2004 AACE International Transactions

CDR.09 Calculating Imaginary Numbers: Time Quantification in Acceleration

John C. Livengood and Christopher R. Bryant
ow long would the project have taken if the work had not been accelerated? This question confronts most forensic scheduling experts when attempting to justify the costs incurred in accelerating the project to overcome delays. The time projection, since it never actually happened, is an "imaginary number." It is a number that never really occursthe schedule consultant only imagines what would have occurred, "but for" the acceleration efforts. Such a calculation is often essential to support the cost incurred in performing acceleration. It renders a tangible number on the contractor's efforts. This paper will explore one of the few reliable and detailed methodologies available to a schedule expert to quantify the acceleration efforts undertaken to complete a projectthe application of Time Impact Analysis (TIA) methodology to a forward-looking sequential analysis. This paper will examine both the similarities with this common usage of TIAs as well as the nuances of using the method to prove acceleration.

quickened. Acceleration occurs when the contractor performs its work at a faster rate than required by the original contract [2]. Recently, the calculation of acceleration has often entailed quantifying acceleration simultaneously with delay. The contractor often argues that changes or impacts to its work beyond its control have increased the scope and complexity of the work required to be performed. Yet the time allowed for this increased scope is not sufficient to perform the additional work. As a result, the actual achievement of activity completion is delayed, but the work required accomplishing that work is increased or accelerated: Constructive Acceleration occurs when a contractor has a justified claim for an extension of time and the owner or general contractor refuses to adjust the completion date for performance, and instead, requires the contractor to finish the project by the original contract completion date [3]. The result is simultaneous delay and acceleration. The methodology explained in this paper quantifies the delay to which the contractor was entitled, thus establishing one element of "constructive acceleration." The resultant costs associated with acceleration are generally related to increased labor costs but the full range of acceleration costs can include: Overtime Costs Additional Labor Costs (more crews or double shifting) Stacking of trades costs Loss of labor efficiency costs Additional equipment costs Additional supervision costs Increased material delivery costs Increased overhead costs.

IDENTIFYING THE PROBLEM Forensic schedule consultants have been asked to justify acceleration costs more frequently in recent years. These costs are generally related to increasing the number of labor workhours, management and equipment needed to complete a task in a time period less that originally estimated. There are two types of accelerationconstructive and directed. Constructive Acceleration requires denial of a valid time extension request and you must actually accelerate the work. Directed Acceleration is due to a written demand by the owner/general contractor. All acceleration affects productivity but the longer an accelerated effort continues, the more labor is lost due to the impacts from acceleration [1].

Throughout this text, the authors have used an example to Either type of acceleration involves working at a more aggres- explain the acceleration time quantification methodology. This sive rate than conditions would otherwise support. model assumes a major industrial complex, with a contract start date of 01-Feb-99, and a completion date scheduled 626 calendar Acceleration is the process by which the ordinary and days later on 18-Oct-00. The project involved several major phasexpected progress of events in a construction contract is es during which the owner initiated numerous changes. In the CDR.09.1

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Figure 1Overall Delay and Acceleration Summary

example, completion was achieved on 24-Apr-01, 188-calendar days late. However, considering the overall delay to the project and the original planned rate of execution of the work, the contractor would not have achieved project completion until 08-Mar02, but for the accelerated efforts undertaken to mitigate the delays and impacts. In Figure 1, the calculated delay and acceleration are shown. As the figure indicates, the overall delay exceeds the acceleration, or recovered time, achieved by the contractor. The unrecovered delay, which occurred between 18-Oct-00 and 24-Apr-01, 188 calendar days, represents the number of days of delay that the contractor's acceleration efforts were unable to overcome.

sequence of construction events. These natural breaks provide an opportunity for the evaluator to measure progress. While the contractor may have maintained CPM updates on a monthly basis, the breaks do not always occur exactly at a schedule update. However, the analysis is predicated on having monthly updates, so identifying changes near in time to those updates is very helpful. Not all monthly updates should be used in the analysis. To do so would create a huge amount of unnecessary, and falsely detailed, analysis. Therefore, the schedule analyst should identify natural breaks in the construction where major events occurred. Some of the possible considerations in identifying these breaks should be: Near to a data date of an update Development of a new or substantially revised baseline schedule Issuance of an acceleration order (directed or constructive) Major construction event completion of a milestone start of a new phase arrival of a major element of equipment an accident

METHODOLOGY The analysis is performed by taking an original schedule (often a baseline schedule), modified if needed, and impacting it to reflect what would have happened "but for" the contractor's acceleration. Then, by comparing that modified schedule with the actual events as reflected in the as-built schedule, a calculation can be made that identifies the acceleration (or delay) achieved during the course of actual performance. The "Time Impact Analysis" (TIA) methodology is used to calculate the impact of the events occurring during each of three separate time periods [4]. The facts associated with each impact event are then examined and a "fragnet," a portion of a Critical Path Method (CPM) schedule network, was developed for each event allowing its specific impact on the project to be integrated into the baseline schedule. The use of this methodology ensures that the individual impact of each change is properly considered with respect to its influence upon the schedule. When all of the impacts for a particular time period have been developed and inserted into the schedule, the schedule is recalculated.

Using too few time periods is often misleading and not helpful to the contractor. In such cases, the measurement covers too long a period and often includes non-acceleration periods as well as acceleration. This results in weakening the "cause and effect" relationship between events and accelerations. Conversely, using too many time measurement periods unnecessarily complicates the analysis, increases consultant costs, and subdivides continuous acceleration efforts. In Figure 2, the authors have modeled an acceleration analysis using three time periods. Figure 2 depicts the three time periods used in performing this example. The first period runs from start of the project through initial engineering and general site civil construction. The second period runs from the start of steel construction through a major change order. The third period runs to the start Step OneIdentifying Time Periods of the mechanical equipment installation through mechanical The first step is to identify the major time periods associated equipment start-up and commissioning. with the project. Generally, there are natural breaks in the CDR.09.2

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Figure 2Time Periods Step TwoModifying the Baseline Schedule The starting point for any schedule analysis that is intended to identify delay or acceleration is to determine the appropriate baseline schedule. The baseline schedule is the schedule that most closely represents how the contractor originally planned to perform or execute the work. Ideally, such a schedule is prepared by the contractor shortly after commencement of the work and complies with all aspects of the contractor's contract, depicting in reasonable detail the sequencing, durations and relationships among the design, procurement and construction activities of the project. Sometimes the baseline schedule must be modified. Typically such modifications might include: Step ThreeImpact Fragnets

Identifying EventsAs with any complicated delay analysis, a major task is identifying the impact events. Typically this work involves detailed discussions with the appropriate staff, a careful review of the correspondence, daily reports, monthly meetings and proposed/approved change orders. Once a list of the major events has been identified, a detailed understanding of the sequence of those events is necessary to enable the schedule consultants to create a detailed description of the event, as a series of schedule events, a fragnet. Unlike a more traditional TIA analysis, there is no need to insert activities for which the contractor is responsible. The reason is that the success (or failure) of the con Removal of progress that was included in the baseline sched- tractor to recover from its own errors will be evident in the actual ule dates. So if the contractor is responsible for a significant delay, it Correction to logic connections that fail to reflect the actual will manifest itself by offsetting the calculated acceleration. predecessor-successor relationship Changing the duration to more realistically reflect the work. Creating the FragnetEach fragnet includes a description of the additional or changed work, the sequence of new activities that It is best not to adjust the baseline schedule [5]. However, it describe the work, durations for each of these activities, and the often occurs. The most difficult baseline schedule to adjust, and existing schedule activities to which it is logically tied. The impact one where such adjustment is most needed, is one where the activity is inserted given either non-accelerated durations or durasequence and timing of the activities is predicated on non-con- tions drawn from "actual" performance if appropriate. In other tractual milestones rather than logic ties between activities. In words, the fragnet represents a CPM activity sequence that would other words, the creator of the original schedule imposed "start no have been included in the original schedule if the contractor had earlier than" or "finish no later than" constraints. This is known as known the work was going to be required at the time it created the implied logic. If these problems remain unadjusted, the result is a baseline schedule. schedule that when impacted with a fragnet and recalculated will Impact events are then inserted into the "adjusted baseline not demonstrate that a delay has occurred to the project. The solu- schedule." By linking these extra work requirements and impact tion to this problem is to add logic ties in place of constraint dates. events to their proper existing schedule activities, each of the However, these ties must not change the sequence or timing of the impacts is integrated into the appropriate adjusted baseline activities. The "adjusted baseline schedule" must, like the original schedule to create an impact duration schedule. Each impact baseline schedule, comply with the contract requirements. event is described in detail as a "fragnet," a portion of a CPM schedule. A fragnet is a sequence of new activities and/or activity revisions that are added to the requisite baseline schedule in order CDR.09.3

2004 AACE International Transactions Table 1 Activity ID CA31360010 CA31360020 CA31360030 CA31360040 CA31360050 CA31360105 CA31360115 CA31360205 Activity Description Original CHANGE NOTICE ISSUED NOTICE TO PROCEED ISSUED DESIGN & ISSUE FDN DRAWINGS DESIGN & ISSUE STEEL DRAWINGS FAB & DELIVER STR STEEL INST ADDITIONAL BLDG PILING F/R/P BLDG ADDITIONAL FDNS ERECT & ALIGN ADDITIONAL STEEL Duration in CDs 1 20 20 20 60 2 3 15

to assess the influence of an event upon the schedule's activity sequencing and overall duration. It is part of a method for analyzing delays and impacts on a schedule. The following steps describe the sequence of analysis generally followed in assessing a delay by use of fragnets: 1) Select the time period related to the date of the occurrence of the impact event; 2) Define the scope of the impact event; 3) Review the appropriate period baseline schedule and determine which activities are associated with the impact and how they are impacted; 4) Prepare a fragnet illustrating the sequence of the impact event and define its relationship to the current schedule and/or existing activity durations for added work; and, 5) Repeat Tasks 1 through 4 for each selected event or condition. Special Issues Regarding Activities within the FragnetTwo special issues are involved in the development of fragnets. The first is how to determine durations for activities that did occur, but occurred under circumstances very different than what would have been planned. For example, if additional engineering is involved, how is that duration calculated. Two obvious methods present themselves: First, the contractor's original planned productivity for engineering could be utilized. If the contractor planned to produce one engineering drawing for every three workdays, then a change that required five drawings would be fifteen workdays. But what if the contractor had doubled her engineering workforce (or increased the hours worked per week)? Alternatively, the actual time spent producing the additional drawings must be considered. This assumes the contractor's records support such detail. But it is likely that the actual drawing production did not occur smoothly. The authors have concluded that using the original planned production rate for the engineering reflects the unaccelerated duration and is therefore appropriate. The second special issue is how to treat construction durations. Even more so than the engineering activities, there is no clear way to estimate the duration of a construction activity in an unimpacted, unaccelerated environment. For this reason, contemporaneous change order estimates are sometimes suspect as they usually incorporate some impact factor. Another alternative is to use actual durations for these added activities. Since this work is performed under impacted conditions, the fragnet would contain a potentially major activity that reflects the delay and acceleration efforts. This clearly does not reflect unimpacted durations, but is the most "conservative" estimate available. The authors believe that the best method, like that for engineering, is to use originally planned productivities in estimating the duration of the impact work.

Fragnet Example: Addition of Building ExtensionThis fragnet/change was the result of modifications to the buildings as ordered by the owner. It required that the "low bays" be extended on the east and west sides of one building. The contractor's estimate for this work was 315 engineering workhours, most of which dealt with foundation and steel design and 1,300 construction workhours, most of which is for steel erection. The impact fragnet, that included eight different activities, was developed from the information contained in the contractor's files. See Table 1. The fragnet in Figure 3 charts the added activities in a timebased format. The fragnet starts on 10-May-99 when the contractor issued a change notice to advise that extra work was required to increase the size of the building. On 08-Jun-99, the owner issued a Notice to Proceed with the change. The duration of the activities was determined based on the engineering and construction workhours estimated by the contractor. These activities were then linked to the appropriate schedule activity. Figure 3 illustrates the time scaled fragnet. The fragnet was inserted into the impact duration schedule. The schedule was then calculated to determine if this change had any critical impact on the overall project completion. The result indicated that this fragnet would, in fact, have extended the anticipated completion date of the Project. The bar chart depicts the additional activities associated with this impact fragnet and their relationship to some of their predecessor and successor schedule activities.

Step FourRecalculate The Impact Schedule The impact duration schedule is recalculated, and the new projected completion date is identified. Not all fragnets result in an increase to the overall projected performance period since only impact fragnets falling on the critical path of the new schedule result in a change to the projected completion date. However, the authors believe that all reasonable possible impacts should be considered and inserted, even though many will have no impact on the overall delay. This is for two reason: First, complete inclusion ensures that no impact or possible delay is inadvertently overlooked. Second, if needed, certain impacts could be deleted from the analysis to ascertain near critical pathsan important feature if the owner asserts concurrency.

Step FiveInsert Actual Progress The actual schedule update at the end of the period is used with progress based upon contemporaneous records of actual

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Figure 3Activity Fragnet

Figure 4Period One Delay and Acceleration Summary progress reported on individual activities. Added to this schedule Oct-00. This represents an acceleration benefit of 69 calendar are the fragnets that were not completed during the period. This days, 13-Dec-00 vs. 05-Oct-00. Through schedule re-sequencing, impact schedule, with actual status, is given a new name. additional engineering workhours and field acceleration, the contractor accelerated the progress of its performance and recovered 69 calendar days of the projected 72 calendar day delay. This Step SixCompare to Contemporaneous Update acceleration was not, however, wholly sufficient to overcome all of The final step is to compare the projected completion date the delays that occurred in Period One. The remaining three calcalculated in Step 4 with the projected completion date calculat- endar days would have to be recovered, if possible, in subsequent ed in Step 5. Step 4 is comprised of the baseline activities and work efforts. impacts, while Step 5 is comprised of the baseline activities, Figure 5 shows the impact critical path for the first period impacts, and progress. This comparison shows what the impacted along with the accelerated path showing a recovery of 69 calendar projected completion date would have been if there had been no days. As shown, this recovery was accomplished by performing out acceleration and what it should have been with actual progress of sequence work along with reducing durations of follow-on incorporated. See Figure 4. activities. In this example, the contractor accelerated its work during The authors have also encountered situations where the con2000 in an attempt to maintain the contract completion dates. As tractor's contemporaneous updates are not appropriate for coma result, Period One, adjusted for delay impacts, shows a project- parison. This may be because of incorrect monthly statusing, or ed completion date of 13-Dec-00. The current update at the end the failure to status at all. In these situations, the authors have of Period One with the addition of the lingering effects of the used a less desirable comparison, comparing the adjusted impactuncompleted Period One impacts shows a completion date of 05CDR.09.5

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Figure 5Period One Delay and Acceleration Detail ed schedule with progress against the original adjusted baseline schedule with progress through the same date. ACCELERATION ANALYSIS SUMMARY Based upon the example, it can be concluded that, while overall delivery of this example project was delayed to 24-Apr-01, the contractor accelerated its performance so as to mitigate a total of 318 calendar days of that delay (71 + 115 + 132). But for the additional efforts by the contractor, including engineering, procurement and administration services and the extra efforts of the subcontractors including additional craft labor and construction equipment, additional shifts and overtime, completion would not have been achieved until 08-Mar-02. In Figure 7, the calculated delays (91+167+248 = 506) and accelerations (71 + 115 + 132 = 318) are shown. The delays incurred in a period do not match the accelerations for the same period, and the overall delay incurred does not match the acceleration recovery of contractor. The unrecovered delay of 188 calendar days (506-318) between 18-Oct-00 and 24-Apr-01 is the number of days of delay that the contractors' acceleration efforts were unable to overcome. The contractor and subcontractors' efforts to accelerate their performance to deliver the project as timely as possible resulted in the completion on 24-Apr-01. This effort represents a net acceleration of 318 calendar days, approximately one year, over and above the time impacts caused by factors not attributable to the contractor. See Table 2.

SUMMARY OF THE STEPS TO PERFORM ANALYSIS Because each of the three time periods involves a separate calculation, the agreed baseline schedule was updated before the new impacts were entered and the delays and accelerations calculated. Figure 6 illustrates this iterative analysis sequence, beginning with Impact Schedule IZ01 for Period #1, IZ06 for Period #2 and IZ15 for Period #3. The steps described above are then repeated for each separate time period. It is expected that each time period is differentthe delays identified and the resultant acceleration are different for each. In Figure 6, the TIA acceleration process is summarized. For example, baseline schedule IP01, which predicted delivery on 18Oct-99, the bottom left-most box, is modified to better permit statusing. The modifications did not alter the intended logic: rather, they permitted the schedule to better reflect ongoing progress. These logic corrections create schedule AP01, which has the same dates as IP01. Then AP01 was impacted with 18 events to create IZ01, showing completion 17-Jan-01. Reported progress reduced this to 31-Oct-00. This process was repeated for the second and third periods.

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Figure 6Schedule Development Diagram Table 2 Start Date 1-Feb-99 1-Feb-99 1-Feb-99 24-Apr-01 Overall Delay Summary Table Delivery Calendar Days 18-Oct-00 626 24-Apr-01 814 08-Mar-02 08-Mar-02 1131 318 Calendar Days Early Completion Schedule 0 188 530

Planned Duration Actual Duration All Periods Impact Projected Duration Total Acceleration

he use of a progressive analysis of impacts, with comparison to contemporaneous updates, provides a powerful tool for assisting a trier of fact in determining the degree of acceleration. The analysis discussed here must however be coupled with a detailed factual cause and effect analysis. The result will be to confirm the calculation of imaginary numbers.

Christopher R. Bryant Senior Consultant Warner Consultants 2275 Research Boulevard, Suite 100 Rockville, MD 20850-3268 E-mail: cbryant@warnercon.com

John C. Livengood Vice President Warner Consultants 2275 Research Boulevard, Suite 100 Rockville, MD 20850-3268 E-mail: jlivengood@warnercon.com

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Figure 7Delay and Acceleration Summary by Period

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