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We have seen a great number of cases recently where poor preparation for negotiations, as well as ineffective negotiation approaches have turned legitimate claims into untenable arguments. The most common mistakes made by owners and contractors include poor strategies in defense of delay claims, poorly articulated claims for additional cost, and negotiation approaches that result in animosity between the parties instead of effective resolution. These ineffective methods can make successful claims resolution much more difficult and adversarial. The result can be delayed resolution or, in the worst case, expensive litigation. We have documented the most common losing strategies in three areas: schedule delay, cost and damages, and negotiation approach. In addition, we have cited experiences from actual case histories where negotiations were affected by poor strategy. Hopefully, lessons will be learned that will be valuable to cost engineers and project management professionals in achieving more successful claims and change-order negotiations.
LOSING SCHEDULE STRATEGIES
Losing Strategy #1 (Contractor)-Blame the Owner for All Delays
Contractors sometimes use a negotiating strategy whereby all project delays are blamed, by default, on the owner. When this strategy is applied, no consideration is given for how discrete changes or events impacted the project completion date. Usually, a litany of owner-caused impacts is identified, but the relationship of these impacts and alleged delays to specific activities in the project schedule is not specified. If specific activities are identified, the criticality of these activities is ignored.
Losing Strategy #2 (Contractor)-Ignore Concurrency
Failure to consider concurrence of delays may result in an analysis that greatly overstates total project delay. In fact, not considering concurrency may yield an analysis that shows a longer delay than the actual project delay that occurred. On a recent claim negotiation, the addition of all delay days requested by the contractor exceeded the actual project delay by three years. Put another way, the requested time extension, if granted, would have resulted in a contract completion 3 years after the actual project completion date. This inaccurate analysis resulted from the addition of delays that all occurred at the same time. This led to a total breakdown of negotiations and to a lengthy and expensive trial. After the trial judge made it clear to the contractor that its delay methodology was...