Death by 8,000 Cuts - How Changes During Construction Can Impact a Project

Jury Trial, North America

A jury trial considered how design and construction changes in a chemical plant project affected cost and schedule. The opinion was developed based on the analysis of each party's rights under the lump sum contract, the change orders, and the construction process.

A chemical manufacturer hired an engineering/construction firm to design and build a chemical plant on a "lump-sum" basis. When the project overran the budget and was not completed on schedule, the owner filed a lawsuit against the contractor, alleging job performance as the cause. In its defense, the contractor claimed recurrent design changes by the owner disrupted the project execution plan.

Completion of a project within the terms of a lump-sum bid requires a well-defined engineering design and scope of work prior to commencement. Owner-requested changes during project execution can disrupt a contractor's work plan and impact overall job efficiency. The cumulative effect of such disruptions can be particularly troublesome and lead to schedule delays and/or cost overruns.

In this case, Baker & O'Brien was engaged to examine how the more than 8,000 owner-requested changes may have affected the cost and schedule. Such an analysis necessitates an understanding of each party's contractual rights, the bases for the changes, and the construction process. A study of thousands of project documents led our consultants to conclude that the incessant design changes were the root cause of most of the cost increases and schedule delays-only 128 changes were traced to contractor-related issues. Our analysis and calculation of damages weighed heavily in the jury's decision.

Charles J. Hirst

Senior Vice President

Industry
Chemicals and Petrochemicals
Service
Engineering, Procurement, and Construction (EPC) / Litigation / Expert Witness Testimony
Region
North America