CONSTRUCTION LAW

CNST 406

EXAMINATION NO. 3: 

(80 Points)

Instructions:    This is an open-book, open-note examination.  Please provide your best answer to the questions below.  Your grade will be based upon your ability to “spot issues” and to analyze the situation in order to arrive at a credible answer to the questions posed.  Be concise and to the point.  Use good grammar, sentence construction and spelling.  Brevity is appreciated, but please provide a complete answer.

References:

Fact Situation

Fact Situation from Essay No. 3 and Exam No. 2

Lectures Regarding Risk Management and Ethics

Lecture Notes and Chapters 11-14 of the Text

Industry Form Contract Documents (Hand-outs)

FACT SITUATION

You are the Senior Project Manager/Project Executive responsible for the entire Project.

You have successfully negotiated a subcontract with FIGG, which includes a number of risk management provisions, including (a) the requirement for a peer review (to be conducted by Louis Berger, Inc.) prior to using the design documents for construction; (b) higher FIGG malpractice insurance limits; (c) use of a pre-qualified FIGG design team, approved by MCM, lead by senior engineers experienced in bridge design; and, (d) a plan review and approval process with the University, prior to the release of the design documents for construction.  These provisions will require more time to implement, and MCM had to increase FIGG’s contract price by $250,000 to cover FIGG’s added costs.  In view of the risks presented, MCM views the added cost as “good insurance.”

The University has designed Professor I. M. Borring, PE, from its Civil/Structural Engineering Department, as its representative for the purpose of reviewing and approving FIGG’s design, and for overall monitoring of the Project.

In addition, as a further risk management tool, MCM has retained, at its own cost, an independent consulting engineering company, GRT Sluth, Inc., to perform quality testing on the concrete panels as they are being manufactured by C.C Castings.

The design documents have been completed.  Based on reports you’ve received from FIGG, Louis Berger, and Professor Borring, the design has been approved at all required levels and has been released for construction.

You’ve forwarded the design documents to Castings, with your request that they submit the appropriate shop drawings.  Thereafter, shop drawings were received; submitted to FIGG for review and approval; submitted to Professor Borring for review and approval and forwarded on the Castings for manufacturing the concrete panels.

During the casting process, GRT Sluth submits a report that some of the concrete cylinders, used to determine the compressive strength of the concrete, the flex beams used to determine the tensile strength of the concrete, are showing break results less than specified.  Reviews of the concrete mix design shows certain non-specified additives are being used to promote “flowability” of the concrete.  GRT Sluth also reports observing some “minor cracking” in the panels.

You reported Sluth’s findings to FIGG, Louis Berger, Castings, and Professor Borring and requested direction on how to proceed.

FIGG responded that it would take the report “under advisement” and address the issue “in the near future.”  FIGG suggested, that in the interim, MCM should proceed “at its own risk.”  MCM has not received a response from Louis Berger, Castings, or Professor Borring.

As a result, you prepare an RFI (“Request for Information”) reporting the exact test results and observations provided by Sluth and requesting specific authorization to continue casting the panels.  You also advise that the situation is delaying production of the Panels, which is becoming a restraint on follow-on activities necessary for erecting the bridge.

QUESTIONS (80 Points Total)

  1. As a result of your RFI, you instruct Castings to stop casting the panels, pending direction from the engineers. Castings, of course, submits notice of a delay claim, duration to be determined, as a result of your direction. (20 Points)
    1. If you respond that the reasons for the delay, including why the concrete hasn’t met specifications and that cracking has been observed, is yet to be determined, so you are taking the Notice of Claim under advisement, pending direction from the Engineer’s/Owner, is that a good response? Why or why not?  (5 Points)
    2. If more than 30 days passes, and you still have no direction from the Engineer’s/Owner what action, if any, will you take? Please explain.  (5 Points)
    3. After 36 days, you finally receive word from Professor Borring on behalf of the Owner, who tells you the issue is a “methods and means” matter for determination by the design/builder (MCM) and its Engineer, FIGG. He issues a “cure notice” directing MCM to provide a written report evaluating the conditions, with recommendations for going forward, sealed by a Professional Engineer.  The response to the cure notice is due in 10 days.  Is this a proper response on behalf of the Owner?  Why or why not?  (5 Points)
    4. After providing FIGG with the cure notice, FIGG responds telling you that it “doesn’t feel comfortable with providing a written, sealed report.” FIGG observes that the problem “lies exclusively with Castings; that the issues do not appear “troublesome,” since concrete will continue to cure over time and increase in strength to achieve requirements; and, that the minor cracking is likely shrinkage and non-structural.  Since it’s a Castings issue, Castings should provide the sealed report required under the cure notice.”  Is this a reasonable response by FIGG?  Why or why not?  (5 Points)
  2. When you present the cure notice to Castings, Castings has an immediate, affirmative response, that: “we are not responsible. We are casting according to the specifications, approved design, and approved shop drawings.  If there’s anything wrong it’s not our problem.  When do we get paid for the delay, no approaching 40 days?”
    1. Does Castings make a good point? Why or why not?  (5 Points)
    2. What is your response to Castings? Please explain.  (5 Points)
    3. Do you have a response to FIGG? If so, what is your response?  (5 Points)
    4. Do you have a response to the University/Professor Borring? If so, what is your response?  (5 Points)
  3. Clearly, MCM has suffered delay – well over 40 days at this point, which is continuing.
    1. Is the delay resulting from this situation excused? Why or why not? (5 Points)
    2. Is the delay resulting from this situation compensable? Why or why not? (5 Points)
    3. At this point, does the delay affect the critical path on the schedule? Why or why not? (5 Points)
    4. Assuming MCM goes forward with making a delay claim, what must MCM do to “perfect” its delay claim against the University? Please describe the process.  (5 Points)
  4. As to the “reviews” provided by FIGG, Berger and Professor Borring …
    1. Does FIGG’s, Berger’s and Borring’s review and approval of the design documents have any effect on this issue? If so, what is the effect?  (5 Points)
    2. Does FIGG’s, Berger’s and Borring’s review and approval of Castings shop drawings have any effect on this issue? If so, what is the effect?  (5 Points)
    3. Is MCM and Castings exonerated by the reviews and approvals of the design documents and shop drawings. Please explain.  (5 Points)
    4. If MCM provided an “early notice of concern” regarding the use of the University’s never tried, innovative design/construction techniques, is MCM exonerated from liability? Why or why not?  (5 Points)

EXTRA CREDIT (10 Points Total)

  1. If FIGG ultimately determines that the concrete strength and cracking issues are of no concern, and convinces the University to allow construction to proceed, does FIGG’s determination strengthen MCM’s delay claim? Why or why not?  (5 Points)
  2. If construction is allowed to proceed in the face of the known concrete and cracking deficiencies, has the Owner modified MCM’s contract obligations and specifications by its action? (5 Points)