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What else can be done?

19 replies [Last post]
Norzul Ibrahim
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I’m representing client PMT (project management team) managing an EPCC (engineering, procurement, construction & commissioning) lump sum turnkey project.

The project is currently delay for 6 weeks and it’s not getting better. We have been pushing & pressuring contractor to expedite, ask for the recovery plan, threaten with LAD clause, closely monitor the day-to-day progress, carry out risk analysis, etc.....still no sign of improvement.

What else can be done? As far as the project objectives only schedule seems to be a problem.

norzul

Replies

Stuart Ness
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Norzul,

Provided that you have given sufficient notice to the Contractor and provided that he has not acted with sufficient response to your notices, then you must call upon the Performance Bond.

Use this money to engage other Contractors to carry out the work that is in delay. I suggest that you do not remove the defaulting Contractor from site, but he will have to work with any other Contractors that you have brought in to "help" him catch up with his schedule.

It may well be messy, but you only have less than seven months to do anything, and every day that passes makes it more difficult for any of your own measures to be effective.

Hope this helps,

Stuart

www.rosmartin.com
Chris Oggham
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Hi Norzul,

I think Damian is right in his approach. Find out how you can help the contractor, after all you both want to get the work finished on time. If they don’t or won’t respond to this approach, then you will have to pressure them in the way Stuart described. The only thing you can’t afford to do is take no action.

Regards

Chris Oggham
Damian Smith
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Well if it is a resource issue then maybe they can not afford to add more resources.
Maybe they would be better of paying late damages than adding more resources to the contract due to cost.

My suggestion would be to help, and see what can be done to help them. That way it is a win win situation
Norzul Ibrahim
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main cause of delay, resources...knowledge also contribute
Damian Smith
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What is causing the contractor to be delayed?
Eg Cash Flow, resources, knowledge??

Maybe try offering advice as to why the contractor has been delayed as well rather than just shaking a stick at him.
Geoffrey Boulton
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Narzul
I would go for a combination of both suggestions. Try and assist where possible at the same time look to carve out some of their work load (preferably something of a stand-alone nature - less problems with the liability issue as you have commissioning included).
The only other suggestion I would make is to remove some of their people from the work. If they are hindering the progress and not being proactive in trying to succeed then use your contract to get them out of the way.
You also need to get your upper management to engage theirs with more frequency than a sponsors meeting every three months or so. With seven months to go you need to show some urgency.
Raja Izat Raja Ib...
User offline. Last seen 13 years 31 weeks ago. Offline
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Hi Norzul,
I have been in this situation, meeting is not the answer. The ideal way is drive them what to do today, control time and monitor closely by each ativities every day, ask the contractor to report their achievement every evening(have short meeting 1/2 hour). Another try to do double shift if required.
Try for one week what is the achievement. I hope this method will help.

Regards
Norzul Ibrahim
User offline. Last seen 17 years 10 weeks ago. Offline
Joined: 17 Dec 2005
Posts: 165
fyi, this is an EPCC lump sum turnkey contract. The deadline (or what we call the provisional acceptance (PA)) of the project will be about 7 months from now. Yeah, we did send several letters starting with highlighting the potential delay, quoting contract requirements, and lately threatening with the LAD. Every week (for the past six months), during the weekly engineering meeting, weekly site progress meeting and weekly project management meeting the issue on schedule delay is clearly mentioned and highlighted to the contractor.

In addition, we had also the quarterly project sponsor meeting attended by the contractor’s and our board of directors. The issue on schedule was one of the top priorities.

Recovery plans, project risk assessments, monte carlo analysis, commitment from the contractor’s top management, promises, etc, etc....all seems not effective at the moment.
Norzul Ibrahim
User offline. Last seen 17 years 10 weeks ago. Offline
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Posts: 165
wish I could have a magic wand that could hit the contractor and everything goes back according to schedule..
Stuart Ness
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Norzul,

Are you telling us that because you have done nothing other than sit on your hands for eight weeks, the Contractor’s schedule has been allowed to slip further behind??

Cheers,

Stuart

www.rosmartin.com
Oscar Wilde
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Norzul
Assume you have followed MR Ness advice
Go to stage 2 and remove some work from them
PS make sure they have no excusese caused by you first
Raja Izat Raja Ib...
User offline. Last seen 13 years 31 weeks ago. Offline
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Hi,
Actually its very difficult to understand the real problem if not elaborate or not self involve in that project but try to imagine.
Just an Idea, Define every interfacing point at site and analyse, then do the window schedule for each interfacing point, also what u can do take your schedule copy it to yourself include the interfacing activities in it with te duration and analyse the impact.
example:
pripority Area, Try minimize the scattered work, do the priority works first, identified how many person at each area then .
manpower skills, suppose can weld 40 dia inch per day but only 12 dia can achieve.
access, block by bulk material.

regards
Norzul Ibrahim
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Posts: 165
now the delay has increased from 6 to 7-8 weeks. This is based on optimistic schedule...
W A
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hey Nourzel, what is the situation now?

update us please,

On the other hand, while i agree with the above post, i think another step shall be donr before really commencing the work to other Contractor, thsi step is sending him a letter that his imperformance will delay his payment, but you have to check the Contract first.
Norzul Ibrahim
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Posts: 165
Dear Stuart,

TQ very much...

norzul
Stuart Ness
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Norzul,

First, you will probably have to give the Contractor a Default Notice in which you tell him to improve performance (be specific!!!) or that you will apply the contractual remedy of having the work that he cannot (or will not) do by others, and charge him the costs. Give him some time (10 days???) to comply.

If he shows no sign of improving, then send the Contractor a Change Order removing part of the Works from his workscope, and give it to someone else (it doesn’t have to be a big part of the Works, but enough to show that you mean business!). The Change Order should be valued at whatever the replacement Contractor’s costs are plus a modest percentage uplift.

Second, pull in part (not all) of his Performance Bond. That will shake him (and his Board of Directors!)

If neither of these tactics work, then you really do have a problem, and you may have to consider replacing him completely! And pull the balance of the Performance Bond!

The worst thing that YOU can do, is nothing, since your current situation will not improve!

Good luck!

Stuart

www.rosmartin.com
Zubair Usmani
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Try to trap/Block him under Monthly RA Bill
It is the only way u can really control him if u want instantenous action.
Norzul Ibrahim
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Posts: 165
yes we do have LAD clause due to schedule delay and fall short of performance guarantee.
Marcio Sampaio
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does contract foresees any punishment? in last case ...