Baseline and Change Orders

Mike

agree then we are saying the same thing. just wanted ot clear that up.

Hi Zoltan

In your scenario the employer takes LD's for 20 days.

Best regards

Mike Testro

Mike 

We might be talking semantics here but you said "Thereby even if a contractor's own delay event over rides an employers delay the Employer cannot take liquidated damages from the contractor for his own contribution."

so we are talking about two delays here one contributal to the owner and the contributal to the contractor. In the last part where you say "the Employer cannot take liquidated damages from the contractor for his own contribution" do mean to say that if the contractors own delay was lets say that there was a delay titling 30 days. The contractors portion of that delay was 20 days and the owners portion of that delay was 10 days. If you are saying that the owner can assess LDs on the 20 days and not the full 30 days or are you saying the owner can not assess ANY LD's  whatsoever ?

Hi Kannan

The whole point is that any rectification must be on the original baseline programme befor any event and before updating.

I hope that is now clear.

Best regards

Mike Testro

Hi Mike,

I understand as follows;

Assume around 50% of the Project is completed and the delay event came up. The analyser identify that the baseline is flawed. Therefore he rectified the logic in the baseline programme and incorporated the first event to evaluate the EOT entitled.

If there is another event, the analyser should incorporate the actuals in the rectified baseline just before the delay event. But in reality, the actuals are already in the updated schedule. Is it not possible to rectify the logic in the updated programme for the remaining activities (if required), in order to identify the concurrent delays (after adding the delay event/s?

Since we already rectified the flaws in the baseline programme, the events can be added one by one in this baseline programme(without progress) to calculate only the EOT entitlement.

To identify the prolongation cost and non excusable delays, the updated (flaws rectified) programme can be used.

Best Regards

Kannan

Hi Zoltan

It is based on two legal principles

1. An Act of Prevention.

2. Unjust Enrichment.

Thereby even if a contractor's own delay event over rides an employers delay the Employer cannot take liquidated damages from the contractor for his own contribution.

In my experience this applies in every jurisdiction - even UAE.

Best regards

Mike Testro

When I changed the Baseline mid way in the project , after deleting the Initial Baseline Project the activities which are completed or in-progress; there dates in the Column BL Finish is giving the dates of the original Baselin Finish Dates 

whereas the activities which have not started yet, the BL Finish dates is same as Finish Dates. Why

Mike 

At least not in the States why in the world would an owner give a contractor a EOT and relief from damages if the contractor

delayed the project on his own accord. This could be a case of concurrent delay situation or two seperate and distinct delays.

I agreee that the contractor is entitled to an EoT and relief from damages from the clients delay ONLY. 

Hi Zoltan

The contractor is entitled to an EoT and relief from damages from the clients delay even if his own progress shows completion at a later date.

This is true for every jurisdiction that I have worked in including UAE - Qatar and India.

Best regards

Mike Testro

Hi Rafael

I found the Origin of the Species to be an examplar of clarity.

AACE however is a masterclass of obfuscation.

Best regards

Mike Testro

Hi Kannan

There are two reasons why the original baseline needs to be changed:

1. An unforeseen event

2. The baseline is flawed.

In the case of 2 then the flawed baseline must be rectified which may produce a later completion date - this delay will be contractor culpable by default.

Events should then be impacted on the rectified programme.

Best regards

Mike Testro

Mike,

In order to understand AACE documents all you need to do is read the Origin of Species, published on 24 November 1859, is a work of scientific literature by Charles Darwin.  Then you should be able to swallow the taxonomy thing.  

Who said this classification language is ridiculous?

LOL

I agree with zoltan on this as i have been doing exactly what he said on my encounters with time impact extensions.

ok then 

I would first create a fragnet of the change order listing the added scope of work and the agreed to durations to perform this change order work. I would also give all of the new activities a unique code so that I could filter only on the added change order activities. 

Once approved I would insert this fragnet schedule into the original schedule to prove entitlement. Once this is done I would then insert this same fragment into the updated schedule prior to the change order being issued and see the impact to this schedule. 

I would make the appropriate predecessor and successor ties to the new added activities then recalculate the schedule to determine if there was a delay. 

This will take care of any adjustments made for out of sequence progress prior to the delay.

Hi Mike,

I agree with you that after incorporating the first event in the Original baseline, it will give the EOT entitlement (impacted baseline). The next step of adding the progress on the impacted baseline is confusing. As the query says, we are now in the middle of the project. Logic and Critical Path might have changed as of now. Now to incorporate the changed logic again in the impacted baseline is re-work in my opinion.

Regards

Kannan

Hi Zoltan

The first delay event must be impacted on the original baseline.

This shows the EoT entitlement.

Progress is then added to show the extent of LAD's and costs.

Subsequent events are impacted on the same programme as the first event.

Best regards

Mike Testro

Hi Zoltan

There is always confusion resulting from the AACE document - the laguage is quite obscure.

To demonstarte delay for the first event you must impact on the agreed baseline programme with NO progress.

This gives you clear entitlement to your EoT whether you are ahead or behind programme.

Adding progress to the impacted programme then compares the impacted end date to the progressed end date.

This allows you to assess LAD's and Costs.

Subsequent events are impacted in sequence on the first impacted programme.

Best regards

Mike Testro

• You first negotiate the Change Order and using Time Impact Analysis you can justify the EOT that shall be included under the Change Order, it shall be done in contemporaneous mode unless other disagreement preclude this.  In any case it shall be clear if the CO solved issues regarding Delay Claims, issues regarding EOT shall always be included.
• Current update as well as current Baseline shall reflec the changes, it is easy until you find opposition by Earned Value advocates that will insist on a flawed procedure that promotes holding the Baseline unchanged.
• Earned Value Management as applied to CPM is Flawed.

• Earned Value is an old concept, was developed over a 100 years before CPM. It was related only to cost as measured in monetary terms and resource hours. At that time it had no flaw. The practices we now call EVM developed out of cost management techniques used in large factories as early as the 1800s. Industrial engineers of the time compared planned vs. actual output, timing, and cost to provide a picture of performance relative to expectations.

• Integration of Earned Value with CPM was introduced by PERT.  Initially PERT statistics were in error as they did not considered the issue on "Merge Bias" this was fixed soon with Monte Carlo methods. The mismatch between Earned Value and criticality was never solved under CPM based EVM. 

• Earned schedule attempts to handle the criticality issue but ignore the fact that baseline as well as critical path or critical chain is not fixed.  In this regard also Critical Chain feeding buffers are flawed.

• DOD Earned Value Management Implementation Guide discourages use of EVM on Fixed Price Contracts under 2.2.3.7; Exclusions for Firm Fixed Price (FFP) Contract Type. The application of EVM on FFP contracts and agreements is discouraged, regardless of dollar value...

• http://www.goaztech.com/media/documents/evmigoct06.pdf

• http://www.technomics.net/files/downloads/scea/2012/Advanced_EVM_SCEA%2…

• http://www.earnedschedule.com/docs/schedule%20is%20different.pdf

• When Baseline changes EVM looses track of prior history and the never perfect adjustments are difficult. 

• http://www.acq.osd.mil/evm/docs/OTB-OTS%20Guide%20121205.pdf

• The following link compares different project control methodologies.

• DOD options for Rebaselining, the father of the creature, do not solve all EVM issues.
• Rebaselining: Rebaselining is the term used for describing a major realignment of the PMB to improve the correlation between the work plan and the baseline budget, scope,and schedule. Rebaselining may refer to either reprogramming or re-planning.
• Drawbacks: Formal reprogramming generally requires significant effort by both parties, can be time-consuming, and can be expensive. Formal reprogramming may result in the elimination of cost and schedule performance variances and trends used for making cost and schedule projections. These drawbacks should be weighed against the benefits of providing more reasonable budget or schedule objectives and improved management control .
• Adjusting Variances: A key consideration in implementing an OTB is to determine what to do with the variances against the pre-OTB baseline. There are essentially five basic options. This is a far more detailed effort than these simple descriptions imply, as these adjustments have to be made at the detail level (control account or work package).Adjusting Variances is Achilles Heel of EVM, none of the DOD options will keep a truly updated baseline while keeping full variance visibility. 

Hi Mike

That was my whole point of using the current schedule let me rephrase that the schedule that was in effect prior to experiencing the delay. if the contractor was on schedule during prior to the delay then you can use the schedule that was sin effect at that time. If you use the baseline you are not capturing the current working conditions and the critical path could have changed during the progressing of the schedule. 

You are assuming that if you use the current schedule that you are already includes any delays. I guess my wording of current schedule would not be correct and I should have said to use the schedule that was in effect prior to the delay and insert the fragnet into that schedule. 

The AACE Recommended Best Practices No 52R-06 step #2 also suggests to Select the appropriate update schedule to insert the fragnet into. 

Hi Zoltan

Extension of Time is separate from recovery of costs.

Time entitlement is demonstrated by impacting the event on the original baseline programme. The impacted delay gives the time entitlelement and relief from LAD's.

Recovery of costs - loss and expense is demonstrated by progressing the baseline with a data date to just before the date of the delay impact.

It must be done in that sequence otherwise you are demonstrating Time entitlement on a progressed programme that already includes any delays.

Best regards

Mike Testro

I would not add it into the baseline because the baseline does not take into effect the status of the project at the time of the delay. 

I would approach this differently and I would first create a fragnet of the change order listing the added scope of work and the agreed to durations to perform this change order work. I would also give all of the new activities a unique code so that I could filter only on the added change order activities. 

Once approved I would insert this fragnet schedule into the updated schedule which was in effect when the change order was issued. 

I would make the appropriate predecessor and successor ties to the new added activities then recalculate the schedule to determine if there was a delay. 

Putting this change order into the baseline would assume that the contractor was on schedule during the time of the delay and all of the logic stayed the same and that there were no adjustments made for out of sequence progress. 

Hi Muhammad

To demonstrate EoT entitlement you impact the event on the original baseline.

To demonstrate cost entitlement you then progress the baseline to a date just before the impact.

Best regards

Mike Testro