Introduction
When schedule delays impact important contract milestones beyond key deadlines, a recovery schedule may be the only chance a project has to achieve those milestones. This paper will explore lessons learned from two projects that were significantly delayed and used recovery schedules to achieve project success. This paper will also discuss guidelines from the AACE Recommended Practice 54R-07, “Recovery Scheduling – As Applied in Engineering, Procurement, and Construction.” Essential to recovery schedule success is the decision by project stakeholders to revise the definition of project success as accomplishing only the most important project goals. The recovery schedule is then developed by revising the original schedule logic to allow for additional resources to work concurrently. The use of targeted overtime for critical and near critical activities, as defined by updates of the recovery schedule, is another important recovery tool. The recovery schedule is also used to warn against any future owner responsible activities (i.e. shop drawing approvals, permits, inspections) that could impact the accelerated project. This paper will also discuss recent case law pertaining to recovery schedules.
The RP 54R-07 was developed as a guideline for troubled projects to develop and implement a recovery schedule to overcome project delays. The RP 54R-07 suggests that troubled projects resolve any contract issues that have delayed the project prior to developing a recovery plan that achieve the four overarching principles of fairness, responsibility, involvement and timing. Two real world case studies with similar early critical path delays attempted to develop and implement recovery plans. How these plans were developed and used by the project team was the difference between a successful recovery effort and failure.
The men and women developing a baseline schedule at the pre-bid or bid stage can rarely conceive of the numerous challenges that a project will face while being constructed that can delay the project. Any number of events such as slower than anticipated production by the contractor, labor shortages, design errors, unusually inclement weather, subsurface issues, etc. can cause severe delays to a project. Some projects have contract language stating when a project is delayed beyond a certain amount of time that the Owner may direct the contractor to submit a recovery schedule. Projects without this recovery schedule language may still allow the Owner to direct the Contractor to develop a recovery schedule. It is when a project must overcome these schedule impacts rather than extend the project timeline that a recovery schedule must be developed. Recovery schedules are more than blindly adding resources and working additional hours. A recovery schedule is not a magic wand that will make all the problems disappear on a project but rather is a tool to help stakeholders resolve their problems in a project.
RP 54R-07 Four Overarching Principles
When a project team is faced with recovering a failing project, there are many options available to them to develop a plan to recover the schedule. AACE has developed Recommended Practice 54R-07 as a guideline. The RP 54R-07 is not detailed checklist for developing a recovery schedule for troubled projects but rather a ‘structured approach’ which provides guidelines for a project team to develop a schedule that shortens the time to construct a project while reducing conflicts on the project [1]. This Recommended Practice endorses four overarching principles in developing a recovery schedule – Fairness, Responsibility, Involvement, and Timing.
The Fairness Principle – The reasons for the impacts to the critical path that have delayed the project to the point that a recovery schedule is necessary should be examined and the responsible parties should be identified.
The Responsibility Principle – This generally states that once the recovery schedule has been developed and approved by the Owner that all parties will agree to work within the constraints of the schedule and each party will be responsible for trying to achieve their work as described in the recovery schedule.
The Involvement Principle – The recovery schedule should be developed with involvement by the entire project team and stakeholders. After a course of action is determined to recover schedule all the stakeholders must agree to fulfill their responsibilities as called out in the recovery schedule. Without buy-in from all stakeholders a recovery schedule is doomed before it even starts.
The Timing Principle – The timing of decision of the Owner to request a recovery schedule, with or without contract language dictating when a recovery schedule can be directed, can be influenced by the extent of the schedule slippage, amount of time remaining to complete the work. The RP 54R-07 also suggests that the Owner review if the availability of resources and the costs of recovery are excessive in comparison to the amount of time that is to be recovered.
The RP 54R-07 provides guidelines for developing a recovery schedule however, this is far from a complete list of possible strategies to utilize to help recover a troubled project. Even before a project is in trouble the Recommend Practice 54R-07 recommends the project Team review the project and brainstorm about possible opportunities to save project time in case the project is delayed. Having a list of options to improve the project schedule on hand will save valuable time when it becomes necessary to develop a recovery schedule.
For Owners, the RP 54R-07 states that when the Owner orders the recovery schedule, that the delay in project schedule be evaluated to determine if the delay is an excusable delay. If the Owner directs the Contractor to overcome excusable delays they are opening themselves up to a constructive acceleration claim from the Contractor. The recovery schedule can be a totally new schedule or just revising the existing project schedules, depending on the quality and usefulness of the existing project schedule. The recovery schedule is sole responsibility of the Contractor unless otherwise specified. There are some projects that require the Construction Manager to develop and control the schedule.
Determining Responsibility for Project Delays
When a project encounters issues that delay important project milestones, it is very important to document the status of the project accurately, the amount of delay to be recovered, and the Contractors planned means and methods at the time of the schedule impact. The RP 54R-07 recommends reviewing the project schedule for historical information regarding the progress of the project. The project schedule accuracy should be verified to assure that it reflects the current status of the project and that the project is indeed in need of recovery. This analysis would also identify the responsible parties to the project delay. The project schedule should seek out any possible concurrent delays. The Owner should be made aware of any excusable delays on the critical or near critical path, regardless if they are compensable or not. If the Owner elects to not provide a time extension for excusable delays, the Owner should be made aware of the potential for constructive acceleration claims [2].
Federal courts have ruled in cases such as Frasier Constr. Co. v. United States [3] that the Contractor will be entitled to reimbursement for constructive acceleration when the following conditions are met:
- An excusable delay occurred on the project
- The contractor made a time extension request to the Owner
- The Owner denied the time extension request
- The Owner held the Contractor to original completion date
- The Contractor notified the Owner that the Contractor will need to accelerate to meet the original completion date
- The Contractor sustained actual additional costs to accelerate work [4]
A later case, SNC-Lavalin America, Inc. v. Alliant Techsystems, Inc. [5], found that the despite failing to provide a notice of acceleration, the Contractor was entitled to recover damages for a constructive acceleration claim [6].
The costs of accelerating a project can be significant. Contractors may be hesitant to begin accelerating a project to overcome delays they believe are not their responsibility. It is important to determine and settle the responsibility for the delays that impacted the project completion date. All parties should be in agreement about the responsibility for previous delays before requiring a Contractor to perform a recovery schedule.
Steps for Developing a Recovery Schedule
After resolving the responsibility for the critical path delay, the project team should then focus on how to improve the performance of the delays cause. As the project team develops the recovery schedule the RP 54R-07 suggests a general outline to develop the recovery schedule. Some common recovery schedule actions include:
Removing Preferential Logic - The existing schedule logic should be reviewed to remove unnecessary soft logic from the project schedule. The project team should look for opportunities to have different crews perform work concurrently.
Reduce Durations - Compare the historical performance of contractors on the project against the durations indicated in the project schedule. It may be possible to improve the work durations without adding additional resources or working additional hours.
Review non work periods in schedule calendars - It may be prudent for the recovery schedule to review the non-work periods in the schedule, i.e. winter calendars for weather sensitive work. The RP 54R-07 recommends reviewing the calendars assigned to activities to ensure that they appropriate.
Additional resources - Whenever possible, the project team should look to add resources to the project without causing inefficient stacking or overcrowding of crews. A resource loaded schedule may be useful in determining if a project is over or under staffed.
Review schedule relationships - The project team should investigate changing relationships from Finish-to-Start to Start-to-Start or Finish-to-Finish with lags. This allows crews to work concurrently in the same space.
Increased Work Week - The project team should investigate using a longer work week in developing the Recovery Schedule. However, studies have shown that the prolonged use of longer work weeks would, over time result in reduced productivity for crews. Therefore, it is important that use of additional work days be limited.
Overtime - The project team should be aware that the use of overtime will increase a crews output but can be inefficient and over time and can result in a diminishing returns.
Review out of sequence work to update future logic - The project team should review the schedule updates for the project for work performed out of sequence. The out of sequence work would be an indication that the relationship between the activities does not reflect the true nature of the Contractor’s work flow and should be changed.
Delivery of long lead items - It may be necessary for the project team to accelerate the production of long lead items that are on or near the critical path, possibly incurring additional costs. The project team must be aware of the timing of important material deliveries to keep the project on track.
Review all manner of disruption -The accelerated pace of a recovery schedule can lead to disruption in various forms. The types of disruption can range from overstacking of crews to lack of materials. The project team should monitor the project and the project schedule regularly to identify any causes of disruption that could endanger the recovery schedule. This may require more frequent schedule updates.
It should be understood that the recovery schedule is not a guarantee that a project will complete on time. The recovery schedule, like all schedules, should be an honest assessment of the project and the current status of the project. Ideally, the recovery schedule is a tool to wipe away the project’s earlier problems and a chance for all stakeholders to bury earlier grievances and work together to accomplish the project goals.
Case Study No. 1
The first case study involves the construction of three condominium towers, ranging from four stories to eight stories, over a two story podium garage structure which spanned a full city block. This project was awarded as a design-bid-build with an agency Construction Manager. The General Contractor was responsible for the erection of structural steel, enclosing the building, and finishes. The installation of Mechanical, Electrical, and Plumbing systems was the responsibility of separate respective contractors.
As the foundations for the podium were being constructed, the Owner of the project began selling condominium units inside the three tower sections. The Owner committed to completing the three condominium towers in 21 months so that the condominium buyers could take over the residences. If the condominium towers did not achieve a certificate of occupancy by the end of 21 months, the purchase agreements with the condominium buyers allowed the buyers to void the purchase agreement and have their initial deposit returned without penalty. The Owner was highly motivated to complete the project in 21 months and could not afford to allow the project to become delayed beyond 21 months.
The Construction Manager developed a project baseline schedule showing the project complete in 16 months. Soon afterwards the Owner began closing purchase agreements guaranteeing a certificate of occupancy in 21 months, providing the construction with five months of float. It was also at this time that a design error was discovered and the foundations and structural steel had to be redesigned. The foundation redesign and delays to the structural steel fabrication delayed the critical path for the project by approximately three months.
As the project continued, other delays developed. The project was then further delayed by a late procurement of a masonry contractor by the Construction Manager. The delayed procurement of the masonry contractor delayed the start of masonry and the enclosure of the condominium towers, which was on the critical path, by an additional three months. The Owner grew concerned that the project was to become delayed beyond the guaranteed 21 month completion date. The Owner requested the Construction Manager, who was responsible for developing and maintaining the project schedule, to develop a recovery schedule to recover the project delays.
The Construction Manager met with the contractors and directed the contractors to provide additional foremen and crews to work the three condominium towers concurrently. There was little input from the trade contractors regarding the increased staffing or revisions to the schedule logic for crew flow. There was also no discussion of availability of additional crews and resources to add to the Project.
Initially, the project schedules showed an improvement of five months due to reduced duration for the finishes in the condominium towers as well as the increased crew resources. As the project continued and the directed manpower increases failed to materialize, the project schedules showed the completion of the condominium towers continued to lose time. The crews that were working on the project were working independently of the recovery schedule. The Construction Manager would update the project schedule and try to hide these delays in the field by reshuffling activities to stack work on floors in the schedule and reducing durations in the schedule. The contractors could not procure sufficient crew resources to meet the schedule.
This project continued to lose time due to the slow progress of finish trade contractors and eventually would finish 6 months beyond the 21 month planned construction period. The Owner lost many of original buyers and suffered a great financial loss due the delays in constructing this project. Following the completion of construction there were many claims and lawsuits between the Owner, the Construction Manager, the Designer, and Contractors that took many years to resolve.
This example shows how projects can lead to failure by not obtaining buy-in from all of the stakeholders during the development of the recovery schedule. All the early gains indicated by the recovery schedule were wishful thinking and did not reflect an honest assessment of the project or how the project stakeholders planned to perform their work. It became simply an exercise on paper, showing a desired result, but not reflecting a road map on how to achieve project success. The development of the recovery schedule was from the top down and was forced on the trade contractors. The contractors were not asked for their input on the schedule and thus the initial gains in the schedule were just an illusion. The Construction Manager added resources to the project schedule without knowing whether the labor market had those resources available. The Contractors might have informed the Construction Manager of this fact had there been adequate communication during the development of the recovery schedule. Instead the Owner was responsible to pay for a halfhearted increase in resources for a project that failed to meet his expectations.
A more successful recovery schedule might have been developed to accurately show how the contractor planned to perform the work at one tower instead of all three towers at once. This may have allowed contractors to work in different buildings concurrently instead of chasing each other. Another option may have been to focus resources only on floors or condominiums which already had buyers and postponing work on unsold units. This may have allowed the Owner to succeed in keeping buyers while not paying for additional resources for non-critical work.
Case Study No. 2
The second case study is the construction of a new high school. The project involved private partnership between a large multinational charitable organization and a large metropolitan school district to construct a state of the art high school in a major metropolitan city. The vision for the project was that the new 168,000 square foot high school would be constructed using the highest ecological standards and equipped with latest technological advances. The project budget was more than $60 million dollars. The schedule to construct the new building was fifteen months with the intention to turn the building over one month prior to the start of school in September.
The completion date and the planned opening of the school were fixed; the school district had no alternative site available for the students to start their school year. The high school was a high profile project for the Municipality as well as for the charity. The successful completion of this ambitious project was also very important to the political stakeholders.
The project was a design-bid-build. The project was constructed by trade contracts and administered by an agency construction manager. The general contractor was responsible for the development and updating the project schedules. Due to the aggressive schedule, the Agency Construction Manager’s scheduling specification included many project milestones. The General Contractor was responsible for the erection of structural steel, enclosing the building, and finishes. The installation of Mechanical, Electrical, and Plumbing systems was the responsibility of separate respective contractors.
The foundation for the structure was the responsibility of yet another contractor. The construction of the foundations began before the completion of the plans for the project. The design of the layout of the anchor bolts as well as the structural steel changed several times. Due these design changes the structural steel shop drawings were delayed and failed to incorporate all the design changes. Unfortunately, it was discovered in the field that the structural steel anchor bolt layout in the foundations had been constructed in error. Structural Steel was revised to correct these and other design errors but resulted in a three- month delay to the start of the structural steel. The delayed start to the structural steel delayed the enclosure of the building until late winter and extended the final completion of the project three months past the project completion date.
The Construction Managers reaction to this situation was to threaten the General Contractor with termination if the project schedule could not be brought back to the original contract milestone dates. The General Contractor retaliated with threats to the Owner with acceleration and inefficiency claims. The General Contractor and the Construction Manager continued to fight over the responsibility for the delay and what course of action to take to recover the schedule. Eventually, the General Contractor was able to convince the Construction Manager that the delay to the structural steel was the responsibility of the Owner. The General Contractors schedule consultant performed a Time Impact Analysis using project schedules and project documents. The Time Impact Analysis demonstrated the impact the Owner’s Foundation Contractor and structural steel design changes had made on the project. The Owner accepted responsibility for the delay to the project but still required the school to be opened on time. After the responsibility for the delay was settled, the antagonism between the parties subsided and they were able to reach agreement and begin to work together to find ways to salvage the project.
The first course of action was getting the buy in from all stakeholders in the project who would be playing a part in implementing the Recovery Schedule. This was important because if one stakeholders fails to perform, the success of the project would be in jeopardy. A series of meetings with the Owner, the Construction Manager, and the General Contractor, other major contractors, important subcontractors and fabricators were held to brain storm ideas on how to improve the project schedule. The ideas generated at these meetings were incorporated into copies of the latest project schedules and the results were shared at the following meeting. These meetings helped unify the Owner and the Contractor towards finding a way for the project to succeed.
One of the major developments from these meetings was a new definition of the “successful” project they were working so hard to achieve. Because the new school was only enrolling one class of freshmen in its initial year, there were several areas in the new school that would not be necessary for the start of the first school year; including an auditorium that had been delayed by structural steel changes earlier in the project. The work determined to be non-essential for the opening of the school was re-scheduled and tracked by a second milestone after the September school opening date. The original project completion date was one month prior to the first day of classes. This one month period was to allow the teaching staff to move into their classrooms. It was agreed by the stakeholders that this one month move in period would be reduced to one week.
The Owner agreed to pay for overtime and additional resources to help improve the project Completion milestone. The project management team was well aware of the use of overtime and adding additional crews can create inefficiencies such as stacking, crowding, and learning curves. In an effort to minimize the potential inefficiencies, as well as reduce the costs, it was carefully decided to use only “targeted” overtime and additional resources for activities on the critical path for the latest project schedule update, as well as for near critical paths, defined as any critical path within 20 calendar days of the critical path. If the acceleration of a critical path improved in future schedule update enough that that path was no longer critical or near critical, then the added overtime and resources would cease for that activity. Conversely, if during a weekly or bi-monthly schedule update a new path began to lose time and it was within 20 calendar days of the critical path, then the project team would investigate revising logic or adding resources to that path to prevent any delays to project completion. The use of overtime was captured in the recovery schedule by reducing the original duration for tasked targeted with additional work hours by 10%. The 10% reduction was as an estimate made by the project team to account for the additional work hours and inefficiency associated with working overtime. The project team was able to reduce the duration of the interior finishes by approximately one month by reducing durations as well as performing work with greater concurrency than had been planned in the original project schedule.
The recovery schedule was used to review the schedule logic of crew workflows through the project. The crew workflows were reviewed to find other areas to work while one area was on hold due to the structural steel delays. The erection of structural steel was revised to allow the structural steel to start at a different wing of the building while the larger structural steel members were still being fabricated. The revised steel erection sequence allowed the following enclosure work and interior work to start earlier. The original schedule logic had the entire building to be weather tight prior to starting the interior framing work. The recovery schedule revised the interior framing crews to begin their work prior to school being completely weather tight. The use of targeted overtime and revised crew flows allowed the project to recover time on the path for enclosing the building. This allowed the mechanical, electrical, and plumbing trades as well as the drywall crews to work inside the enclosed building during the winter. The use of targeted overtime was eventually curtailed.
The project schedule played an important role during this recovery period and provides an excellent example of how important accurate periodic schedules are in helping a project recover lost time. The schedule updates were vital in determining where additional resources were needed but also providing warning that Owner activities such as permits and inspections would become critical if not performed when needed. The project team and construction manager would review the schedule updates use them to work together to find a solution to problems on the project as they arose.
This project was able to open sections of the building required for an occupancy permit and the start of the school year for the first freshman class by the original milestone date. No delay or acceleration claims were filed for this project. The Owner was celebrated for opening the school on time and the project was heralded as a success.
Conclusion
AACE developed the RP 54R-07 in an effort to provide guidance to troubled projects in overcoming schedule delays and achieving success RP 54R-07 recommends recovery plans be developed and implemented by following the four overarching principles, fairness, responsibility, involvement and timing. The two case studies had similar early delays that required their respective project teams to prepare recovery schedules. The results of these two recovery plans were very different. The more successful of the two case studies was the project that followed all four overarching principles of the RP 54R-07. The successful case study was the project that sought ideas and agreement from all the stakeholders to develop an attainable recovery plan. The unsuccessful case study developed a schedule that was not based on input from the Contractors that were performing the work and that did not reflect available resources or achievable production rates.
The school case study met the fairness principle by the Owner accepting responsibility for the early delays on the project and being willing to pay for additional crews and overtime. The school case study met the responsibility principle by the Owner and Contractor working together to meet their responsibilities in the development and implementation of the recovery schedule. The involvement principle was achieved by the school case study by developing the recovery schedule with input from the Contractor, its subcontractors, fabricators, and the Owner. The school case study met the timing principle because the recovery schedule was developed with an eye on available manpower resources and sought to minimize the amount of overtime and added crews.
The condominium tower case study did meet the fairness principle because the Owner did acknowledge responsibility for the early delays on the Project that necessitated the preparation of a recovery schedule. The condominium tower case study did not meet the responsibility principle because the Contractors failed to achieve their targeted responsibilities in the recovery schedule. The lack of input from the Contractors in developing the recovery schedule is why the condominium tower project failed to meet the involvement principle. The RP 54R-07 states that the availability of resources should be considered when requesting a recovery schedule. The condominium tower did not consider the availability of additional crews when developing the recovery schedule and this is the main reason why this case study failed to meet the timing principle. Had the condominium tower case study involved the prime contractors and other stakeholders in the development of the recovery schedule and considered the lack of additional resources, the results for this project might have been drastically different.
These two actual case studies illustrate the need for realistic schedules to accurately capture the impact of schedule delays and developing options to overcome these delays. It is also vitally important for all stakeholders in a project, the Owner, The contractor, the designer, subcontractors and fabricators, to resolve their issues and all work together to think of ways to save the project. The successful recovery of schedule requires a realist appraisal of the project and project issues as well as a realistic approach to what measures can be taken by stakeholders to improve the schedule.
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