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Records, why so shy?

Records, Why so shy?

Employers and contractors alike produce records, but sometimes it seems as though they are reluctant to preserve them for future use - even when it means that valid claims go unsupported. Why are they so shy?

Author: Andrew Miller, Associate Director, Driver Trett, London. 

Recently, we have come across both employer and contractor organisations who proudly insist that they have no available records. Our clients are either pursuing or defending claims for some millions of pounds. All the advice they have paid for, or been given, including from the responding parties, makes it clear that there is a sound basis of claim if the time and cost can be substantiated with records.

The employer organisation, in one case, has a number of reasons why they are unable to produce substantiation:

  1. The business unit responsible for the project has an internal conflict with the business unit responsible for pursuing the claim, resulting in a general lack of ownership and cooperation.
  2. The financial system that captures internal personnel costs has been changed and the relevant records may be accessible in another country but no-one is quite sure, or much inclined to find out.
  3. A significant part of project costs are captured, in detail, by an outsourced service contractor who (potentially) was short staffed, abroad and has no skin in this game.
  4. Other project costs are captured in the SAP system, but records are not complete. Some contracts could have been awarded by a partner organisation before the formal commencement of the project, and are thus, lost to sight.
  5. The project kept detailed reports recording site activities and progress - daily reports, monthly reports, shift handover bullet reports, daily discipline reports, HSE reports – but, the shared folder containing 'all' the project info has massive voids in these records and includes only fragmentary records of the primary construction activities. This is because the group responsible for finishing and commissioning did not file their reports in the same folder. No one knows where the missing items are, but they are good, very good. Occasionally, an example shows up, attached to a supplier’s invoice as supporting documentation. It contains an hour by hour record of site activities, contractor interactions, personnel in the discipline team - the lot. 

As a result, this employer's claim against its contractor is woefully short of details and backup, yet our client, the employer, has kept good, even exemplary records. The employer knows it has issues with tracking down the records but is unable or unwilling to empower anyone within its organisation, or an external consultancy like ours, to go and find the missing material. All the evidence indicates that cost records were kept in detail and that progress and activity reports were made regularly and timely, as part of the management of the project. The foundations of a solid claim are there, but the claim will founder because the energy to find and analyse the material cannot be mustered up.

Another client, who is a contractor, has similar difficulties with its claim against a major blue-chip employer. Again, the story is that:

  1.  All the project managers involved have left; most of them under a cloud.
  2. The site reports were not maintained regularly or have got lost.
  3. Personnel and resources on site were not fully and regularly recorded.
  4. The baseline schedule was not regularly updated and issued.
  5. Site money was spent out of petty cash to local contractors, without detailed records.

The employer has said, in fairly straightforward language, that it expects the claim to be presented with detailed cost and planning analysis and with records supporting the items claimed. It has clearly intimated that there are some valid heads of claim but that no settlement can be reached without a properly substantiated statement of claim. This seems an entirely reasonable position taken by the employer, and is consistent with contractual requirements.

In practice, the site operations were closely scrutinised by the employer and its site representatives. Due to the technical nature of the work, employer representatives signed off completion and testing records for very small discrete pieces of work. These records are available to the contractor but have not been analysed to establish the dates and locations of particular activities, nor their connection to the baseline and actual programmes and critical paths.

The site operations required the workforce to be bussed to work locations, but the records from the bus company of how many trips were made, with how many passengers, to what locations, have not been analysed to support resource utilisation. The major construction sub-contractor was paid on a time and cost basis and kept records of personnel and equipment deployed. These records have not been made available for analysis.

So, we have again a situation where the records required to support a claim have been kept but either cannot be found, or are not being provided, for analysis. In the contractor’s case, there is no doubt, an evaluation is to be done on the cost of carrying out records recovery and analysis. This work can be completed in whole, or in part, by the contractor’s staff, or by external consultants, like Driver Trett. For a multi-million-pound project, the price of finding and analysing records is inevitably time consuming and costly. It is, however, a necessary precursor to establishing a cost and schedule claim, and winning the dispute.

Records, Why so Shy? Don't go to court unless you have the time and cost records buttoned up.The contractor takes the view that the recognition by the employer of some entitlement means that the claim can be settled by horse trading, based on round-sum amounts, loosely based on the global cost overruns incurred.

Reminiscent of Robert the Bruce and his spider (or possibly Einstein's alleged definition of insanity) this contractor has submitted substantially the same claim in substantially the same form three times, with exactly the same outcome.

Our proposals to re-build the claim on a sound footing were roundly rejected, probably because of the expectation that the exercise would be expensive and that further resubmissions of the same material would eventually work.

Robert's spider managed it, but our contractor would be unwise to follow the same course. From the outside, it seems glaringly obvious that a successful claim needs to be built on solid foundations. The courts are littered with claims that have fallen apart under cross examination in the most embarrassing circumstances for the delinquent party. Don't go there unless you have the time and cost records buttoned up and on your side. There may be complications and internal difficulties that make it hard to pull together the data, but to proceed without either belt or braces carries a serious risk of exposure.

This article was written for issue 20 of the Driver Trett Digest, to browse the issue, click here. 

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