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


S U M M A R Y


DIARY: February 28, 89 04:03 PM .......; Rod Welch

Dinner meeting with DNRC Director re Gracon claims.

1...Summary/Objective
2...CPM and Schedule Analysis


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CONTACTS 
0201 - O-0387 0101 Tudor Engineering Company  415 543 9820 fax   415 543 5538
020101 - Mr. Clyde Earnest,
0202 - O-0387 0201 Tudor Engineering Company  415 543 9820 fax   415 543 5538
020201 - Mr. Kurt Scholz, Project Engineer, =Telephone
0203 - O-0395 0101 Department of Natural      406 444 6699 fax   406 444 6721
020301 - Ms. Karen Blakley, Director
0204 - O-0395 0202 Department of Natural      406 444 6699 fax   406 444 6721
020401 - Mr. Wayne Wetzel, Project Manager, =406 444 6791
0205 - O-0395 0201 Department of Natural      406 444 6699 fax   406 444 6721
020501 - Mr. Norman Barnard,

SUBJECTS
Gracon, Claim denied
access, general

0604 -    ..
0605 - Summary/Objective
0606 -
060601 - Wayne explained the general results of the meeting this afternoon  ref
060602 - SDS 3, and the settlement concepts under consideration to encourage
060603 - the contractor to meet BPP objectives.
060604 -
060605 - Clyde advised that Tudor generally finds Gracon has not submitted
060606 - adequate support for its claims.
060607 -
060608 - Norm feels DNRC should consider carefully the viability of foregoing
060609 - its right to recover presumed damages from Gracon, in light of Tudor's
060610 - feeling that Gracon's claims are weak.  Clyde mentioned that sometimes
060611 - there can be difficulties in collecting presumed damages, particularly
060612 - where less or no damage is actually sustained.  In this case, DNRC
060613 - will not suffer actual damages until Voith is ready to test the
060614 - generators in late April and even in that case a work around may be
060615 - possible. Therefore, full recovery is not assured, although it remains
060616 - a strong possibility.
060617 -
060618 -
060619 -  ..
060620 - CPM and Schedule Analysis
060621 -
060622 - Kurt said that when Tudor prepared the contract documents in 1987, the
060623 - planning and design team never thought the Spillway contract could be
060624 - critical.  He was very disappointed that the actual work failed to
060625 - meet original schedule expectations, per discussion with Gracon this
060626 - afternoon, ref SDS 3 3217.
060627 -
060628 -     These difficulties arise in part from not using contract sanctions
060629 -     to remedy failure to meet submittal requirements.  Such failure
060630 -     encourages lax bidding practice, or outright fraud in bidding
060631 -     without an intent to comply with provisions.  Those who bid
060632 -     according to plans and specs, are punished for doing so, and are
060633 -     thereby led to cut corners on their next bid in order to get work.
060634 -
060635 -     Kurt's original opinion of project duration was based on incom-
060636 -     plete analysis of the work operations.  The nature of the work
060637 -     obscured the practical duration of the job, during the planning
060638 -     stage, although a contractor might have been liable to anticipate
060639 -     what actually transpired.  Delay due purely to change order
060640 -     administration, should be avoidable through better management, see
060641 -     report on 890228. ref SDS 3 TG9G
060642 -
060643 -     Drilling and grouting the rock anchors on an angle was the
060644 -     contractor's choice.  This work impeded other work because of the
060645 -     mess it caused, and because it took longer to perform due to
060646 -     excessive fracture of the rock.  All of the holes had to be
060647 -     drilled and grouted twice.  How different is this from drilling
060648 -     rock anchors on other concrete dams.  What did the engineer
060649 -     expect?  What did the contractor expect?  What is industry
060650 -     practice?
060651 -     ..
060652 -     If the contractor had done a CPM it might have anticipated
060653 -     the outcome and allowed for it in the bid.  Another position could
060654 -     be that since the nature of the ground caused an extra step, even
060655 -     though the contractor was compensated for it, this did not cover
060656 -     the schedule impact.  This may classify as a latent condition,
060657 -     that could not have been reasonaly anticipated.
060658 -
060659 -     The ultimate question is whether the contractor can rely solely on
060660 -     the Engineer's estimate of project duration.  Since duration is a
060661 -     function of methods and method is a contractor perogative  it
060662 -     would seem the contractor was responsible, except for the extra
060663 -     time needed for drilling and grouting.
060664 -
060665 -     Now comes the question whether the contractor could reasonably
060666 -     have recognized the impact of the job conditions on activity
060667 -     durations and relationships.  Activities that typically could have
060668 -     been performed concurrently had to be sequenced instead because of
060669 -     the drilling and grouting operation.
060670 -
060671 -
060672 - Clyde suggested that if a practical solution can be developed to avoid
060673 - putting Gracon in the "claim" mode there will be a greater chance of
060674 - meeting DNRC completion objectives.  He noted that even though
060675 - Gracon's claims are technically weak, anything can happen in litiga-
060676 - tion.  The fact finder may not be sufficiently schooled in the nuances
060677 - of contract disputes to appreciate the flaws we find in Gracon's
060678 - position.  We may not do a great job of presenting the case, etc.
060679 - While these same risks exist for Gracon, DNRC may be best served by
060680 - focusing on obtaining its objectives to earn revenue.
060681 -
060682 - The Director approved proceeding with the meeting this evening on the
060683 - basis outlined by Wayne.  Any ultimate agreement would require final
060684 - approval by the Director.
060685 -
060686 -
0607 -
Distribution. . . . See "CONTACTS"