In this article:
- Understanding the impact of a project schedule on on project claims
- Real-life consequences: A project claims case study
- Consequences of poor schedule management
- Assessing your vulnerability
Lack of Project Planning Skills Costing you Money in Claims?
In today’s fast-paced world, more and more projects are under extremely tight timelines, making it nearly impossible to complete them within the prescribed deadlines. However, many contractors are taking on these challenging projects to survive, aiming to manage the risks and delays as they arise while hoping for additional scope through variation orders or compensation events, which can extend the project timelines and provide much-needed breathing space. It's crucial to note that a well-developed project schedule is essential to support or substantiate project claims and protect against potential disputes, ensuring smooth project progression.
Understanding the Impact of a Project Schedule on Project Claims
In this regard, ensuring that the project schedule is updated and maintained to the highest of standards becomes top priority. This will support you if you find yourself in a project claim or dispute situation requiring you to fall back on the project schedule to substantiate your claim.
Qualifications of an effective Project Planner
The key to ensuring that you can always rely on the schedule is to have a suitably qualified, experienced, and skilled project planner or project scheduler. When I say suitably qualified, I don’t mean an engineer, as many companies call for, or a software jockey (someone with ample software certification and “experience”), but rather an individual with proper foundation and upskilling related to project planning and scheduling first principles and who understands what is essential to providing a sound contemporaneous project schedule update.
Challenges with Junior-Level Project Planners
Many organizations I know of will rather employ a junior-level project planner to keep overhead costs down or opt for the project manager to perform this function. This is possible, but I believe that when one is executing a complex, high-value project, the need for a seasoned project planner is highly recommended. Personally, I think that some organizations are not aware of the service and support a project planner is supposed to provide for the project. This support is critical, especially when dealing with project claims, which can make or break the financial outcome of a project.
Real-Life Consequences: A Project Claims Case Study
Now you may be asking yourself, why would we need this? I have heard all too often, "Anyone can update the project schedule," or "After all, it’s only there to keep the client happy."
I am going to attempt to explain the importance through a scenario based on actual events on a project I was involved in. This project had 74 sectional completion dates, each one having liquidated damages linked to it. The project was initially planned to take just over four years to complete, but due to many changes and delays, it ended up taking close to 15 years to complete. As a result of all the changes, we found ourselves in a project claims situation where we were claiming for additional time and money. The client believed both parties were responsible for the delay, which was true, and it left us having to prove our entitlement.
Deal with it promptly
Many of the project claims we had submitted had not been dealt with promptly, and the effect thereof was that it ended up with the client performing the assessment of our claims retrospectively rather than when the events occurred. This being the case, the client requested that we provide 23 months of contemporaneous project schedule updates which they, in turn, used to assess our individual project claims. The client had contracted a group of forensic experts to assist them with evaluating and verifying, or rejecting, our project claims. Initially, we weren’t intimidated by this as we thought our project schedules would stand up against challenges.
To our dismay, it turned out to be the opposite. The forensic experts didn’t even look at our submitted project claims but rather started by reviewing our project schedule updates as submitted contemporaneously, which is the right place to start, notwithstanding that the contract would also need to be read and understood.
Consequences of Poor Schedule Management
After 13 months of having to provide explanations for why certain things documented in our claim submittals were not evident in the project schedules, it became clear that our project schedules were in a very poor state. There were many attempts from the forensic experts to discredit our project schedules altogether, but we managed to provide documented proof for some of the claimed events. We were very fortunate to conclude the project claims settlement and walk away with only a couple of scrapes and bruises, but a lot of money had to be left on the table because our project schedules were in bad shape.
The reason for the project schedules being in bad shape was a combination of poor project management from both the client and the contractor, poor client interface management, and inexperience of the project planner. Because the project planner is responsible for the project schedule, he was ultimately responsible for the failure of many project claims.
Assessing Your Vulnerability
So, ask yourself this
- Are you sure that the planner / scheduler you have in your employment is suitably experienced and skilled?
- How do you determine the level of skill your planner / scheduler has?
- Are your schedules your ultimate get-out-of-jail free card?
Not sure how to answer these questions?
Well, here is the good news, Profactaplan has developed a method to provide your organization with the answers. With knowledge comes power. Send us an email on info@profactaplan.co.za and let us tell you how you can get answers to these 3 questions and stop leaving money on the table!
