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PaulStanfordKupakuwana
CostEngineeringVol.51/No.9September2009
Abstract
ThisanalysisusedacasestudymethodologytoanalysetheissuessurroundingthepartialcollapseoftheroofofabuildinghousingtheheadquartersoftheStandardsAssociationofZimbabwe(SAZ).Inparticular,itexaminedthepriorrolesplayedbytheteamofconstructionprofessionals.TheanalysisrevealedthattheSAZ’straditionalconstructionprojectwasgenerallycharacterizedbyhighrisk.Therewasaclearindicationofthefailureofacontractorandarchitectsinpreventingand/ormitigatingpotentialconstructionproblemsasallegedbytheplaintiff.Itwasreasonabletoconcludethatbetweenthemthedefectsshouldhavebeendetectedearlierandrectifiedingoodtimebeforethepartialrooffailure.Itappearedjustifiedfortheplaintifftohavebroughtanegligenceclaimagainstboththecontractorandthearchitects.Theriskanalysisfacilitated,throughitsmulti-dimensionalapproachtoacriticalexaminationofaconstructionproblem,theidentificationofaneffectiveriskmanagementstrategyforfutureconstructionprojects.Itfurtherservedtoemphasizethepointthatclientsarebecomingmoredemanding,morediscerning,andlesswillingtoacceptriskwithoutrecompense.Clientsdonotwantsurprise,andaremorelikelytoengageinlitigationwhenthingsgowrong.
Keywords:
Arbitrationclaimsconstructioncontractslitigationprojectandrisk
ThestructuraldesignofthereinforcedconcreteelementswasdonebyconsultingengineersKnightPiesold(KP).QuantitysurveyingserviceswereprovidedbyHawkins,Leshnick&
Bath(HLB).ThecontractwasawardedtoCentralAfricanBuildingCorporation(CABCO)whowasalsoresponsiblefortheprovisionofaspecialistroofstructureusingpatented“gangnail”rooftrusses.ThebuildingconstructionproceededtocompletionandwashandedovertotheownersonSept.12,1991.TheSAZtookeffectiveoccupationoftheheadquartersbuildingwithoutacertificateofoccupation.Also,thedefectsliabilityperiodwasonlythreemonths.
Theroofstructurewasinplace10yearsbeforepartialfailureinDecember1999.Thebuildinginsurancecoveragedidnotcoverenough,theCityofHarare,agovernmentmunicipality,issuedthecertificateofoccupation10yearsafteroccupation,andafterpartialcollapseoftheroof.
AtfirsttheSAZdecidedtogotoarbitration,butthisfailedtoyieldanimmediatesolution.TheSAZthendecidedtoproceedtolitigateincourtandtobringanegligenceclaimagainstCABCO.Thepreparationforarbitrationwasreusedforlitigation.TheSAZ’squantifiedlossesstoodatapproximately$6millioninZimbabwedollars(US$1.2m).
Afterallpartieshadexaminedthefactsandevidencebeforethem,itbecameclearthattherewasagreatprobabilitythatthecourtsmightrulethatboththearchitectsandthecontractorwereliable.Itwasatthisstagethatthedefendants’lawyersrequestedthatthematterbesettledoutofcourt.Theplaintiffagreedtothissuggestion,withthetermsofthesettlementkeptconfidential.
TheaimofthiscriticalanalysiswastoanalysetheissuessurroundingthepartialcollapseoftheroofofthebuildinghousingtheHQofStandardAssociationofZimbabwe.Itexaminedthepriorrolesplayedbytheprojectmanagementfunctionandconstructionprofessionalsinpreventing/mitigatingpotentialconstructionproblems.Itfurtherassessedtheextenttowhichtheemployer/clientandpartiestoaconstructioncontractareabletorecoverdamagesunderthatcontract.Themainobjectiveofthiscriticalanalysiswastoidentifyaneffectiveriskmanagementstrategyforfutureconstructionprojects.Theimportanceofthisstudyisitsmultidimensionalexaminationapproach.
Experiencesuggeststhatparticipantsinaprojectarewellabletoidentifyrisksbasedontheirownexperience.Theadoptionofariskmanagementapproach,basedsolelyinpastexperienceanddependantonjudgement,mayworkreasonablywellinastablelowriskenvironment.Itisunlikelytobeeffectivewherethereisachange.Thisisbecausechangerequirestheextrapolationofpastexperience,whichcouldbemisleading.Allconstructionprojectsareprototypestosomeextentandimplychange.Changeintheconstructionindustryitselfsuggeststhatpastexperienceisunlikelytobesufficientonitsown.Astructuredapproachisrequired.Suchastructurecannotandmustnotreplacetheexperienceandexpertiseoftheparticipant.Rather,itbringsadditionalbenefitsthatassisttoclarifyobjectives,identifythenatureoftheuncertainties,introduceseffectivecommunicationsystems,improvesdecision-making,introduceseffectiveriskcontrolmeasures,protectstheprojectobjectivesandprovidesknowledgeoftheriskhistory.
Constructionprofessionalsneedtoknowhowtobalancethecontingenciesofriskwiththeirspecificcontractual,financial,operationalandorganizationalrequirements.Manyconstructionprofessionalslookatrisksindividuallywithamyopiclensanddonotrealizethepotentialimpactthatotherassociatedrisksmayhaveontheirbusinessoperations.Usingaholisticriskmanagementapproachwillenableafirmtoidentifyalloftheorganization’sbusinessrisks.Thiswillincreasetheprobabilityofriskmitigation,withtheultimategoaloftotalriskelimination.
Recommendedkeyconstructionandriskmanagementstrategiesforfutureconstructionprojectshavebeenconsideredandtheirexplanationfollows.J.W.Hincheystatedthatthereisandcanbeno‘bestpractice’standardforriskallocationonahigh-profileprojectorforthatmatter,anyproject.Hesaid,instead,successfulriskmanagementisamind-setandaprocess.AccordingtoHinchey,theidealmind-setisforthepartiesandtheirrepresentativesto,first,beintentionalaboutidentifyingprojectrisksandthentoproceedtodevelopasystematicandcomprehensiveprocessforavoiding,mitigating,managingandfinallyallocating,bycontract,thoserisksinoptimumwaysfortheparticularproject.Thisprocessissaidtonecessarilybeginasascienceandendsasanart.
AccordingtoD.Atkinson,whethercontractor,consultantorpromoter,therightteamneedstobeassembledwiththerelevantmulti-disciplinaryexperienceofthatparticulartypeofprojectanditslocation.Thisissaidtobenecessarynotonlytoallowalternativeresponsestobeexplored.Butalsotoensurethattherightquestionsareaskedandthemajorrisksidentified.Headsofsourcesofriskaresaidtobeaconvenientwayofprovidingastructureforidentifyingriskstocompletionofaparticipant’spartoftheproject.Effectiveriskmanagementissaidtorequireamulti-disciplinaryapproach.Inevitablyriskmanagementrequiresexaminationofengineering,legalandinsurancerelatedsolutions.
Itisstatedthattheuseofanalyticaltechniquesbasedonastatisticalapproachcouldbeofenormoususeindecisionmaking.Manyofthesetechniquesaresaidtoberelevanttoestimationoftheconsequencesofriskevents,andnothowallocationofriskistobeachieved.Inaddition,atthepresentstageofthedevelopmentofriskmanagement,Atkinsonstatesthatitmustberecognizedthatmajordecisionswillbemadethatcannotbebasedsolelyonmathematicalanalysis.Thecomplexityofconstructionprojectsmeansthattheprojectdefinitionintermsofbothphysicalformandorganizationalstructurewillbebasedonconsiderationofonlyarelativelysmallnumberofrisks.Thisissaidtothenallowageneralstructuredapproachthatcanbeappliedtoanyconstructionprojecttoincreasetheawarenessofparticipants.
Thenew,simplifiedConstructionDesignandManagementRegulations(CDMRegulations)whichcameintoforceintheUKinApril2007,revisedandbroughttogethertheexistingCDM1994andtheConstructionHealthSafetyandWelfare(CHSW)Regulations1996,intoasingleregulatorypackage.
ThenewCDMregulationsofferanopportunityforastepchangeinhealthandsafetyperformanceandareusedtoreemphasizethehealth,safetyandbroaderbusinessbenefitsofawell-managedandco-ordinatedapproachtothemanagementofhealthandsafetyinconstruction.Ibelievethatthedevelopmentoftheseskillsisimperativetoprovidetheclientwiththemosteffectiveservicesavailable,deliveringthebestvalueprojectpossible.
ConstructionManagementatRisk(CMatRisk),similartoestablishedprivatesectormethodsofconstructioncontracting,isgainingpopularityinthepublicsector.Itisaprocessthatallowsaclienttoselectaconstructionmanager(CM)basedonqualifications;
maketheCMamemberofacollaborativeprojectteam;
centralizeresponsibilityforconstructionunderasinglecontract;
obtainabondedguaranteedmaximumprice;
produceamoremanageable,predictableproject;
savetimeandmoney;
andreduceriskfortheclient,thearchitectandtheCM.
CMatRisk,amoreprofessionalapproachtoconstruction,istakingitsplacealongwithdesign-build,bridgingandthemoretraditionalprocessofdesign-bid-buildasanestablishedmethodofprojectdelivery.
TheAEcanreviewtheCM’sapproachtothework,makinghelpfulrecommendations.TheCMisallowedtotakebidsorproposalsfromsubcontractorsduringcompletionofcontractdocuments,priortotheguaranteedmaximumprice(GMP),whichreducestheCM’sriskandprovidesusefulinputtodesign.Theprocedureismoremethodical,manageable,predictableandlessriskyforall.
Theprocurementofconstructionisalsomorebusiness-like.Eachtradecontractorhasafairshotatbeingthelowbidderwithoutfearofbidshopping.Eachmustdeliverthebesttogettheprojec.Competitionintheco
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