Introduction

With increasing frequency, construction contracts contain detailed specifications sections that prescribe the form and detail of the project schedule and supporting data, the methods for adjusting and updating the schedule, and the use of the schedule for purposes of contract modifications, time extensions, and analysis of performance delays. These specifications and their interpretation must be carefully considered by contracting parties because they often result in important allocations of risk and responsibility. Although well drafted scheduling specifications are critical to the ability of the parties to achieve their joint goals of timely and economical construction, in practice, schedule specifications are rarely clear and concise. Experience has shown that it is difficult to establish standard schedule specifications for use by the construction industry today. For example, specifications may range from one paragraph to five to ten pages. The short specifications are dangerous, and the long ones expensive. Generally speaking, however, the more detail included in the specifications, the better chance there is to eliminate misunderstandings. 

This article, the first of two parts, discusses twelve major factors that must be considered in drafting schedule specifications. In the next section, Part Two, we will address in more detail the major factors contributing to poor scheduling specifications and how to minimize disputes over the maintenance of a project schedule.

Feasibility of Specified Schedule

If the schedule specified for a project does not present a feasible or reasonable plan for the sequence and duration of the work and is not properly updated, it is worthless as a pragmatic tool to execute work in the field. Further, such a schedule is useless as a database by which the parties or finders-of-fact can evaluate the actual performance of the work, the effect of delays on the project, and the responsibility of the parties for such delays. Thus, a scheduling specification should call for a real commitment to the scheduling process and require that a schedule actually be used by the parties rather than requiring simply a software exercise. In a number of cases, courts and boards of contract appeals have refused to accept critical path method (CPM) schedules that were not properly prepared or that were not used to actually schedule the work in the field. See Fortec Constructors v. United States, 8 Cl. Ct. 490 (1985); Chaney & James Constr. Co., FAACAP No. 67-18, 66-2 BCA 6066 (1967).

Type of Diagram

Schedule specifications need to detail clearly both the specific type of diagram and the network planning technique desired. Vague language may allow the Contractor the opportunity to use bar charts, rather than CPM network analysis system diagrams, as an appropriate schedule, even though it is intended that a time scale critical path network CPM diagram be used on the project. For example, in H.I. Homa Co., ENGBCA No. PCC-41, 82-1 BCA 15,651 (1982), the contract contained the following provision: “The schedule shall show the order in which the contractor proposes to carry on the work, the dates on which he will start the several salient features (including procurement of materials, plant and equipment) and the contemplated days for completing same.” The specifications further provided that the schedule be of a type and size acceptable to the contracting officer. Under these circumstances, the board of contract appeals determined that a CPM network was not required by the contract since a bar chart would meet the specifications. Because the government had required a CPM schedule, the board determined that the Contractor was entitled to additional compensation.

Number of Activities

Most schedule specifications require a network showing a minimum number of activities. Such a requirement is sometimes implemented by limiting the duration of individual activities to no more than a stated number of days. It is very important to have a clear idea of the required level of detail for any network diagram. The appropriate number of activities is largely dependent upon the nature, size, and complexity of the project. If too many activities are required, the resulting diagram may not be an effective management tool for field construction. However, if too few activities are specified, the resulting activities may be so gross as to provide for a diagram that does not properly reflect the intricacies or interdependencies of various activities required to be completed on the project

Resource Loading

Another extremely important requirement for an Owner to include in a competent scheduling specification is one for resource loading of activities. This requirement is commonsensical when we consider that for us to know whether a purported activity duration has any validity we must know its resource loading. This is because the equation which provides us the activity duration requires the application of the productive resource (e.g. number of personnel, equipment) against the projected productivity of those resources. In other words, Resources/ Productivity = Duration (of defined activity). Stated another way, ten workers with a productivity of two windows per day will accomplish a stated activity of twenty windows in ten days. However, if our ten workers have a productivity rate of four windows per day, the activity will only take five days. Without visibility on the part of the Owner or the Construction Manager as to resource loading for a purported activity duration, the Owner has no yardstick to determine whether the Contractor is including realistic activity durations in the original planned network schedule or in estimates of remaining durations in updates. 

Approval

Schedule specifications should establish whether formal approval of the schedule is required, as well as the party responsible for making the approval. Thus, the specifications should state whether the Owner or Architect/Engineer or Construction Manager approves the CPM schedule. The specifications also should indicate the duration of the approval cycle and include the appropriate leverage to enforce the approval process. The specifications should also clearly state that the Owner is entitled to electronic versions of all schedules (including updates) submitted by the Contractor and electronic versions of all backup to the submitted schedules.

Owners and/or their Construction Managers will occasionally refrain from approving or acting upon a Contractor’s proposed schedule because they fear that their response can later be used by the Contractor as acceptance of the schedule and the Owner’s responsibility under the schedule. In many cases, this type of forbearance is unsuccessful. Courts have imposed implied obligations upon Owners with regard to the schedule despite the Owner’s silence. In one case, when an Owner even orally disclaimed parts of the schedule but failed to actually reject the Contractor’s initial proposed schedule, the Owner was held to be bound to time durations contained in the submitted schedule. Fullerton Constr. Co., ASBCA No. 12275, 69-2 BCA 7876 (1969). See also G. Blindzius Contractors, Inc., ASBCA No. 37707, 90-2 BCA 22,835 (1990).

When a schedule is approved there is a rebuttable presumption of correctness or reasonableness of the schedule. Santa Fe, Inc., VABCA No. 2168, 87-3 BCA 20,104 (1987). Because of this rebuttable presumption of the reasonableness of the schedule where an approval is in place, many Owners are afraid of approving any schedule much less an early completion schedule. However, the approval process is the only chance for the Owner to weigh in on overly aggressive or erroneous schedules (with all float removed, defective logic, unauthorized inclusion of constraints, unrealistically short approval cycles, etc.). Case law holds that even where a schedule has been approved it will be thrown out if it contains unrealistic logic and/or durations. See e.g. Neal & Co. v. United States, 36 Fed. Cl. 600 (1996); Hensel Phelps Construction Co., ASBCA No. 49270, 99-2 BCA par 30,531 (1999).

Control of Record Schedule

The control of the record schedule in its original form and in the various updates is a matter which cannot be ignored by the Owner or Construction Manager. Approvals of the original network or of stipulated revisions to schedule updates (such as correcting for out of sequence logic or unrealistic durations) will be of little value if the Contractor does not maintain the record schedule as agreed by the parties or as required by contract. Without safeguards in the scheduling specification to assure that all parties are working to and evaluating the project from the same schedule, expensive disputes between the parties are a high probability.

Updating

Most contracts require updating of the schedule during performance. Issues addressed by the specifications include the use of computers in updating, frequency of schedule updates, and what the updates must reflect about changes, delays, or modifications to the plan for the remainder of construction that may be contrary to the original network diagram. Many schedule specifications require Owner approval prior to incorporating logic changes in schedule updates, usually after a joint updating meeting. Conflicts frequently arise where the specifications fail to establish monthly procedures to ensure that the historical work on the project is properly recorded and that the parties agree on the Contractor’s game plan for completing the work.

Cost Loading

Some Owners require the schedule diagram of activities to be cost loaded for progress payment purposes. The level of detail required for such cost loading should be specified clearly. Owners often retain discretion to adjust the cost loading in order to make certain that they are not subjected to exaggerated front end loading in the cost loading of the diagrams.

Subcontractor Involvement

Most construction projects today place a great level of risk on the major trade contractors. These business entities frequently have the majority of the risk of labor productivity on the project. In fact, the trade contractors may even be operating under the framework of a total broker general contractor, where the general contractor itself performs no physical work on the project. For this reason, as well as for policy considerations of project teamwork, owners have increasingly been requiring the participation of major trade contractors in the preparation of the original CPM, as well as in the updating process.

Float Use & Reporting

Schedule specifications should address a number of issues concerning float, which is the amount of time that an activity may be delayed without causing delay to the project finish date. First, the contract should state the desired requirements for reporting float. These provisions may require, for example, periodic reports of total or project float, free float, and activity-specific float. These reports can be a useful management tool. Second, the schedule specifications should address the availability of the use of float to the parties and the project. Without risk-allocating provisions, neither party will be entitled to priority in use of float time. In other words, if float is available along the channel of work involved, either party (as long as it is acting in good faith) may, without being charged for a delay to the project, delay or extend work activities up to the point that the float is extinguished. See Weaver-Bailey Contractors, Inc. v. United States, 19 Ct. Cl. 474 (1990).

Major Revisions & Time Extensions

Schedule specifications should state whether the CPM or network diagrams are to be totally revised or significantly modified if there are major revisions in the project sequence. The contract should also indicate the party responsible for preparing such major revisions to the network diagram and describe the Owner or Construction Manager’s rights to approval of any such major revisions. At a minimum, major changes and schedule impacts should be incorporated into the schedule as promptly as possible so that the CPM network accurately reflects current conditions. Thus, contract drafters should also consider specifying the appropriate time for quantifying delays. For example, should the time-extension calculation for the delay be measured based on (a) a CPM update or diagram current as of the time of the delay, (b) the impact to the original CPM plan, or (c) a “20/20” hindsight look at the project? The reference point for measurement of the impact often will have a major effect on the length of the appropriate time extension. Today, the most widely accepted approach for evaluating delays is on a chronological and cumulative basis, that takes into account the status and critical path(s) of the project at the time of the delay in question.

Prohibitions on Schedule Manipulations

Use of inexperienced personnel to schedule the work and so-called user friendly software advances that mask the logic and changes to CPM networks have led to serious scheduling abuses. As a result many Owners are including specifications which specifically prohibit improper scheduling manipulations, such as the use of automatic default mechanisms to update actual start and finish dates, incomplete predecessors and negative lag relationships. These issues will be addressed in more detail in Part Two of this article.