|Becht Engineering personnel have significant experience in serving as Expert Witnesses for a variety of legal matters. However, litigation can be costly, time consuming and often times the outcome is unpredictable.
It should be avoided if at all possible through implementation of proper controls and oversight.
A much better strategy than after the fact litigation is to put contracts, systems, specifications and personnel in place to assure there is a good outcome on a project. This will also assure that issues are addressed in timely fashion and resolved quickly.
Several years ago I wrote a paper titled “The Top 10 Myths of Reliability Management.” The first myth was “You can always trust your contractor.” While many contractors are quite competent, it is important to have a clear understanding of the expectations and the contactor must be monitored to assure the work is going according to plan. Becht Engineering has experienced management and technical resources from owner organizations that can be used to supplement a project or turnaround team to assure a good outcome. These resources are often integrated into the overall project or turnaround team early in the process to provide needed skills for a strong bid package or turnaround plan. Our resources can also provide “cold eye” review and turnaround assessments to assure packages, plans and execution strategy meets industry standards.
The second myth was “Don’t worry about the first myth, just sue if it doesn’t work out.” This is a poor choice since it will be difficult to fully recover the impact of a poor job. For example, the contractor or vendor liability might just be to fix the piece of equipment, leaving the owner with losses for lost production and poor reliability. In addition litigation can take years and consume valuable owner human and financial resources.
The third myth was “Mechanical Engineers know everything.” The engineering field is actually very broad and execution of a project or turnaround requires highly specialized skills. Sometimes a person with limited experience is thrown into a situation and struggles since they do not have the experience or tools to handle the job. This is another area where Becht Engineering can provide expert support to mentor the individual, add the needed skills to the team and keep the project on track.
Recently, a Becht Engineering employee worked as an Expert Witness for litigation on a project that had been significantly over expended. The mission was to attempt to recover funds due to over expenditures in both engineering and construction. At the end of the day it was determined that the way the owner managed the project was a significant contributing factor to the cost overrun. The over expenditure was not caused by a single error but rather a cascading series of events and decisions.
Engaging expert support at the outset of the job and throughout the duration of the project likely could have saved significant costs and potentially avoided litigation. Some of the issues on this project included:
- The project was over expended by about 66% of the original projected cost.
- Engineering cost was about 4.5 times the original estimate and was significantly late. There was limited monitoring of the contractor since it was assumed “they knew what they were doing.”
- The owner’s rep on the job had limited experience and the project cost was estimated to be 340 times larger than any project the individual had handled in the past.
- Originally the project was to be done on a lump sum basis and a number of bids were received, all well below the final cost of the plant. However, only one bid was conditioned and when it was determined that contractor did not have the financial strength to do the job, the EPC concept was abandoned. The job was split between engineering and construction and the owner had responsibility for procurement and expediting major equipment.
- The client accepted a T&M construction arrangement. T&M requires careful monitoring by the client and is the highest risk arrangement for the owner.
- There was no specific scope of work for the constructor or written communication protocol between engineering and the field. Engineering packages were generally late and there was no strategic interface between engineering and the field.
- The client execution manager was a contractor and there was little owner direct oversight.
- The contractor failed to implement numerous standard systems promised on the job however the client did not adequately document these issues in writing or shut down the job.
- Anticipated credits to complete the job by a certain date were significantly overstated thus artificially pushing a schedule driven situation.
- All change orders, time sheets and other documents were authorized by the client representative.
Obviously this situation made it difficult for the client to present a solid case for recovery. Many of the stated pitfalls would have been addressed and avoided by an experienced project management team. In this case the total cost of litigation and expert services amounted to about 15% of the original estimate to build the plant and the party losing the judgment generally accepts the burden of the legal and expert costs. A seasoned project team could have been put in place for a fraction of this cost.
The lessons learned on this job included the following:
- A seasoned project team must be assembled to execute a major capital project
- Continuous monitoring of the engineering and construction is essential
- Written scopes of work must be in place and agreed
- All systems needed for the contractor to monitor the job progress and report costs must be in place at the outset of the work
- The owner must continuously monitor the contractor to evaluate job manning and efficiency
- Change orders must be fully justified and include detailed engineering, manpower estimates and execution plans.
In recent months due to significant activity in the construction business, Becht Engineering has been approached on several other projects with similar issues. In each case a solid project management plan, detailed specifications, sound vendor surveillance and excellent field quality control could have avoided the issues.
Becht Engineering can help clients with this complex process to build a strong project management team, develop project packages, provide vendor oversight and monitor field execution to help assure a successful project.
Need some more information or have a question?