THE WELCH COMPANY
440 Davis Court #1602
San Francisco, CA 94111-2496
415 781 5700


S U M M A R Y


DIARY: August 24, 1988 10:00 AM Wednesday; Rod Welch

Meeting at Broadwater Power Project with Tudor, Sletten State, Voith

1...Summary/Objective
2...Gracon Needs Access Route to Dam Separate from Other Traffic
3...Sletten Demands Time Extension
4...Need Updated Schedule to Expedite Approval, Coordinate Work
5...Change Order, Time Extensions Granted
6...Reason Sletten did not install Spider bracing


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CONTACTS 

SUBJECTS
Weekly Schedule
& Progress Meeting

0404 -
0404 -    ..
0405 - Summary/Objective
0406 -
040601 - Wayne Wetzel
040602 - Norm Barnard
040603 -  ..
0407 -
0408 - Tudor
0409 -
040901 - Jeff Ghilardi
040902 - Rod Welch
040903 -  ..
0410 -
0411 - Sletten
0412 -
041201 - Bill Merriman
041202 - Paul Robinson
041203 - Kieth Fergeson
041204 - Dave Marsh
041205 -  ..
0413 -
0414 - Gracon
0415 -
041501 - Dale Harrington
041502 -  ..
0416 -
0417 - Voith
0418 -
041801 - Ken Carlson
041802 -
0419 -
0420 -

SUBJECTS
Coordination with
Gracon Contract

0504 -
050501 -  ..
050502 - Gracon Needs Access Route to Dam Separate from Other Traffic
050503 -
050504 - Dale asked about cutting an alternate access road so Gracon will not
050505 - be hindered by other work and will not interfere in Sletten's
050506 - contract.  He offered to pay Sletten to perform the necessary work for
050507 - this.
050509 -  ..
050510 - There was also discussion about the placement of Gracon's crane or
050511 - other operations adjacent to Sletten's work.  Bill Merriman was
050512 - concerned about potential liability of Sletten if Gracon damages its
050513 - cofferdam or other work.
050515 -  ..
050516 - Ultimately Sletten agreed to evaluate a submittal by Tudor (Jeff)
050517 - showing the proposed staging needs for Gracon, and advise if it has
050518 - any objections.
050519 -
050520 -
050521 -
0506 -

SUBJECTS
Schedule, Time Extensions
Contract Disputes, Notice Provisions
CPM Contractors Avoid Accountability

1105 -
110601 -  ..
110602 - Sletten Demands Time Extension
110603 - Need Updated Schedule to Expedite Approval, Coordinate Work
110604 -
110605 - Bill expressed disappointment about Tudor's failure to issue time
110606 - extensions and approve payment increases for a variety of pending
110607 - claims.  He offered no grounds to warrant approval other than the
110608 - contention that Sletten is loosing money on the job.
110610 -  ..
110611 - Rod Welch noted that the State is very concerned about completing the
110612 - project on time; that it will incur significant damages if certain
110613 - milestones are not met.  Since Sletten has not updated the schedule,
110614 - the State has no way to accurately determine its total exposure nor
110615 - the steps needed to minimize the damages.
110617 -  ..
110618 - Rod asked when Sletten expects to submit an updated Schedule?
110620 -  ..
110621 - Bill Merriman said Sletten will "bring in someone" to begin preparing
110622 - an updated Schedule and prepare for filing claims.
110624 -  ..
110625 - Rod asked when the updated Schedule will be submitted?
110627 -  ..
110628 - Bill said Sletten will advise Tudor by Friday, 880826, of the date it
110629 - will submit the updated schedule.
110631 -  ..
110632 - Bill was frank and pointed in alleging that Sletten is being delayed
110633 - in performing the work because the Engineer has not agreed with all of
110634 - Slettens requests for contract time extensions.  He offered no
110635 - examples or other empirical support for this position.  Rod Welch
110636 - pointed out that Sletten should submit its propoesed updated Schedule
110637 - based upon the approvals it now has for time extensions.  This would
110638 - permit Sletten to demonstrate the impact in real terms of any delays
110639 - it has experienced and the Engineer could expedite review and approval
110640 - of time extension requests based upon current and accurate scheduling
110641 - data.
110643 -  ..
110644 - Bill and Wayne Wetzel then had a heated exchange about Rod Welch being
110645 - permitted to complete comments.  Bill was adament in his demeanor --
110646 - making it inappropriate to continue this line of discussion,
110647 - reflecting prior discussion with Clyde Earnest on 880815. ref SDS 1
110648 - 3089
110650 -  ..
110651 - It was made clear that the State would be seriously damaged if the
110652 - work is not completed on time and therefore it is essential to have an
110653 - updated schedule showing how this can be accomplished and what
110654 - impediments exist so these can be worked on early enough to solve the
110655 - problems, as required by contract.
110657 -  ..
110658 - Contract provisions were reviewed on conducting business in an orderly
110659 - manner that maintains progress, and require the contractor to replace
110660 - personnel who are not approved by the Engineer.  Bill Merriman pointed
110661 - out that the Engineer is not a dictator who can tell the contractor
110662 - what to do.  He related that the Engineer has to go by the job record,
110663 - and Sletten feels they are acting reasonably.
110665 -  ..
110666 - The Engineer agreed that contract determinations must be based on the
110667 - record, and that the contractor is entitled to timely notice to
110668 - correct deficiencies, and to offer evidence showing good faith
110669 - compliance.  The meeting today conveys notice that yelling,
110670 - interrupting, threatening conduct, as occurred today, delays the work.
110671 - Continuing this record is grounds for changing personnel and/or
110672 - termination.
110673 -
110674 -      [On 890215 issue of orderly meetings arose again. ref SDS 6 P116
110675 -
110677 -  ..
110678 - Change Order, Time Extensions Granted
110679 -
110680 - Jeff submitted change orders to Sletten granting approximately 14
110681 - calandar days time extension to complete the contract.  He further
110682 - advised that additional change orders will be issued shortly to bring
110683 - the total approved contract time extensions to 20 days.  Sletten
110684 - maintains they are entitled to more time, but observed that the time
110685 - extensions acknowledged by Tudor this morning, will result in slipping
110686 - all contract intermediate completion milestones by 20 days.
110688 -  ..
110689 - Dave Marsh and Jeff agreed that Tudor verbally advised Sletten last
110690 - Wednesday, 880817 that Sletten would be granted a 20 day time
110691 - extension.
110692 -
110693 -
110694 -
110695 -
110696 -
1107 -

SUBJECTS
Schedule, Voith
Coordination

1305 -    ..
130501 - Bill Merriman advised that due to these time extensions Sletten will
130502 - not complete the backfill in time for Voith to begin its installation
130503 - on 881001.  Ken (Voith) said that unless it starts on 881001, it
130504 - cannot complete its work in time for the State to meet obligations
130505 - with respect to the overall project completion.  I asked if Sletten
130506 - can accelerate its operations to meet the needed dates.  Bill said
130507 - that Sletten cannot do this.
130509 -  ..
130510 - Bill suggested Voith may be able to begin work in advance of Sletten
130511 - completing its work as originally planned.  Initially it was believed
130512 - Voith would require a 90 ton crane.  Ken was asked to verify the loads
130513 - that must be handled.  He left the meeting for a short time to
130514 - research the matter.  Upon return, he advised that 22 tons is the
130515 - initial maximum load.  Bill feels Sletten could provide an alternate
130516 - lifting pad by 881001 so Voith can begin on that date even though the
130517 - structure is not backfilled and the concrete work is incomplete  as
130518 - originally contemplated by the 880911 contract completion date for
130519 - backfilling the structure.
130520 -
130521 -
130522 -
1306 -

SUBJECTS
Draft Tube Liner

1904 -    ..
190401 - Bill Merriman advised that this morning he rescinded the Sletten
190402 - position from yesterday afternoon, ref 2 line 0607, to support Voith
190403 - with a crane to install bracing in the Draft Tube Liner beginning at
190404 - 0800 this morning.
190406 -  ..
190407 - He requested a Directive from the Engineer in advance of permitting
190408 - Sletten forces to perform the support work.  Jeff issued a Directive
190409 - during the meeting.  About 1145, Keith reported after returning to the
190410 - meeting that Sletten was assisting Voith in setting the bracing.
190411 -
190413 -  ..
190414 - Reason Sletten did not install Spider bracing
190415 -
190416 - Sletten was asked why "spider" bracing was not installed when the
190417 - Draft Tube Liner was assembled?
190418 -
190419 - Bill advised that the bracing was not installed because Sletten
190420 - management did not believe it was necessary in order to accomplish a
190421 - correct assembly.
190422 -
190423 -     [On 880907 Bill disputed the record today showing the reasoning
190424 -     Sletten used for omitting spider bracing. ref SDS 5 526J
190426 -  ..
190427 - Dave Marsh and Kieth with Sletten agreed with the Engineer, Jeff
190428 - Gilardi, that the flange is not within .010 inch tolerance requested
190429 - by Voith.  They believe however that it is within .062 inch and that
190430 - such is their only contract obligation.
190432 -  ..
190433 - Ken (Voith) reported after returning to the meeting at 1245 that the
190434 - bracing the Voith crew just installed following Jeff's written
190435 - directive to Sletten to assist Voith with crane service, resulted in
190436 - eliminating about 50% of the alignment problem that existed yesterday
190437 - when the bracing was not installed.
190439 -  ..
190440 - Bill Merriman affirmed Sletten's position that it considers all work
190441 - resulting from the requirment to set the Draft Tube Flange to a
190442 - tolerance of less than .062 inch is subject to extra compensation.
190443 -
190444 -     [On 880907 the Engineer's decsion on this matter was submitted to
190445 -     Sletten. ref SDS 5 VX8G
190446 -
190447 -
190448 -
190450 -  ..
1905 -
1906 - Force Account Procedures
1907 -
190701 - Jeff requested that Sletten submit daily records of time expended on
190702 - disputed work for verification by the Engineer.  This will permit the
190703 - parties to agree on the reasonable cost of performance so the only
190704 - matters to resolve are liability.
190706 -  ..
190707 - Jeff supplied a Tudor Force Account form which Sletten will prepare.
190709 -  ..
190710 - Matters which are agreed as extra work will be signed under the
190711 - heading of "Substance."  All such Daily reports can be submitted by
190712 - Sletten for inclusion in each month's payment request.
190714 -  ..
190715 - Disputed work will be signed by Jeff each day under a heading that
190716 - only awknowledges cost incurred shown in the report.
190717 -
1908 -
1909 -

SUBJECTS
Dewatering

2104 -    ..
210401 - This is really a dispute about contract responsibility for furnishing
210402 - standby power to service pumps installed by Sletten as part of their
210403 - cofferdam dewatering system.
210405 -  ..
210406 - Standby power is needed to insure reliablity of the system.  Sletten
210407 - has not provided such standby power.  Instead it is relying solely on
210408 - the reliability of the public utility system it is using for general
210409 - electrical power to service the project.  Sletten maintains the State
210410 - must provide standby power for its dewatering system.
210412 -  ..
210413 - Greater reliablity is needed when Voith begins installing equipment
210414 - because the equipment is much more susceptible to damage from water
210415 - than is the current work which has suffered serious flooding on two
210416 - occassions due to temporary power outages by the local utility company
210417 - (the pumps stopped because there was no standby electrical source to
210418 - kick in when the power outages occurred).
210420 -  ..
210421 - Therefore, an electrical system with greater reliability than is
210422 - typically available from the local utility company, must be in place
210423 - on or about 881001 that will insure Voith's work area will not be
210424 - flooded during construction as occurred previously on this job.
210426 -  ..
210427 - The parties agree this requires reliable backup power source.
210428 - ..
210429 - Bill Merriman estimated the cost would be approximately $20 000
210430 - based upon his experience with another project.
210432 -  ..
210433 - He said Sletten will not provide the necessary power service, even if
210434 - Directed to perform by the Engineer under the contract.
210436 -  ..
210437 - Rod Welch asked why Sletten would refuse to follow a Directive issued
210438 - by the Engineer intended to resolve disputed contract work?
210440 -  ..
210441 - Bill explained that Sletten would consider such decision to be a "cost
210442 - saving" to Sletten in light of its position that the State is
210443 - obligated to furnish "adequate" power to the job.
210445 -  ..
210446 - Rod Welch proposed that minimizing the cost of accomplishing disputed
210447 - work would reduce the risk to both sides.  This can only be achieved
210448 - by Sletten performing the work with its own forces.  Alternatively,
210449 - the State would be forced to hire another contractor with attendant
210450 - increased mobilization, coordination and delay costs charged against
210451 - Sletten's contract.  If such costs are held to be appropriate charges
210452 - to Sletten, then the amounts would be deducted from its payments with
210453 - even greater impact on Sletten's cash flow.
210455 -  ..
210456 - Bill feels based upon advice of counsel that Sletten can reasonably
210457 - expect to recover such sums through litigation.
210459 -  ..
210460 - Rod Welch pointed out that litigation can be protracted, particularly
210461 - in complex contract disputes; results are often different from
210462 - expectations by all parties, including counsel.  Since Sletten is on
210463 - site and has the expertise, it would be advantageous to apply these
210464 - assets to minimize the cost of the dispute, rather than withhold same
210465 - and compound the problem for all sides.
210467 -  ..
210468 - Bill advised that Sletten disagrees that its interests are served by
210469 - mitigating damage in this case.
210470 -
210471 -
210472 -
210473 -
210474 -
2105 -

SUBJECTS
Metalna Equipment
Deliveries

2804 -
2806 -    ..
280601 - Sletten submitted at the meeting a letter, ref 6, from Ingra showing
280602 - forcast deliveries of contract equipment to be installed by Sletten.
280603 - This responded to Tudor inquiry, ref 5.
280605 -  ..
280606 - It shows significant delays from contract requirments.
280607 -  ..
2807 -
2808 -
2809 - Delivery dates, FOB jobsite:
2810 -
281001 - 002 Embedded parts, Fixed Wheel Gates      before 880930
281002 - 006 Bulkhead Gates                                880930
281003 - 009 Lifting Beam                                  880930
281004 - 001 Fixed Wheel Gates                             881125
281005 - 004 Hoisting Equipment                            881125
281006 - 005 Electrical Equipment                          881125
281007 - 010 Slot Covers                                   881125
281008 -
281010 -  ..
281011 - The parties agreed these delays affect the dewatering problem because
281012 - if the bulkhead gates were installed, then the amount of dewatering
281013 - capacity and the reliability of same would be greatly lessened. Since
281014 - dewatering affects the Voith collateral contract installation work,
281015 - the late delivery impacts this matter as well.
281017 -  ..
281018 - Bill Merriman awknowledged Tudor's notice, ref 5, to Sletten that late
281019 - delivery will cause other damages beyond the dewatering problem which
281020 - can be mitigated as described above.  Among these is the increased
281021 - risk of damage to the Voith collateral contract equipment work due to
281022 - potential flooding.  Insurance costs might greatly increase  or
281023 - coverage could be withdrawn altogether.
281025 -  ..
281026 - Bill Merriman advised that no one from Sletten has inspected the plant
281027 - in Yugoslavia to determine the actual status of manufacturer.  Sletten
281028 - has had discussion with the Ingra representative in New York who
281029 - claims to have been to the plant, and thereon vouches for the
281030 - reliability of the report.
281032 -  ..
281033 - Sletten has made no incentive offers to Metalna to expedite
281034 - deliveries.
281036 -  ..
281037 - Bill advised that Sletten has not given Metalna notice of likely delay
281038 - damages because Sletten does not want to incur the risk that Metalna
281039 - will abandon the contract, or further delay delivery.
281040 -
2811 -