project risk and control. tender risk programme and method – tightness of completion lad’s...
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Project risk and control
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Tender risk• Programme and method– Tightness of completion
• LAD’s• Extent of change
– Construction method• Temporary works• Change of sequence• Reuse
– Ground conditions• Measurement and “contractors” risk• Who measures, how paid for consequential method-related
costs?
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
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Tender risk cont
•Subcontractors– Extent of quotation– Qualifications– Relationship with main contractor– Specificity
•Suppliers and materials– Fixed ? Price– Which rate to use?– Wastage allowance– Small load charges– Muscle?– Time for resend out
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
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Commercial opportunity
•An opportunity to make the tender more competitive– Sometimes called “scoping” allowance– Calculated figure which results in a net reduction of
the tender total– Usual to have a project commercial strategy
• Design team ability• Client approach• Quality of documentation• Type of procurement• Competitiveness of subcontract market• Valuation and variation provisions
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
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Reduction in tender price
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
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Contract risk
•Delay and disruption– Responsibility
• Delay-impact on overall handover• Delay-impact on sequencing
– Disruption• Direct measurable consequences• Can take place without any measurable delay
•Who is at fault– Contractor– Client– Both– No-one
•Who determines– Architect– Engineer– Approach of contract
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
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Delay- some terms• Compensable delay
– An employer risk event where the contractor is entitled to an extension of time and time-related costs
• Concurrent or parallel delay– Where there are two or more delays and at least one is an employer risk event and another a
contractor risk event• Critical delay
– Delay to a critical activity which causes delay to overall completion of the project• Excusable delay
– Where the contractor is relieved from delay damages and where there may be time and money entitlement under the contract
• Non-excusable delay– Delay caused by the contractor for which there is no relief from delay damages and no time or
money entitlement• Global delay
– Where actual completion exceeds planned completion but individual employer risk events are not identified
• Local delay– Delay to noncritical activities which do not impact the contract completion date.
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
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Claims
• Extension of time awarded– Relevant event/compensation event– No culpable delay– Culpable delay
• Loss and expense– Records, records, records
• Evaluation of prolongation expenses– Who and how
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
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Insolvency
•Risk rating•Definitions•Bankruptcy•Voluntary agreement•Administrative receivership•Administration•Winding up•Voluntary liquidation•Compulsory liquidation
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
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Termination and insolvency• The effect of termination
–Notices–Impact
• Subcontractor insolvency–Practical difficulties
•Programme•Evaluation of the work•Notional account and final account
• Employer insolvency–Practical difficulties
•Recovery•Contractual position•Subcontract position
• Contractor insolvency–Options available
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
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Subcontractor price weighting criteria
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
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Post auction stage
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.12
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Bidding activities
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
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Popularity?•Price only?•Reduced buyer/supplier trust•Need for completeness of tender information•No opportunity to offer comparable materials•Little opportunity for integrated procurement•Future in a price-oriented market?
© 2013 Andrew Ross and Peter Williams. Published 2013 by John Wiley & Sons, Ltd.
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