TAKING ON TOO MUCH WATER

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TAKING ON TOO MUCH WATER
American Bar Association Forum on the
Construction Industry
2007 Fall Meeting

• Making Sure Control and Management of Costs
  Provide the Survival Kit
• of Sound Evidence When Needed

John E. Bulman, Esq. Little Medeiros Kinder
Bulman Whitney Providence, RI
Patrick A. McGeehin, CPA Rubino McGeehin
Bethesda, MD
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• We all have the strength to bear the misfortunes
  of others.
• Francois de la Rochefoucauld, 1613-1680

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FUNDAMENTAL TENET

• Non-breaching party entitled to be put in
  position it would have been absent the breach.

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FUNDAMENTAL CAVEAT NUMBER 1

• Non-breaching party only entitled to damages
  reasonably in the contemplation of the parties at
  the time of contracting.

FUNDAMENTAL CAVEAT NUMBER 2
Any award of damages must be reduced by the
savings obtained by the contractor as a result of
the breach (i.e., any cost or loss that he has
avoided by not having to perform).
FUNDAMENTAL CAVEAT NUMBER 3
Contractor must establish damages to a
reasonable certainty.
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SLAM DUNK ON ENTITLEMENT ? GOOD RESULT IN
ARBITRATION
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HOW DOES THE DAMAGES SHIP VEER OFF COURSE?
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IT MIGHT COST TOO MUCH TO MAKE THE SHIP AS GOOD
AS YOU PLANNED.

• Dangerously assuming that repair and replacement
  costs will be awarded instead of diminution in
  value economic waste doctrine.

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CAUSATION AND DAMAGES MIGHT BE LIKE TWO SHIPS
PASSING IN THE NIGHT.

• Failing to prove that the damages incurred bear
  sufficient relationship to the breaches claimed.

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IN A MULTIPLE SHIP COLLISION, WHICH SHIP CAUSED
WHAT DAMAGES?

• Failure to properly allocate damages where there
  are several potential contributing parties.

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BERMUDA TRIANGLE DAMAGES SPECULATIVE OR REAL?

• Pushing the envelope into speculation.

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• PROJECT COST AND FIELD RECORDS GENERAL
  CONSIDERATIONS
• Cost to maintain records
• Company policy issues
• Establishing detailed cost and productivity
  tracking at the outset of the project
• Growing from smaller to larger projects
• Availability of technology to support tracking

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• DELAY AND IMPACT ISSUES
• Problem arises keep good records
• Extra work vs. impact and inefficiency and
  acceleration costs
• Job-specific vs. industry wide data
• Technology leading to need for higher level of
  tracking and proof

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• DAMAGES THEORIES METHODOLOGIES
• Total Cost Approach
• Jury Verdict Approach
• Modified Total Cost Approach
• Use of Inefficiency Percentages from
  Published Sources
• Expert estimates of inefficiency
• Measured Mile

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• Measured Mile Approach
• Most preferred method
• Productivity during abnormally disrupted period
  minus productivity during normal period of work
• Deduct losses resulting from disruptions which
  are not compensable (e.g. weather or contractor
  performance issues)

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• Measured Mile Approach
• (continued)
• Difficulty in finding period of un-impacted
  performance
• Comparability of the work

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• Considerations for Tracking Cost and Productivity
  Data
• Physical location of the work
• Type of work and sub-categories
• Timing of the performance of work

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• Considerations for Tracking Cost and Productivity
  Data (continued)
• Perceived differential in the impact on varied
  sub-categories of work
• Degree of difficulty comparison
• Materiality of the work in each area
• Cost to accumulate the costs and productivity in
  question

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Types of Records and Other Issues

• Timesheets
• Equipment logs
• Diaries
• Productivity data (equivalent units per shift)

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Types of Records and Other Issues (continued)

• Project personnel instructions
• Uniqueness of each project situation
• Actual examples of successful/unsuccessful
  attempts
• to prove inefficiencies

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Boston Big Dig Construction Project

• Impact claims for concrete operations
• No un-impacted period
• Measured Mile calculation
• Analysis based on time only -- no sub- elements
  tracked (e.g. forming, placing,
• finish, etc. (no tracking by pour)
• Point and patch issues quality and timing

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Boston Big Dig Construction Project
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Boston Big Dig Construction Project
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Overseas Embassy Construction Project

• - Inefficiency claim
• - Inappropriate approach
• - Rejected by BCA Judge

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Overseas Embassy Construction Project
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Remediation of Landfill

• - Termination of subcontractor
• - Second set of books craft labor
  database
• - Self performed vs. brokered job
• - Use of consultant to do re-coding
• - Costly and inefficient approach

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Highway Bridge Construction

• Subcontractor fabrication and
  inefficiencies
• - No cost segregation by Pier and Bridge

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Highway Bridge Construction
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Boston Big Dig Construction Project

• - Impact claims for concrete
• operations
• - Degree of difficulty comparison
• - Costs/productivity by structure

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Boston Big Dig Construction Project
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Boston Big Dig Construction Project
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Boston Big Dig Construction Project
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Boston Big Dig Construction Project
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SOME BASIC POINTERS FOR LIFE ON THE HIGH SEAS

• Help your clients develop systems that collect
  damages evidence in a coherent fashion.
• Try to use the best accepted damages theory.
• Always remember causation.
• Give the fact finder the necessary tools to
  perform allocation and diminution of value
  assessments.
• Common sense should prevail.