Construction Information Management: Proactive Tips to Increase Your Success Rate of Claims, a 5-Part Series – Part 2

Part 2:  Consistency is Key – The Value of a Work Breakdown Structure.  

Typically, the organization of construction project data varies from one category of data to another. It’s rare to see the same data structure used for schedule activities for example, as used for the cost control items or in the contract payment breakdown. And yet, the ability to co-relate data from all of these sources can be a valuable analytic tool, especially when it comes to substantiating construction claims.

Here are a few examples:

An earned value analysis compares the planned revenue over time to the actual revenue on a project. The planned revenue data curve is generated by allocating the timing of activities and work progress as per the baseline schedule to the dollar values of the contract payment breakdown. The planned earnings curve plotted over time is then compared to the actual earnings as per the approved progress payment certificates. If there is no similarity between the structure of the activities on the baseline schedule and the contract payment items, it can be time-consuming and difficult to co-relate these two separate sets of data.  With a common work breakdown structure the task becomes much easier, and the analysis can then be used to support a claim for delays by identifying the timing and impact of events that result in deviations of the actual earnings to the planned.

A labour productivity analysis requires the ability to measure planned and actual labour hours and co-relate them to work progress over time. To accomplish this, one needs to be able to compare the original estimated labour hours that would have been spent for an amount of work completed, to the actual spent labour hours and work progress. Again, if there is no commonality between the how all of this data is structured, this task can be difficult. With a common work breakdown structure used for the estimate, cost control items, measurement of quantities of work performed and/or the contract payment breakdown, one can more easily evaluate labour productivity for various components of the work on an on-going basis and support a claim for loss of productivity.

Even when it comes to capturing subjective data about work progress on a supervisor’s daily diary, having a work breakdown structure to code the entry to can prove valuable. A detailed and fully substantiated as-built schedule can be generated from data gathered in the daily diaries by using a scatterplot or other analytic tool. The importance of capturing relevant information on daily site diaries is discussed in Part 1 of this series.

These are a few examples of the types of analyses that are commonly performed in order to substantiate, or to defend against, contractor claims for additional costs, delays, impacts and loss of productivity. If it is not practical to devise a single detailed breakdown that can co-relate the components of the estimate, schedule, revenue and cost control, one could develop at a minimum a structure where the data can be summarized and compared at a higher level. Having access to different project data that have a level of consistency and are comparable makes the job of a construction claims professional in analyzing the project easier, more accurate and less time-consuming, which in turn makes these services more cost effective for the client.

More than that though, the ability to organize and compare data quickly to evaluate actual against planned is a valuable project management tool in performing analyses that tell the story of what is happening on the project in real time. When variances become apparent, the parties can take action to identify and mitigate the impacts to get the project back on track. There are therefore numerous benefits in being proactive to develop a practical work breakdown structure that can be used for project data gathering at the beginning of a project, which will help to ensure consistency and the ability to use that information to analyze work progress and impacts.

This blog was authored by ICCP Fellow, Adele Wojtowicz, Construction Claims & Risk Management Consultant, ProEdge Construction Services Inc

Related articles written in this series on Proactive Tips To Increase Your Success Rate of Claims can be found here:

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  1. Pingback: Construction Information Management: Proactive Tips to Increase Your Success Rate of Claims, a 5-Part Series – Part 1 | Institute of Construction Claims Practitioners (ICCP)

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