Week 5_John Agbo_ Managing discrepancy between drawings issued to client for construction (IFC) on a tank farm project as a result of improper communi

One major challenge I am facing right now on a Tank Farm project I am on, is the discrepancy that exists between Issued For Construction (IFC) drawings sent to clients as a result of improper communication.

Excerpts from the Scope of Work

Tanks will be 3No, 20m diameter tanks. Driveway will be concrete grade 25. Engineering design duration will be 6 weeks. Engineering Contractor to submit schedule to Client within 2 days of project kick-off. All correspondences, clarifications and comments shall be conveyed through Principal Consultant (on behalf of client) and Contractor’s Project Manager (on behalf of contractor).

These was re – emphasized at the kick-off meeting.

Our records show that previous jobs of this magnitude were executed within a minimum duration of 3 months. When it was 4 weeks into the project, the Mechanical Lead (ML) got a call from one of the consultant’s personnel informing us that the client had requested that the tanks be increased to 4No and the diameter increased to 25m while the height was maintained. This change was because the client had succeeded in obtaining the bank facility he was expecting. He conveyed the change to the Mechanical Team. 2 days later, there was a project meeting and the consultants, the client’s representative and the ML forgot to mention the change. The completed deliverables were submitted on week 6 and the client and consultants spotted 2 conflicting layouts (1 from Mechanical and the other from Structural) when reviewing the drawings. We have been informed and Management has requested all Leads to make recommendations as to responses to make to the client, while maintaining our good name.

Findings

It was discovered that the ML was hurrying to meet the targeted date and forgot to convey the message. Due to the tight schedule, there was no time for review cycles to be followed up.

Proposed responses

1. The client should return the entire drawings to us so we can do a re-work while the cost of the re-work is borne by both parties(client/consultants and contractor)

2. The client should adopt the 3No, 20m diameter tank since all the drawings except the mechanical drawings reflect this. While the mechanical drawings are re-worked at our cost to meet the original scope.

3. The drawings should be returned and re-worked by us to meet the new specifications but for a longer duration (maybe 3 months) and at the client / consultant’s cost.

Analysis of the responses

The 1^st response will result in us doing a re-work at the cost of 75% the actual cost of the income within the same tight schedule of 6weeks, leaving us open to mistakes which may lead to a further re-work. Should this happen again, it will dent our image and is likely to aggrieve the client since interests on his bank facility is already running.

The 2^nd response is the quickest option and is likely to save the client some money by way of interests on the bank facility. But this will defeat the client’s aim of receiving the bank facility.

The 3^rd option, we will request a re-work at the client’s cost since the channel of communication (Principal consultant and contractor’s Project Manager) was clearly stated in the scope of works. This forms a basis of the contract as well. We will also request a longer duration to allow for various review cycles (interdisciplinary Checks –IDC, Issue for Client’s Comments –IFCC and IFC when client’s comments have been incorporated). But the client will lose on bank interest.

Best response - Conclusion and recommendation

Based on the above, the best response to the will be the 3^rd response. It will cost the client more money to because he will have to bear the cost of re-work and pay accumulated bank charges. But at the end of the day, he is most likely to get the best deliverables that would have gone through various internal and external checks and reviews. This is obviously not to the client’s financial advantage but we have to be honest in our response to him in order to maintain our image.

References:

AACE CORPORATE SOCIAL REPONSIBILITY

AACE International Education Board. (2006). Project Performance Assessment. In J.K.Hollmann (Ed), Total cost management framework – A process for applying the Skills & knowledge of cost engineering (1^st ed) (chapter 10.1) (pp.199-208). Morgantown, West Virginia: AACE International.