working is another method provided the resource levels and access is available - this is visible and easliy checked so I am not surprised thet the Contractor is resisting this method.

In my experience acceleration is a rich source of future claims so go carefully.

Best regards

Mike Testro
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Thu, 2009-01-08 12:56
#4
Samer Zawaydeh
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Dear Ian,

If the other side is accepting only 60% of your claims and you believe that you are entitled for more, then what you need to do is to study the Delay using other "Delay Analysis" methods and prove that what you are asking for is correct.

Best Regards,

Samer
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Tue, 2009-01-06 05:27
#5
Ian Mackrell
User offline. Last seen 10 years 14 weeks ago. Offline
Joined: 15 Jul 2008
Posts: 27
Groups: Petro-Chem / Oil & Gas
Hi Samer,

I think i have explained it incorrectly. We are currently approx 20% complete in the project, and it was a delay analysis i was referring to. By the word Risk, i mean Employers Risk/Contractors risk as opposed to the words Employers fault/Contractors fault, which i believe is the correct term used.

Nethertheless, i shall look up what you are saying out of interest.

Cheers

Ian
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Mon, 2009-01-05 21:17
#6
Samer Zawaydeh
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Joined: 3 Aug 2008
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Groups: Civil Engineering, Regional Representatives
Dear Ian,

Answer 1: For the "situation" that you have, you will need to do a proper Risk Analysis. This is divided into two parts, qualitative and quantitative. Subsequently you input the probabilities and importance in the risk matrix and calculate your numbers and decide. Please check the information available online for proper Risk Analysis. And consult an expert if you are talking about a big project that can take care of the expert’s fees.

Answer 2: To decide how much the Contractor has included in their Tender for Risk factors, if would be advisable to review the BOQ and check for non standard items and their prices. Also, check the prices of the other tenders that were submitted at bidding stage. Usually, a price breakdown is asked from the Contractor at the Bidding stage. This will give you an indication of the Risk Factor that they have included.

Best Regards,

Samer
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