In the Society of Construction Law Delay and Disruption Protocol, four retrospective delay analysis techniques are referred to, as follows:
1. As-Planned v As-Built.
2. Impacted As-Planned.
3. Collapsed As-Built.
4. Time Impact Analysis.
A brief analysis of each of these delay analysis techniques is given below.
…
Construction Lifecycle Risk Management Conference
Date: 17th & 18th April 2011
Venue: Sheraton Abu Dhabi Hotel & Resort, Abu Dhabi, UAE
Welcome and Opening Remarks by the Chairperson, Samer H Skaik
Ladies and Gentlemen,
Good morning.
I am delighted to join our speakers in welcoming you all and open this Conference on “Construction lifecycle Risk Management” in Abu Dhabi.
It gives me great pleasure and honor to chair this conference. I am so happy that we have in this hall, dedicated individuals from different backgrounds and expertise, from various industries across the GCC region. Those delegates who travelled for miles remind us how important this conference is. Thank you all for coming.
…
Opening and Closing remarks of Construction Lifecycle Risk Management ConferenceRead More »
Inherent risks are those that exist based on the general characteristics of the project. These are risks that can appear regardless of the specific nature of the project.
None of the inherent risks mean that the project is in trouble. Many of these risk factors will be rated as low or medium-level risks. Even if you identify an inherent risk as high, other project factors will come into play as well. For instance, the checklist below states that a large project is inherently more risky that a smaller project. This is generally true. However, an experienced project manager can mitigate many risks associated with large project size. Also remember, if your project falls into a high-risk category, it does not mean you will not be successful. It only means that you should put plans into place to manage the risks. …
Estimate in Phases
One of the most difficult aspects of estimating projects is that you do not know exactly what work will be needed in the distant future. It can be difficult to define and estimate work that will be done three months from now. It’s harder to estimate six months in the future. Nine months is even harder. The reason is that decisions made and deliverables produced earlier in the project have an impact on what the work looks like further along. Therefore, there is more and more estimating uncertainty associated with work that is farther and farther out in the future. …
It has been said that an army marches on its stomach. Contractors and subcontractors in the construction industry run on cash. Lord Denning many years ago made the oft repeated phrase that cash flow is the lifeblood of the construction industry and this sentiment is still relevant today. Estimators when preparing tenders usually concentrate on building profits into the price. Of equal importance is the amount of working capital required to fund the contract and the need to keep the amount to a minimum. The payment terms are therefore crucial to every contractor and subcontractor. Certification and payment should be the subject of careful strategy and planning. …
By Martin Preston
THE majority of the features of a project finance loan agreement are the same as a corporate loan agreement. However, because the basis on which the lenders are advancing the loan is the forecast revenues of the project, rather than the assets or creditworthiness of the sponsors, the risks taken by the lenders and, therefore, the controls that they require under the loan agreement, are greater than would be required under a corporate loan agreement. Inevitably, some of these additional controls impact on the construction contract.
Conditions precedent
Conditions precedent are those that must be met by the project company for financial close to occur, which is when the loan becomes effective. Additional conditions precedent may also need to be satisfied before first drawdown under the loan can occur.
Typical conditions precedent to financial close that affect the construction contractor are that the construction contract and all ancillary documents (including the direct agreement to the lenders) have been executed and become effective. Since the construction contract will often itself contain a condition precedent stating that it does not become effective until financial close (to prevent the project company being committed to construction of the project before it has funds available to pay for it), it is important to avoid circularity between these two requirements. The usual way that this is dealt with is for the condition precedent in the construction contract to state that all conditions precedent to financial close under the loan agreement have been satisfied other than the effectiveness of the construction contract.
Representations & warranties
The representations and warranties made by the project company are the facts upon which the risk is allocated between the parties and form the basis of the lenders’ decision to commit funds to the project. These will normally be made at the date of the loan agreement and deemed to be repeated at financial close. Alternatively, one of the conditions precedent to financial close will be that no changes have occurred that render any of the representations and warranties previously made inaccurate.
Where the project company is required to make representations and warranties relating to the construction of the project, these will be passed down to the construction contractor, who will be required to make the same representations and warranties to the project company.
The representations and warranties commonly required to be given by the construction contractor in a project-financed construction contract include the following:
• The construction contract is legally binding;
• No defaults have occurred under the construction contract;
• No force majeure event has occurred under the construction contract;
• All necessary licences and consents required for the construction of the works have been obtained;
• Completion will occur by an agreed date;
• No variations will be made to the works; and
• No amendments will be made to the terms of the contract.
Undertakings & discretions
Undertakings and/or reserved discretions are the means by which the lenders control the project company and its implementation of the project. They may be positive or negative and prevent the project company from exercising any discretion it has under the construction contract without the lender’s consent. Thus, the project company will not be able to vary the terms of the contract or the scope of the works, issue certificates or terminate the construction contract without obtaining the lender’s consent.
Payment
Payment will be due to the construction contractor when it has met the payment conditions under the construction contract (which will usually be based on the achievement of milestones). However, the project company will only have funds to make payment to the construction contractor if it is able to draw down funds under the loan agreement. This will usually require demonstration by the project company that not only are the amounts due to the construction contractor under the construction contract, but also that:
• When aggregated with all amounts paid to date, the amount sought is within the agreed construction budget;
• The sum of the amounts paid to date and the remainder of the loan allocated to the construction costs is sufficient to complete the works;
• The representations and warranties remain accurate in all respects;
• No event of default has occurred under the loan agreement; and
• There has been no material adverse change affecting the project.
Insurance
Where the works suffer a total loss (or a loss in excess of a pre-agreed amount) and this is covered by insurance, the usual position would be that the insurance proceeds would be paid to the contractor who would then undertake the rebuilding of the works.
However, in a project finance transaction, the insurance proceeds will be paid into an account controlled by the lenders who will decide how they are to be used. If they decide that the insurance proceeds and the outstanding amount of the loan are insufficient to complete the works, then rather than the works being rebuilt, the insurance proceeds will be used to repay the debt. This is known as a “head for the hills” clause and will need to be replicated in the construction contract.
Gulf Construction
by Sarah Blackman
zoomNets can be used to eliminate fall hazards but personal protective equipment should also be used when working at height.next »In order to prevent injuries or fatalities at work, companies should go out of their way to reduce hazards wherever possible. Where there is the slightest risk that someone could get hurt, personal protective equipment should always be used, as experts tell Facilities Management Middle East. …
The Cost Management Plan describes the process that will be used to manage the project budget including tracking current expenditures, upcoming expenses, identifying potential budget overruns and evaluating overall project spending against the budget. The components of the Cost Management Plan can include:
…
The Schedule Management Plan describes the process that will be used to manage the project schedule including tracking activities in progress, identifying activities to be completed, measuring activity performance against allocated time, identification of potential project delays, and evaluating overall project performance. The components of the Schedule Management Plan can include: …
The majority of respondents pointed to improper planning and methodology (78 per cent), lack of communication (75 percent), and unrealistic target completion dates (67 percent) as the top three contributing factors to project failure. They also identified inadequate commitment and involvement from senior management (59 percent), insufficient budgets and resources (56 percent), too many assumptions and unknowns (51 percent), project politics and conflicts (38 percent), lack of set targets or measurable results (45 percent), and the formation of the wrong project team (27 percent) as other major causes. …
Not everyone believes in project managers. Some common complaints include:
by Conrad Egbert
With the market having fallen 40% until now, many clients, contractors and suppliers across the region have begun to renegotiate contracts. CW talks to some of the top experts in the industry to find out what they think about the trend. Last week, CW discovered that City of Arabia – the Ilyas & Mustafa Galadari owned US $3 billion development – is currently renegotiating certain contracts. …
