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CPM SCHEDULING CAN HELP IN RESOLUTION OF DISPUTES

Copyright, Hill International, Inc., 2000

According, to data compiled by the American Arbitration Association, the building industry has witnessed an explosion of construction claims in recent years. with an increase of more than 130 percent over the past decade.  Many of these disputes involved delays in the completion of a construction project.  As Alternative Dispute Resolution (ADR) becomes an increasingly popular method of resolving construction disputes without litigation, the trend toward litigation may decelerate.

Detailed reports and records always have been an essential factor in construction claims litigation.  Critical Path Method (CPM) scheduling, a method of plotting. tracking and controlling the numerous activities involved in construction, can be an effective instrument for assessing the progress of a project or for determining the impact of one delay on all subsequent activities.  During litigation. accurately created and updated CPM schedules can provide an indisputable source of information when attempting to resolve time-related disputes outside of the courtroom.  Before CPM scheduling can be fully constructive, however, it must be used more effectively by all parties involved in the construction process.

Although CPM scheduling was introduced to the construction industry nearly 30 years ago, it is still not widely used.  Even when it is used, it is often underutilized, employed merely as an aid for reporting and recording project progress.  In the mid-1960s, CPM scheduling was used selectively, due largely to the inaccessibility of computer equipment.  The schedules were prepared by mainframe computers through a costly, multi-tiered process that started with a cadre of planners who first manually drew out the logic and input data onto data cards.

Some errors had to be investigated, followed by the running and re-running of the data to obtain a precise schedule.

Through advances in personal computing, such difficulties have been diminished and the cost and effort of producing an accurate, well detailed CPM have dropped dramatically. With less expensive and more user-friendly options now available, no firm need be without a CPM scheduling package.

For greater effectiveness in ADR, a conscious effort must be made to use CPM scheduling more often.  The following steps can prove helpful in increasing a CPM's effectiveness.

1.   Bring CPM Scheduling into the Mainstream of Project Management

By establishing procedures including detailed scheduling specifications, timely approval or disapproval, reality checks, strict reporting, and updating requirements, CPM scheduling can become a central component of a construction project.

Detailed scheduling specifications.  Recent contract specifications now require the use of CPM techniques in project scheduling.  Though this is a promising development, CPM schedules often still do not include the components that make them useful project tools.  For this reason, when requesting a deadline extension, one should be required to provide not only a CPM schedule analysis, but also particulars such as the number of activities in the CPM, the level of detail, and resource loading requirements.  Once the project schedule has been set up in CPM form, it can be used in the ADR process to analyze time-related disputes more effectively.  Examples of these procedures are scheduling specifications currently used by the U.S. Army Corps of Engineers, the Veterans Administration. and the Naval Facilities Engineering Command.

Timely approval or disapproval of CPM schedule.  To be most effective, the CPM schedule must be approved or rejected within the first four to six weeks of the start of the project.  Otherwise, delays in the establishment and monitoring of the project schedule against the original as-planned schedule may eventually cause disputes between contractor and owner since each parry may be using a different baseline to measure delays. In many instances, when approval of the as planned schedule is delayed, the project has advanced so far by the time a CPM schedule is approved that data on the CPM schedule does not accurately reflect the realities of the project.

Because a common baseline is so vital to the determination of project delays, CPM approval must be a top priority at the start of every project.  In fact, timely approvals should be required by the contract.  When both parties are following a common baseline schedule, time-related disputes that arise during the course of the project can be clearly understood and are more likely to be resolved in the ADR process.

Reporting and updating of the CPM schedule.  Once prepared. the CPM schedule must be updated regularly through a well-defined procedure established and agreed greed upon by both the owner and the contractor.  The CPM update should be prepared with input from the project team and only by those intimately familiar with the project.  During the updating process, the integrity of the CPM must not be compromised by either unilateral changes in logic or changes in the constraint dates.  Reporting must be consistent. and all updates must be carried out on the original or agreed-upon base schedule.

To make the CPM's logic and effects easier to follow after updates, both parties must agree to all changes in logic, activities, or constraints before the updating process starts.  Most importantly, the updated CPM must indicate both the percentage of an activity that is complete and the remaining duration for that particular activity.  Providing one without the other can lead to confusion over the actual status of the project.

Reporting and updating the CPM provides concurrent data, so it is important that such information is preserved in an easily utilized, retrievable form.  Generating this information electronically will make it more accessible in the ADR stage

Reality check of CPM schedule.  Updating the CPM improperly can cause discrepancies between the information on the schedule and the actual construction progress.  Therefore. a validity or reality check of the CPM schedule can help gauge the authenticity of what the schedule reflects.  This exercise also will make the CPM schedule a live document performing its proper function, while making it a more effective tool in the ADR process.

Improper updating can be caused by a number of factors.  For example, if the CPM being used by the contractor has been corrupted and its logic has been changed unilaterally, the report's  contents are an inaccurate representation of the project.  Therefore, the float posture for the activities is different from the actual activity taking place on the project, and its Critical Path is different.  To avoid such discrepancies, owners and contractors should schedule bimonthly meetings to review and check the current CPM for validity.

2.  Shadow Schedule

A shadow schedule is a replicated CPM schedule prepared by the owner to match the contractor's CPM.  Creating a shadow schedule provides two advantages.  First. it ensures that the owner is fully aware of the dynamics of the project.  Second, the owner holds an independent check of the contractor's respective update reports.

It is important to remember that a shadow schedule is a living document, not an archival record used only at the end of the project for claims preparation.  Owners must discuss and verify the shadow schedule and subsequent updates with the contractor on a regular basis so that as the project moves along, the owner and the contractor have an equally thorough understanding of its “pinch points.”  Ideally, all disagreements should be documented so effective steps can be taken to resolve disputes.  If updated properly at the end of the project, shadow schedules also can be used both as the project’s as-built schedule and as a tool to resolve delay claims in ADR.

3.   CPM Training

Because some of its most basic concepts are largely misunderstood, CPM scheduling is often perceived as esoteric.  Training sessions are the best way to address this misperception and ensure that all key project personnel are conversant with CPM scheduling techniques.  

Training in the use of CPM scheduling is crucial.  A concerted effort must be made to educate project personnel and make them conversant with the process.  Basic training courses can explain the fundamentals of CPM scheduling, including:

·        Critical Path

·        Float

·        Free Float and Total Float

·        Early/Late Start & Finish Dates

·        Forward Pass Calculation and Backward Pass Calculations

·        Logic

·        Constraints

·        Activity Durations

·        Percentage Complete

·        Remaining Durations

·        Resource Allocation and Resource

·        Leveling

·        Work Breakdown Structure

When more project personnel are acquainted with the elements of CPM scheduling, the chances are greater that an effective CPM schedule will be available for use in the ADR process.

4.   Software Compatibility

As CPM scheduling software becomes more widely used in the construction industry, owners and contractors who work together must agree to use compatible computer programs.  There have been instances on a few major projects where the owner's CPM scheduling software was incompatible with the contractor's, leading to discrepancies between the contractor's and owner's progress data.  In many instances. the float was incorrectly transferred and the critical paths shown were vastly different.  This kind of inconsistency can lead to further confusion when delays are evaluated in the ADR environment.

Making the effort to compare software between owner and contractor at the start of a project will obviously save a great deal of time and anguish if a dispute arises during or after construction.

5.   Time Impact Analysis

Finally, Time Impact Analysis developed using CPM techniques can play a key role in ADR by demonstrating the effect of specific delays on the project.  It is most effective when it is developed using CPM scheduling techniques.  Pinpointing, isolating, and quantifying the time impact caused by a specific delay can help determine the time relationship to any other delays that may have occurred or may be occurring at the same time.

The use of Time Impact Analysis, in which fragments are used to simulate the impact of a delay or a change, should be more extensively practiced.  Relatively simple and easily learned. techniques of this type of analysis are key to type representing the respective positions of the two parties and their impact. or lack of impact. on delays.

As ADR is used more often to settle construction claims, the industry should focus on the value of CPM scheduling.  Clearly. its implementation will be of great value in the attempt to resolve time-related claims more effectively.