Scholatly Paper Measured-Mile Principles William Ibbs, M.ASCE! Abstract: Change is any addition, deletion, of revision tothe general scope of a contact, It may cause an adjustment to the contract price or ‘contract time of a design or construction project. Many disputes arse out of change, and suocessfl resolution of those disputes requires that three elements be evaluate: liability, equsation, and resultant injury (Qamages). One specific type of damage that is frequently alleged on changed projects is loss of labor productivity. One way to evaluate and quantify loss of labor productivity damages is through use of the ‘measured-mile technique. Problems exist with the measured-mile approach, however, because the guidelines for developing and applying it fare unclear, Based on a teview and synthesis of project management literaure and court and! appeal board decisions, this paper presents ‘guidelines for development and application of the measured-aile methodology. The intent is to help contractors, owners, consultants, and ‘other partes step through a logical process for preparing and presenting a credible roeasured-mile analysis. DO 4170,0000087. © 2012 American Society of Civil Engineers. CE Database subject headings: Construction management; Legal factors; Prcd (0.1061(ASCE)LA.1943- sivity; Contracts ‘Author Keywords: Change; Construction; Construction management; Legal issues; Loss of productivity; Measured mile; Productivity Introduction Productivity isa measurement of output per unit of time [America Association of Cost Engineers (AACE) 2004) and is important because it is one of the three components of labor cost (along with the hourly sve and the work quantity). IF productivity is im- paired, project labor costs will incresse, Because labor costs are Usually @ large proportion of total project costs, dhe overall wtal ‘project cost will probably increase. Such an increase will probably jeopardize the owner's project business value and the contractors profit ‘One of the ways labor productivity may be impaited is through change, which is any addition, deletion, or revision to the general scope ofa conttac (Tbbs 1994), Because change may result in died resourees (e.g, Waiting for nev instructions), reassigned resources vith extra, unplanned waasit time or learing curve losses), of ‘other problems, a contractor may suffer loss of labor productivity (LOP). Even though labor effort and schedule are related and ‘Somewhat interchangeable, the courts have held that LOP damages are diferent than and distinct from schedule delay damages.’ This, makes them a separate and important category of recoverable damages; c£, Clark Concrete? Tis also a maxim of law that when claiming such damages a contractor must demonstrate what caused the change, why the ‘owner is liable for the change, and that any claimed damages are reasonable,’ There ae different methods for estimating such LOP. losses, including aetual costs, total aid modified total cost, project ‘comparison studies, specialty industry studies, general industry "Protessor of Consretion Management, Dept of Civil Eavironmen. tal Enpinerng, Uni. of Califomis ar Berkeley, Berkeley, CA 94720; and President, Ins Consulting Group, Ine, Oakland, CA 94618. E-mail: Wiliam Ibbs@ lobsConsuling.com Note, This manaeript was submited on July 13, 2011; approved on September 2, 2011; published online on September 5, 2011. Discussion petiod epen Until October 1, 2012; separate dssussons must be submited forindvial papers. This pope is part ofthe Journal of Legal Affairs and Dispute Resolution in Engineering and Construction, Vol. 4, No. 2, May, 2012. ASCE, ISSN 1943-4162/2012/2-31-39825.00, studies, and the measured :mile approach (AACE 2004; Finke 1997), Oucof the ways that productivity damages ean be estimated is through ase of a measured mile “Though scemingly simple in concept, there are actually a nom- ber of issues and maces associated with measured-mile analysis. ‘The AACE (2004) says the more common mistakes are (1) caleu- lating lost productivity on 2 cost rather than a labor-hour basis (2) applying ealeulared factors wo all Tabur huts eu the projeet tater than just those ofthe impacted perio; (3) failing to aecount ‘or typical leaming carve effects and Losses in the early stages of a project; (4) filing to deduct additional labor hours already paid for in change orders; and (5) failing to take into account other factors that impacted productivity but that are not recoverable under the contract's tems. ‘Thomas (2010) categorizes the problems with measused-mile analysis a& either analysis (or methodotogical) diffcnlties and process (or application) difficulties. Specific issues include solect- ing time periods that are not truly comparable; fling to verify ‘cost, productivity, and progress dat; using production rather than productivity date: and performing a cost-based analysis without understanding the project context and construction meshads. To this should be added the general proposition that many project owners ddo tot waat to acknowledge LOP damages because they are by nature dificult pinpoint and quantify, and often very substantial Objective and Research Methodology ‘The success rate for LOP claims is low because there is in genecal to rigorous methodology for quantifying damages and specifically ‘no rigoroas methodology for developing and applying the ‘measured:-mile concept (Thomas 2010s). Thus, thec is a need for such guidelines. The purpose of this paper thetefore is to present such. ‘The guidelines presented herein were developed by (1) review- ing the messured-mile basies; (2) summarizing key project man agement Iteratare and court ané board decisions on dhe subject; ) identifying complications and contradictions in its use; and JOURNAL OF LEGAL AFFAIRS AND DISPUTE RESOLUTION IN ENGINEERING AND CONSTRUCTION © ASCE / MAY 2012 31(4) symhesizing the Biterature and decisions. The result is a set of ‘guidelines for general usage, ‘The intended audience of this paper is any contactor, con- sultant, or owner who needs to quantify LOP, cither on a {forward-looking or retrospective basis. Though itis writen from the viewpoint of a contractoriplaintiff pursing a LOP claim against ‘an owneridefendant, the points presented could apply tothe reverse situation. They may also help in forward pricing change proposals. ‘This research and its guidelines are important because of the vast sums of moncy at stake in LOP disputes, probably exceeding $60 billion in the United States alone (bbs 1997). Improvement, ‘whether by faster resolution or more accuracy of such disputes, will translate into cost savings for both the contractor and the owner partes, ‘Measured Mile: General Background ‘The preferred method for quantifying LOP damages is the use of actual costs, but when that isnot possible, measured mile should be ‘used (Calvey and Zollinger 2003, W.G. Yates, U.S. Industries). The ‘goal in sueh an analysis isto compare the actual Jabor-hours spent ‘and work output achieved during a period of time or for a category fof work unimpacted by disruptions (Uhe measured mile) with a period or category impacted by such. That arithmetic diference is then presumed to be the loss associated with the disruption and is used to calculate the LOP. The LOP is measured in tors ff labor hours, which can then be multiplied by an hourly rate { derive the cost associated with LOP, Those lost labor houts can also be inserted into a project’s as-built schedule to determine if the project duration was lengthened. If it was extended, the con- tractor may also be entitled to extended overhead costs. This ap- proach has been accepted by U.S. federal and stale courts (Giscussed in length below), as well as by overseas authorities such as the U.K's Society of Construction Law (2002). This approach relies upon the accuracy and completeness of contemporaneous project records and the skill, care, and impartial- ity of the analyst (Keane and Caletka 2008). The quality and avail- ability of data will be important factors in determining the durations ‘of the time periods (or work categories) studied. Good weekly labor-hour records, for instance, will lead to weekly labor produc tivity analyses. In some cases monthly pay applications, with ‘monthly analyses based on dollars put-in-place, ean be used. One ‘example where this approach might be necessary is general con tractor’s pursuit against an owner for 2 LOP claim on behalf of a subcontractor whose records are insufficient. It may also be the ‘case that the project isso disrupted that even good record keeping, is of no help: one of the itonic things about loss of productivity claims is that offen the very factors that produce the less of pro- ductivity can also serve to preclude the accurate and precise record-Eeeping that would constitute evidentiary certitude. (Shea 1989) ‘Measured-nile analysis is stractive to owners and tiers-of fact because itis based on actual project productivity. This avoids any problems created by @ contactor bid bust and the necessity of ‘making adjustments to the bid as is required in the modified total cost oF earned value approaches, Measured mile analysis also takes into account the contractor's own inefficiencies. Some contractors do not like it because it requires them to keep more detailed records than they custornatily would. However, it {does offers banefit that an estimate based eamned-value calculation does not, Namely, the contractor may be able to recover more damages than what an eamed-value approach would yield if he for she is actually more productive than expected in his original estimate, In adltion, the measared-mile approach is more closely tie to the specific circumstances ofthe projet at dispute thaa some of the other LOP estimating methods. That avoids the evticism often leveled at estimating guidelines and industry studies as being too generalized, Project Management Literature Review Zink (1986) introduced the concept of a measured mile, Its based fon a project's actual labor hours, comparing productivity ducing an unhindered time to productivity during a hindered time, His ‘original paper presented a pictorial representation of the concept along the lines shown in Fig. 1 of this paper ‘Tho actual labor-hours curve in this igure shows the eontrae- tor’s actual production at different points in time, from start to finish. The slope of thet curve at any particular point in time is the contemporaneous productivity at that particular point in time. Often it isthe ease thal there isa period of lower productivity a the start of the project while learning curve and other start-up effects sre worked through. That is illustrated by the nonlinear portion of this curve, on the JefUhand side of the figore. Then, the project hits its stride (he linear portion of the curve between the 40% and 60% complete points). Later, some event disrupts the project tnd creates iower productivity rates, as reflected in the higher, noa- linear curve on the right-hand side. The linear portion in the 404% to 60% range of this example would be extrapolated and used as ‘the measured mile or unimpacted reference period. The difference between the two curves post 60% complete would be computed to estimate the LOP. In this case, that loss is the 670 cumulative Tabor hours As straightforward as the concept scems, years of application Ihave revealed @ number of nuances and inwicacies. Wilson (1993), for example, was one of the firs to ilustrate how two differ- ent computational approaches applied to the same project—one ‘being the productivity per eubie yard of excavated sol and the other being productivity per lineal foot of excavated soil—can yield sub- stantially different rests. The reason is because the cross-sectional |[ tnt ev apoted mracton | sw | ete tris Projet complete Fig. 4. The measured mile concept (adapted (rom Zink 1986) ‘92 / JOURNAL OF LEGAL AFFAIRS AND DISPUTE RESOLUTION IN ENGINEERING AND CONSTRUCTION © ASCE / MAY 2012area of the measured-nile section differs substantially from the allegedly impacted section. 'A few years Incr, Finke (1998) reported thatthe impacted and unimpacted time pesiods could be concurrent if the underlying works are separate and distinct, This reinforces the point that LOP claims should be evaluated separately from schedule delay etxims, He also noted that productivity can be defined as labor houts per percentage point of completion or progress, labor hours per dollar of eamed value, or labor hours per quantity installed. Finke also made the impoctant observation that_measured mile analysis generally compares an average productivity rate foram unimpactd tine period with an average productivity rat for an impacted time pesiod, Moreover, such averages hide the fact that a contractor does not achieve a single, uniform rate of produc: tivity throughout a ie period. Thus, “once itis realized that yx ae dealing With a collection of productivity rates rather than a sine gle average productivity rate, you open the door for a stats analysis to determine whether thore ae mesnineful differences." “This means thatthe laws of probability enter the discussion There isa certain probability that the difference between PRorepuind a PRypaat (PR is productivity rate) is simply a manifestation ofthe faherentvarabfity of tho contractor's produc Livi, That i, the diferences may just be statistical aoe and thus not ual as a systemic owner-caused disruption, There must be a tmeaningfil difference between PRyyingaies a4 PRiggases ft owner lability to arise “Thomas and Olouta (1995) compared the productivity of vari cous construction projects that had been disrupted by change. To Standardize the deta, they applied the ideas of conversion factors to obiain equivalent work types across the projects. The basis for these conversation factors was the earned valve, using labor hours taken from standard estimsting manuals. Thomas and Zavrski (199%) show that projees with more complex design have lower an more variable baseline productivity. That may be useful infor ration when tying to compare an impacted project agninst an ‘impacted project. “Thomas and Sanvido (2000) and Thomas (2010a) note some projects are disrupted throughout their entire duration, meaning ho pure, cnimpacted measured mile period exist, For such cond tions, they propose using a basline productivity method. In this approach, the best time periods are selected and used to estimate the LOP for ther ine periods, even if they are noncontinuous time petios and even if they have ownercaused dismpton “The approach has meri, although these are some insufficiencies, one being tha according to Thosnes the baseline period should be the time petiod constituting 10% of the entre project duration, There is a scientific evidence to support that 10% i an appropriate number, Abu-Hijleh znd Tbbs (1998) have in fact shown that some- times 20% is needed and other times 3% is suicient. Holloway (2007) comes to the same conclusion. Thomas is also ambiguous and possibly mistaken when he say thatthe baseline subset is che “reporting periods tht have the highest unit production or up.” Unit production or unit ontpat could refer to output pee dxy, thus ignoring crew size and misrepresenting productivity, which would Tead to computational ero. Finaly, the best time period (0. the baseline petiod) snd the time period being impacted and reviewed may both have LOP that is the owner's responsibility. To compute the LOP asthe difference ‘eeween the baseline and impacted periods would therefore be 10 compare one time petiod with modest owner-caused problems ‘with another ine peiod that ad significant ewner-causedprob- Tems, This would lead to an underestinate ofthe ttwe LOP and penalize the contractor. A better proach would be to select the Disetine period, make adjustments for that period’ productivity, and then compare this adjusted baselin to tha of other project peri ods. This is something the courts have allowed, as discussed in @ subsequent section. CGalezian and Samolian (2003) note that plotting the to-date pro ductivity in a cumulative fashion may smooth the data and more clearly reveal systematic abnormalities. They also apply statistical control chart heory to the measured mile concept. In this approach, ‘center line is computed for the average ofall the productivity data points during the course ofa project. Then upper an lower control Fimits are pleted as three standard deviations from that average rite. Values filling within these contro mits are sai to fll within 8 normal range of vasiaton, Those falling outside the contro! limits are said to be attributable to some systematic event, not a chance vent. Those 2vents would be events where productivity was mean- ingfully distrbed:; events within the three sigma range would not qualify as LOP events, Gulezian presents no evidence, though, to validate the use of three standard deviations other than histori cal usage. [Eden (2005) notes that the measured mile approach does not easily allow disaggregation between different categories of distup- tion and dey, and wiers-of fact often want fo assess disruptions and delays individually because of liability provisions in the project contract. Shea (1989) notes that cases with measured mile analysis are usually too complicated fo parse in detail: "Commenting on the practicality of proving damages the board [in Rober MeMutien & ‘Sons, ne.] stated that to attempt to deal with each individual issue ‘and to segregate delays and loss of efficiency would be a wasteful exercise, It was impractical if not impossible to distinguish with any degree of accuracy the contract work fom extra work.” Braimah (2010) notes that one key to developing a credible rmeasured-mile analysis is good underlying project documentation. ‘A critical fet stop ie developing a flexible an cable werk break ‘down structere (WBS). As project change arises, it is important 10 create separate WBS accounts in a timely way aud update progress and Isbor-hcur expenditures frequently. Presnell 2003) and Serag (2010) describe the measured-mile ‘process in very general terms as (1) defining the work activity or cost, (2) account for the work performed, (3) log accurate labor hours used to perform the work, (4) log accurate quantities of work, ‘completed for the period, and (5) briefly define any condition or event that prevented optimum production, These guidelines also refer to production (output) rather than productivity output per unit of time), which is incorrect, Loulakis and Santiago (1999) suggested cioosing a measured mile according to (1) the work performed curing the usimpacted period should be substantially similar in type, nature, and complexity to the affected work, and (2) the skill and composition of the workers should be ‘comparable. This and Li (2005, 2011) have developed and tested a statistical Kclustering method for separating prodactivity data into impacted ‘versus noniimpacted categories. Applying this method to an actual claim, Williams (2011) found that it yielded resuts that were closer to the actual project losses than other methods. The method also demonstrated that hard and fast 10% rule is arbitrary. Dieterle and Gaines (2011) offer some practical points about rmeasured-nile use, including the fact that shifting the measured- rile period forward or backward in time may have substantial impacts on the claimed LOP amount. This allows the analyst co perform a sensitivity analysis and assess the confidence in the ‘analysis. They also encourage step-by-step explanations of the LOP analysis with transparent use of data JOURNAL OF LEGAL AFFAIRS AND DISPUTE RESOLUTION IN ENGINEERING AND CONSTRUCTION @ ASOE / MAY 2012/33Case Law and Board Decision Literature Review ‘There have been many project disputes involving the measured mile concept that have resulted in published court or board deci- sions. Federal deisions that are instructive and have been favorable for plaintiffs using measured miles include: *+ Bell BCI Co,, where compensation was granted to the general ‘contractor based on use of a measured mile using units of work. complete and eared valued on a weekly basis. Bell's practice for many years had been to track productivity rates by requiring the foremen to record each week the amount of units installed on & project, allowing analysis of the actual time to install units agains its estimates. A subcontractor on this project was also granted compensation after using a quantity/labor-how-based ‘measured-mile approach: “Stromberg installed the changed duct ‘work on the third floor at arate of 6.26 Ib per hour, compared to the 11.23 Ib per hour it experienced carly in the project” + Natkin & Co. In this ease Natkin suffered LOP because the owner failed to furnish design drawings and permanent equip- tment in a timely manner, and the owner and general contractor abandoned the CPM schedule. At the same time, they forced Natkin to accelerate its piping work. Natkin began tracking pro= suctivity for the affected piping systems shortly afterward. + DANAG, Inc. ‘The court awarded the contractor LOP damages For out-of-sequence work. It also put the burden to disprove LOP back om the defendant after the govemment repeatedly asserted that DANAC’s analysis was flawed. + PJ. Dick. Electrical design deficiencies occurred throughout the enti installation of electrical branch circuits, This Ted to tmeven workflow, constructive acceleration, and reduced labor productivity. The court allowed the coniractor to compate a LOP using a measured mile based on similar work (feeder circuit) even though that work was done by a different crew. The board found that there was “no basis to conclude that either the productivity of the same crew or that exacly the same work isa prerequisite fora valid measured mile analysis to establish the amount ofthe loss of productivity.” + Alstom Power, Alstom’ expert used! a measured mile to validate ‘arebid of the project. Verifying that estimate allowed Alstom to successfully prosecute a modified total cost claim. + Lamb Engineering & Construction Co. Here, the Board of Appeals allowed! use of a corrected measured mile, incorporat- ing a large number of comections in seraper eycle time t0 reflect site conditions, Those comections were substantiated with extensive documentation. + Bay West. Board allows use of measured mile that was adjusted for leaning curve and other factors, Such adjustments were ‘made by the analyst ater careful review of daily diaries and interviews with the dredge levernst Luria Bothers & Co. isan instructive ease because it supports the use of measured-mile productivity rates that are then adjusted bby experts to account for slight differences with the impacted period. However, those adjustments must be substantiated with rea soning, not just observation and experience: Its a rare case where loss of productivity can be proven by books and records; almost always it has tbe proven by the ‘opinions of expert witnesses. However the mere expression of ‘an estimate as to the amount of productivity Joss by an expert witness with nothing to support it will not establish the fundamental fact of resultant injury nor provide a sufficient basis for making a reasonably correct approximation of dam- ages...we cannot ignore the fact that the percentages testified to were merely estimates based on {the contractor's witness} observation and experience. Furthermore, his estimates are muuch higher than those testified to in ether cases in which the conditions are not materially different from those present here, Taking these things into consideration and in view of the fact that no comparative data, no standards, and no cor- roboration support his testimony, we ae constrained to reduce his estimates based on the record as 2 whole and the court's knowiedge and experience in such cases. Other cases in which contractors successfully used a measured- nile approach include Bateast Construction, where the analyst developed his LOP by working with the foreman actully coping with the disrupted work. James Comporation is an example of a state court permitting use of the measured-mnile concep. inthis ease Inbor billings as percentage of the contractual abor value were deemed to he a sufficient measure of completion? Most denials of measured-mile analysis are sooted inthe appi cation details, not the methodology isel£. One common reason {or rejection isthe faulty rationale by which the reference period is selected, such a8 choosing an unimpscted patiod that is not comparable to the impacted period. A noteworthy example is PW, Construction, Inc, in whieh the court sharply ertcized the expert ‘The record shows that welding in the impaired period was Dutt-welding on polyethylene pipes, which takes only 15 soo- fonds to 2 minutes per weld, wheress the welding done in the pre-disruption period was steel wekling, which may take upto 2,69 hours per weld... [PWCI's exper) deloted both the weld ing work and the trenching work from the pro-dismuption rate and left both kinds of work in the post-tisruption period ‘The two periods thus have not made a correct compatison, Indeed, the Government submitted unrebutted evidence that ‘adding the welding costs back into the ideal period yields ‘an ideal rate of 0.171 hours per linear foot, a rate very close to the impaired rate Another reason for denial is that analysts sometimes make adjustments to the measured-mile period to make it better Bt the tunimpactéd period. The adjustment may not be credible or the aufjusiment may be credible but not fully explained in & clear and teansparent manner. Such was the case in Clark Conerete Contrac- tors. Here, a subcontractor’s work was disrupted by the addition of| ‘some extra concrete work and, the coust believe, the government's failure to respond to RFIs in a timely manner and the government ‘engineer's lack of experience. The analyst in Clark Conerete also defined and used two types of impacted periods: severely and moderately, which the court accepted. Using multiple categories cof impacted period makes it easier for a tierof-fact to accept a LOP claim, ‘Unfortunately, Clark Concrete expert's use of an adjusted unim- pacted period productivity rate was denied because the expert making the adjustment did not sufficiently corroborate his pro- posed adjustinent. Shields, Inc. had the same problem. Similarly the Board in Bay Construction Co. denied a contractor claim be- ‘cause his expe filed to separate trades between the comparison petiods. In Southern Comfort Builders Inc., the contrgetor's expert claimed that it was impossible to identify « measured mile beenase the construction period was 09 short. He also asserted that the whole period was subject to lost productivity because of the own- rs late change orders and the acceleration an out-of sequence ‘work that resulted from those change orders. In an. attempt to overcome these problems, be developed a measured mile using procutivity rates achieved hy another contractor on the same {24 / JOURNAL OF LEGAL AFFAIRS AND DISPUTE RESOLUTION IN ENGINEERING AND CONSTRUCTION © ASCE / MAY 2012‘project and then applied those rates to the disputed portion of the project. ‘The court did not accept this analysis: Based on the information presented, this court cannot adopt {contractor's} measured mile analysis or modified total cost analysis to support SCBI's calculation of damages for loss of productivity... Plainti's expert attempted three different methodologies without explicitly signing on to any ove of those definitively, and his analysis on each of the methodol- gies presented at tial was flawed. SCBI's measured mile calculation is deficient in that it does not adequately represent ‘a comparison between SCBI's unimpacted work with SCBI's impacted work. Instead, SCBI’s calculation compares SCBI's ‘work with the work performed by another contractor, Merrit. Although the (wo companies conducted similar work, even SCBI’s own exper...indicated that, under a measured mile alysis, comparing two separate companies is fundamentally flawed. Also, since SCBI did not provide a basis ofits work uunimpacted by govemment actions, the court cannot properly conclude what SCBI’s unimpacted work would have been, Another flaw in SCBI’s measured mile analysis is that in its calculations, plaintif's final average labor costs under the measured mile analysis is [sic] grester than the total cost calculations. This presents a fundamental problem because, {as plaintiff's expert] admitted, a total cost analysis represents the maximum amount a contractor could possibly receive. I, therefore, is unreasonable for SCBI’s measured mile calcula. tions to be higher than its total cost calculation, perhaps & result of comparing SCBI's costs with Merrit's costs. ‘The court was also critical of SCBT because many of the sisruptions cucouutered by SCBI could have been identified by SCRI had SCRI drafted the coordination drawings required by the contract, SBCI als failed to attend the prebid site vist, which may have contributed to che court's skepticism of its claim, Despite the fact thot this court was not comfortable accepting use of measured mile from an adjacent contractor in Southern ‘Comfort, Shea (1989), Jones (2001), and Society of Construction [Lav (2002) staie that itis possible to use productivity from a similar project or series of similar projects. Schwartzkopf and MeNamata (2001) cite Robert McMullan & Sons, Inc. and Ginsburg (1985) cites Maryland Sanitary Manufacturing as cor- roboration that similar projects can be used as a measured mile ‘on a distupted project.” ‘The tipping point in Southern Builders might have been that the contractor's expert applid the measured-mile productivity rate from the other contractor's project to SBCI’s entire project dura- tion. Meritt (2008) goes so far as to desoribe this as an example ‘of a measured mile being identified for reasons of convenience rather than from a rigorous, impartial basis, Another problea was that the court saw this asa total cost claim, which defeats the whole point of preparing a measured-mite analysis in the first place. Calvey and Zollinger (2003) stress the importance of an impar- tial qualified expert in quantifying LOP claims. Lack of such impariality has been cited in several cases, including Daewoo Engineering. In that case, the court rejected the expers' opinions, noting they made a presumption of efficiency with regart to the impacted period, which were neither substantiated nor justified: ‘We assume that a finder of fact faced with the measured mile ‘method of estimating damages would want to have confidence in the exper’s ability and objectivity. A court would be particularly concemed to know how the experts picked peti- ‘ods of productive and non-productive construction for comparison. We did not have such a level of confidence in the plaintiff's experts. Cross examination showed their choices of productive and non-productive periods to be arbitray at best. More likely they were chosen to achieve a pre-determined result. LA, Jones Construction is another example of misapplied ‘measured mile. The plaintiff's expert used a ove-ofackind measured-mile approach and testified that a contractor suffered LOP as the result of the cumulative impact of numerous change coders. The Boant rejected his anslysis for several reasons. First, the expert appears 10 have derived his 28% inefficient factor by 4 very subjective and convoluted route that was not explained clearly to the Board. His analysis was also weakened by a failure to eliminate other noncompensable factors that could have contrib- uted to LOP. ‘Anotker major problem was thatthe expert did not attempt 10 perform a cause-and-effect analysis, even failing so much as to show the timing of when the purported disruptions occurred and their consequences. (The lack of tying to demonstrate a cause-and-effect undercut a LOP analysis in Sunshine Construction & Engineering. oo.) Otter problems included the fact that craft labor hours were coded to various cost accounts and in some cases materially over Stated and not corrected by the contractor’ expert. As one example, the analjst included al the labor hours ofa flagger inthe LOP cal culation 2ven though thet flagger was providing traffic control ser viee tothe entire project, which had undisturbed pats His ayproach also was suspect because a single impacted day determined whether entire months of data were categorized as impacted or unimpacted. It appeared the contractor's expert had not reviewed all the pertinent documents or else chose to ignore them hecause some intemal documents placed blame for cast over runs on the contractor. Those documents recounted high tumover of supectisony personnel, « bid bust, aa wuncasomable oveiy ay- pressive productivity estimates. Those samme internal postmortem, ‘documents noted that the productivity rates were better on this disputed project than those on a similar but less complex. project performed a short distance away, Finally, the decision also suggests that dhe Board was swayed by the credentials and experience of the ‘governments expert relative fo those of the Contractor's exper. ECC. Himst, nc. is 2 case noteworthy for using dissimilar work, types to compute LOP. Emst’s expert computed that there were roughly (00,000 labor hours lost on a three-year project. To allo- ‘cate nuttber of lost labor hours per year, he decided that the major cause for delay was the extraordinary number of drawing revisions developed by the defendant. This led to a calculation of the percent age of dawing revisions that were submitted in each of the three years. From this, he prorated the lost labor hours to a particular year ‘and assigned that years labor cost to those labor hous. Te court dismissed this approach because Emst’s hypothetical allocation of unpaid journeyman hours ‘on the basis of the number of drawing revisions received peer year is invalid, Not all drawing revisions required work by First, and all revisions requiting work would not cause an ‘equal amount of work, Thus, & calculation based on an arti- ficial method of allocation is nota proper substitute fora cal- culation based on historical expenditure [on} labor Recommended Measured-Mile Practices The prefered method for computing LOP damages on a disrupted project isthe actual costs methodology. However, this approach is, often not available for various reasons, one being that contractors JOURNAL OF LEGAL AFFAIRS AND DISPUTE RESOLUTION IN ENGINEERING AND CONSTRUCTION © ASCE/ MAY 2012/35sometimes do not realize they are in a substantially changed cir. cumstance until i is 100 late. They may be too late because they literally do not recognize the changed condition or because they ‘cannot react quickly enough t set up new cost accounts fo eapture the quantity, timing, and productivity of the change work: ‘In liew of actual costs, the measured mile technique is preferred. However, the cases and decisions summarized above indicate that there problems with this approach, To help ameliorate the situation, the following guidelines are recommended for con- ducting a measured mile analysis. Some of the key, specific refer. fences cited in this paper are cited in the parentheses behind a _Buideline when that reference is sed asthe basis forthe particlar iden. I. Selection of the measured mile analyst. a, Use impartial, experienced, knowledgeable experts (Luria Brothers; Dacwoo; J.A. Jones; Calvey and Zollinget 2003), ‘Someone who understands both coastruction east account. ing and construction work methods (ILA. Jones). © Review the entire project record. Interview the project pessonnel, including field personnel. Review pertinent documentation, obtain clear understanding of the issues in dispute Batteast; A. Jones; Keane and Caletka 2008) 2, Selection of the impacted period ‘2 Graphically plot daily, weekly, monthly productivity over time to identify periods of disruption (Zink 1986; Finke 1998; Thomas 2000; Tabs 2005). . Consider use of statistical methods to select impacted and unimpacted periods objectively (Finke 1998; Thbs 2005, 2011). ©. Compute productivity, not production data (Zink 1986; Thbs 2005; Thomas 20105). 4. Atthe minimum, make an effort demonstrate cause and elfect between the change(S) and the consequence(s) (LA. Jones) (1) Ideally, prove what the causes of LOP were, Ifunsble to prove, demonstrate and explain to a reasonable degree. (@) Investigate the timing of the purported disruptions and their alleged consequences. € Make adjustments for noncompensable changes and contractor-caused problems in the impacted period (LA. Jones). £ Consider developing categories of “impact severity” rather than one general category (Clark Conerete). 3, Selection of the measured-mile period, 4, Selecta reference period for a narrow spectrum of similar ‘work (1) Select a period that as similar co the disrupted period as available (Zink 1986; AACE 2004: Loulakis 1999; Presnell 2003; Sesag 2010; Ibbs 2005, 2011; Tomas 20100; Ems) 2) Use quantity of work per Iabor-hour as a measure of productivity if possible; if not, resort to quantity of work pet percent project complete or quantity of work per dollar spent (Bell BCI; PJ. Dick; P.W, Construc- tion; James Coxp., AACE 2004). (@) Consider the physical charactor and amount of the work Zink 1986; AACE 2004; EC. Ems) (4) Consider the means and methods, e.g., weather condi- tions, work hours, project schedule, site logistics, man- ‘agement and supervision, trades, used to perform the work (Zink 1986; AACE 2004; Thomas 20108; Bay Construction), (3) Consider the ai ative and managerial aspects ‘governing the work; e.g., supervisory ratios, number ‘of and time spent processing shop dmwings, RFls, and change orders (AACE, 2004; Ibs 1997). © Select workers with reasonably similar skill, knowl edge, and effort. The same Tabor pool is desirable (PJ. Dick Construction; Loulakis 1999). ©) Separate the loss of productivity by Inbor tade if possible (Bay Wes). (8) Use owner-collected data iff available (Dicterle and Gaines 2011, '. Confitm that the reference period has unhindered produc tivity. Both for the contractor and any subcontractors or suppliers. (1) Make adjastments if there are contractor-caused hin- ‘drances to adjust the reference period (Lamb Enginecr- ing; Lusia Brothers; Southern Comnfor}. @) Be prepared to explain those adjustments with solid reasoning, not jost assertions (Luria Brothers) (3) Conversion factors, perhaps derived from authoritative estimating sources, may be needed to compensate for differences between unimpacted and impacted work (Thomas and Oloafa 1985). «. Ifno measured-mile productivity data available on disputed project, use other information sources. (1) Published industry estimating guides (AACE 2004), (2) Other projects built by this contractor or by similar contractors (Robert MeMullan & Sons; Maryland Sanitary; Southem Comfort; Shea 1989; Jones 2001), (3) Dollar per percent complete, eared value rates (Bell BCI; James Corp.; AACE 2004) (4) Baseline Productivity analysis (Thoms 2010). (2) Make adjustments as necessary to baseline refer- ‘ence period to develop true unimpacied baseline productivity rate (Bay West; Luria Brothers). 4, Calculate the Tess of productivity 1. Test the integrity of the onderlying productivity, change, progress, etc. data (Dieterke and Gaines 2011). b. Apply LOP factors to just the time period and labor trade disrupted (AACE 2004) «c. Adjust for leaming curve productivity factors in the early stages of a project (Bay West; AACE 2004) 4. Adjust for additional Inbor hours already paid for in change orders (AACE 2004). ©. Exclude any loss which is not recoverable under the contract's terms, including, contractor's own problems (AACE 2004), Look for several different ways to compute. from the instant project (Wilson 1993), (1) Report the results using those different ways and ‘racket them into a high-low range. 8. Consider other reference sources. (1) Other projects by this contractor, other projects by other contractors (Society of Construction Law 2002). (2) Otter decisions by this court or board (Larin Brothers). 1h. Be conservative. (1) Apply the LOP factor to just the erews and the time petiod involved (LA. Jones) i, Check the mathematics: do not present resis that strain credibility, such 2s a measurad-mile analysis that claims tore damages than a total cost claim (Southern Corfor?) 5. Present the analysis cletly a. Explain the cause and effec (J.A. Tones; Southern Comfort Sunshine Construction. peasured mile 96/ JOURNAL OF LEGAL AFFAIRS AND DISPUTE RESOLUTION IN ENGINEERING AND CONSTRUCTION © ASCE / MAY 2012». Use more than broad, unsubstantiated statements such as based on “my experience” (Lania Brothers). . Focus on key points, not minutia QA. Jones; Clark Concrete; Southem Comfort). 4d. Include photographs, other graphic aids, comespondence, job diaries, ec. ‘e, Coroborate with other methods such as modified total cost, industry guidelines. £, Rehearse before presenting. Anticipate questions and prepare answers (Dieterle and Gaines 2011). 2, Tell the trath (Merritt 2008; Loulakis 2003). Discussion ‘The previous section presented a set of guidelines for developing tho measured-mile approach in LOP claims. Applying these proposed guidelines requires a variety of implementation steps, which is the subject of this section. One of the keys to boing able to apply the measured-mile approach properly is to have the right productivity data, both im- ppacted and unimpacted, Ideally the contractor will have developed and maintained a detailed WBS with a sufficient number of cost ‘accounts so that the processes are already in place to capture the data, What constitutes a suicient numberof eost accounts depends ‘oa many factors, including the type of work, project size and du ‘ation, the contactor's familiarity with that type of work, the Isbor proportion of the work, future estimating needs, owner require~ ‘ments, and the risksharing nature of the project as expressed by the contract terms, ‘Teicholz (1987, 1974) observes, however, that many contrsciors {all 10 keep good, detailed cost control systems, in part because they believe it is too expensive to collect and put the dats into the system. In such eases, the contractor who has an insufficient cost ‘control system must recognize early that le may be installing, dis poted work and must therefore react quickly t define new cost accounts so he can begin capturing the productivity data, Further ‘complicating this is that maay contractors and owners intially deceive themselves into believing that a changed condition really is nota serious matter, only to ealize much later thal the problem is significantly worse than they thought snd that impact productivity aia needs to be collected (bbs 1994). By that Gime much or afl ofthe disputed work has been completed and itis too late 10 capture the productivity of that changed work and in sufficient etal to be accurate. [Even if the contractor does recognize in a timely manner the need to start tacking this information, there can be other difficul- ties, One such difficulty involves setting up new cost accounts. This, is not easy because new codes must be developed and the personnel rust be tained to use those codes. On large projects, it can take 2 considerable amount of time to communicate these changes. ‘Another problem is that it can be difficult to separate contract work: fom changed work, As an example, estimating the amount of time. toadd 1 in, of extra shoterete co a tunel fining when the base con tract calls for 4 in, is a judgmental call. Ifthe ficld engineers or foreman are not properly cained, the data may be collected inco sistently because they are using their individual judgments without ‘any overarching guidance. That inconsistency can in tum jeopant ie the guality ofthe measured-mile analysis, ‘Once the information is collected, it must be analyzed faily ‘Though that almost seems unnevessary to note, several ofthe cases cited above underscore the importance of objectivity and candid ness. Loalakis (2003) writes, “the baseline for demonstiating what the contractor could have done needs fo be unimpeactable.” In other werds, the baseline used for demonstrating losses docs not aged to be perfect, but it should be eredible if not irrefutable. ‘The eases reviewed easier in this paper demonstrate that most of the problems associated with measured-mile analyses are applica- ‘ion problens, im particular problems with the measured-mile ‘analysis being 8 fair and balanced estimate of the project’s prob- Jems, The contractor and his expert should presume that the own- cers team is familiar with the measured-ile approach and will be Jooking for ways to dieredit the contractor's analysis. A singe in- stance of stewing the analysis and trying to hide chicenery can discredit the contractors entire claim. Better to present information that isnot eniely favorable than to try (o sneak a skewed analysis through the owner's review: The benefit of using these guidelines is that labor produe- Aivity losses will be more accurately and consistently quantified, which will make disputes easier and less expensive to resolve ‘A collateral benefit of using ther is that more detailed productivity information may be collected, which will help to better pian and ‘estimate furure projects. They may ako help evaluate employee performanes Conelusions ‘The measured-mile methodology is one of the preferred methods for quantifying loss of productivity claims. The technique com- putes the difference between the setual productivity on an unim= pected portion of a project to an impacted portion of the project, ‘and woats the difference as the LOP associated with that impact. Responsibiity for the costs of this impact are then assigned to the party responsible, as determined from the cause of the impact and the liability, as determined by a reading of the contract or interpretation of industry custom and practice. ‘The measured-mile technique has been the subject of many court and appeal board decisions. Those decisions and applications in professional practice have shown that thete are nuances to the methodology and those nuances undermine the results ofits eo. sisteney and reliability, The purposes of this paper are to review those decisions to identify specific methodological and application issues aud w develop and present a series of guidelines that ean be ‘used by contractors, owners, and other interested parties to develop ‘and apply measured miles for quantifying the loss of labor produc> tivity on disputed projects, They may also help in forward-pricing ‘change proposals. The intent isto help reduce the uncertainty and inconsistency in LOP requests and clsims, and make construction more cost effective, From this review, it selear that impartial and unbiased selection and application of the measured-mile methodology is the most ‘important determinant in its success, Preference is given t9 cont puting @ measured mile on a laborchour basis, not a cost bass, ‘and presenting a conseavative analysis, which includes taking into account other factors that impacted productivity but which are not recoverable under the contracts terms. Also important i the selec~ tion of the ype of work or time period used as a reference. Though the reference work does not need to be identical to the impacted work, the analyst must show a good faith effort when trying to find the mile, wid if similar work is used, a good explanation of that similarity i essential, Finally, consider use of a measured mile from, similar projects, if available. List of Cases Alstom Power; Ine. v. RMF Industrial Contacting, In, 2006 U.S. Dist. LEXIS 2019 (March 2, 2006), JOURNAL OF LEGAL AFFAIRS AND DISPUTE RESOLUTION IN| ENGINEERING AND CONSTRUCTION @ ASCE / MAY 2012/97Appeal of Bateat Construction Co. Ine, ASIKCA Nes. 35,818 & 36,608, 92-1 BCA 24,697 (Dee 31, 1981). Appeat of Bay Construction Co, VABCA No, 5594, 02-1 BCA WL “#42118 (2002), ‘Appeal of Bay West, ASBCA No. 54166, April 25, 2007, Boar allows use of Measured Mble bat it most be adjusted for kaming curve & conditions accurely indicated in contact documents Bell BCI Co. v. United States, 72 Fed. CL. 164, 168 (2006). (Clark Concrete Contractors, The. v. General Services Administration, ‘GSBCA No, 14340, 99-1 BCA 4 30,280, Daewoo Enginooting and Constrction Ld v. U.S, 73 FeéCt 547(2006) Dame, Ine, ASBCA 33394, 91-2 BCA 4 29184, EC. Bint Inc. v. Koppers Company, Inc, US. Coue of Appeals, 625 F.2d ‘324, 327 (3d Cir 1980). 476 F. Supp. 729 (WD. Pa. 1979) James Corporation ¥. North Allegheay Schoo! Dissct, No. 1268 C.D. ‘2007. JA. Jones Construction Company ¥. Comps of Engineers, BCA, ENG BCA Nos, 6348, 6386-6391. 00-2 BCA. (CCH) $ 31,000, Gly 7, 2000). ‘Lamb Eaginering & Construction Co, Eng, BCA No. C-9304172, 97-2 BCA § 29.207. Luria Bothers & Co. v. United States, 369 F2d, 701 (Ct Cl. 1966), Maryland Sanitary Manufacturing Corp. v. United Stes, 199 Ct. CL 100 ssn), skin & Co. v. George A. Puller Co, 347 F.Supp. 17 (WD. Mo, (972), reoansidered, 626 F.2d 324 (Bl Ci. 1980), PL. Dick Inc. v. Princip, 324 F.3d 1364, 1370 (Red. Ci. 2003). PW. Construction, lc. v. US., 83 Fed. Appx. 555 (Fd. Ci. 2002) Robe McMalizn & Sons, Ine, ASBCA No, 191229, 76-2 BCA 4 12072, at 57,947, 962. Safeco Insurance Co, of America v. County of San Berar, U.S. Court ‘of Appeals for the Nit Circuit, No. 07-55832 (October 1, 2008. S. Leo Hamonay, Inc. v. Binks Mfg, Co, $97 # Supp. 1014 (SDN, 1984) Soutinem Comfort Builders, Inc. v. United States, No, 00-542C (aly 29, 2005). ‘Sunshine Construction & Enginering, Inv, United States, No. 02-250 (March 4, 2005). US. Indus, Ta, ¥, Blake Construction Co, 671 F.2d, $39 (DC. Ci 1982). United Stites for Use and Benefit of Shiols Ine. , Citizens and Southern National bank of Atlanta, 967 478 din ei (1966). ‘Warwick Construction, In., GSBCA Nos. 5070 eta, 82-28CA 16.009 at oo ‘WG. Yates & Soas Construction Company, ASBCA No, 48398, 01-2 BCA 417 31,428, ‘Wandetich Contracting Co v. Waited Stats, 351 F.2d 956 (CCl, 1965), Endnotes "SL. Harmonay, Ine: Subcontractor Hanonay was able to recover LOP lbecause his general contactor, Binks, accelerated the project and forced Haannouay to double crew size and move toa thee-shift per day oper ation. "On the othor hand, courts have often rcoprized thatthe extent ‘of harm sufered as a result of delay, such a the loss of efficiency claim in issue, may be difient to prove” Clark Concrete Contactors, In: "inpact eosis are aditional costs oceut= fing a a result ofthe loss of productivity lone of produetiviy it also terne inefficiency. Thus, imple cost are simply inerested labor costs that stom from the disruption w labor productivity resling fom ‘change in working conltion caused by a contract change, Productivity is inversely proportional tothe man-hours necessary to pre «given, ‘unit of work. Asi self-evident, if productivity declines the musnber of ‘man-hours of labor to produce a given task wil incre." tn Warwick the court noted “I has always been the lav that in order to prove entlemeat oan adjustment under the contact fr its beach, a ‘contractor mus esblish the fundamental fae of liability, causation and damage” And in Wuodetich, “A claimant need not prove his dam- ges with absolute certainty or mathomatical exocttue... tis scent ite fumishes the cour witha wasonable basis for hi computation, even though the result is only approximate... Yet ths leniency as to the aca! mechanics of computation doesnt relive the contractor of his essential burden of establishing the Fundamental face of ibility, ‘causation, ad estan injury."And in Safeco the federal appeals cout ruled that the erpen's measred mile was acceptably even tough i ray have inocuraely treated some low productivity days: “Bese damages need not be proved with mathematical precision, nitpicking regarding the calculation is seldom success grounds for appeal.” “Fourth, while respondent speculates that appellant's quantum evidence is unreliable, suspect, and mest likely done aferthe-feet,..spandeat has filed to dect our attention to any specific entre in hase exhibits that are inaccurate.” “The court wrote, “This approch compares the cost f completing work nat subject fo delay or acceleration with casts of completing work during a pend of impact, the difocence representing the measue of damages Alas Cas. Surety Co, x: The George Hyman Const: Co. No, 93-€V- 4570, 198 U.S, Dist Lexls 22627 (ED. Pa. May 15,1998). The work compared need not be exactly the same, a8 dhe ascertainment of dam- ages for labor inefliciency is not susceptibo to absolute exactness, Clark Concrete Contractors, In, v. Gen, Servs, Admin, 99-1 Bd. Contact ‘Appeals, 30280, 999 WL. 143977 (Gen. Servs Bd, Conact Appests 1998). When a contactor alleges a loss of productivity, the measured rile appronch i the prefered method of comping damages. Atlas Cas. Suery Co, ef Angelo afrate Const Co, Ine, PA. "Tpke ‘Comm'n, 2006 Pa. Bd, Cl. Lexis 4 Dit, No. 3654, Pa. Bd. CL 2008) {experts agreed measured mile analysis i ideal method to determine Jost of preductvity.)" One ofthe persuasive facore in the contractors favor wes thatthe school distit presented no counterespert to rut the measured mile analysis. cit appeas that a not insubstantial par of the extra cost for which the Psat’ sought reimbursement [in the impsctod periods] could be atibuted 1 factors for which [the conesctor] Was not seponsibe, {As the evidence does not provide any reasonable basi for allocating the akltional cost among these contrbutng factors, we conelude that the entre claim should have been rojcted...this eourt hes heretofore recognized and applied the principle tha if there are actionable end nonactionable factrs, the cout, in the absence ofa showing of same reasonable bassin the evidence, will not aempt to apportion dhe dam ages.” Shields tne ‘he Maryland court also points out ha to use «measured mile method itis ‘necessary to demonstrate: ) that there actually exss a reprerenistive petiod that canbe used asa baseline ane that tha period is isl aetally "undisrupted(b) that those acwally exists single period that has been consistently dsrupled by the event boing aaalyzed; and (c) that the relative lack of productivity i the dscupted period is solely arubtable to the event being analyzed, and no er evens. 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