Hill International

DONG Energy Workshop

Session 1
Franco Mastrandrea
Senior Vice President and Head of Expert Services, International
Hill International, Inc.
8 October 2012

The Global Leader in Managing Construction Risk ™

 Introduction

Specific areas of interest in the context of problem projects -

• The importance of record keeping
• Understanding the Contractor’s accounting system
• Understanding the nature of the Contractor’s costs
• Difficulties with free issue resources and services e.g. WTGs and
installation and commissioning personnel
• Vessels: mobilisation/demobilisation costs, DPRs and their relevance
to claims, Waiting on Weather (“WoW”) considerations
• Logistical issues on shore and offshore: non-critical time
considerations.

The Global Leader in Managing Construction Risk ™

 The importance of record keeping
• Compliance: e.g. Steps taken in response to a safety improvement notice
(clause 4.8); compliance with QA requirements (clause 4.9); shortage,
defect or default of free issue materials (clause 4.20); as-built drawings
(clause 5.6); operation and maintenance manuals (clause 5.7); personnel
and equipment (clause 6.10); tests (clause 7.4); programme (clause 8.3);
notice for tests on completion (clause 9.1); taking over notice (clause
10.1); records in connection with claims (clause 20.1).
• Reporting: e.g. Progress reporting (clause 4.21: less 10% from any future
payments)
• Relative weight: documents versus recall
• Setting up a system: design, develop, explain, implement, check, adjust
• Internal and external: Notification, Verification (e.g. Daily records of
dayworks resources - clause 13.6)
• Independent substantiation: emails, text messages, diaries, photographs

The Global Leader in Managing Construction Risk ™

 Accounting system

• What is the system?

• Description
• How do the project accounts fit in to the contractor’s overall
accounts e.g. overheads?
• Exceptions
• The records that feed the system
• Random testing of the system

The Global Leader in Managing Construction Risk ™

 The Contractor’s costs

• Direct and indirect, or fixed and variable? e.g. overheads

• One-off costs
• Volume or task-related
• Time-related e.g. is fuel for vessels a task-related or time-related cost?

The Global Leader in Managing Construction Risk ™

 Free issue resources

• WTGs
• Installation personnel
• Commissioning personnel

The Global Leader in Managing Construction Risk ™

 Vessels
• Often the single most costly items
• Even so, they may or not be on the critical path of the project: typically MPs are
less complex than TPs so the MP installation vessel may not be on the critical path,
although it is likely to be one of the more expensive if not the most expensive
vessel
• Typically the charter is on a time (e.g. BIMCO) or the owner is prepared to
undertake work on a lump sum basis.
• Waiting on Weather (“WoW”) considerations. The vessel owner will typically seek
to exclude weather downtime risk usually on the basis that alternative work could
otherwise be done in more southerly seas
• Mobilisation/demobilisation costs. Because of the specialist nature of the
installation works these are typically expensive and represent substantial
components of the overall costs. What is the nature of these costs: are they time
related? How is responsibility for their cost to be allocated as between the
parties?
• DPRs and their relevance to claims: records for controversial issue purposes

The Global Leader in Managing Construction Risk ™

 Logistical issues

• Port facilities: e.g. congestion.

• Preparation of lay down areas or work areas.
• Inspection facilities: e.g. specialist rollers or turning equipment
• Attendances: e.g. craneage: how will the loading in and loading out of
goods be done? Availability of and downtime for crawler cranes.
• Permits: e.g. sandblasting and spray painting.
• Specialist scaffolding and enclosures
• Diving: keeping them busy
• UXOs

The Global Leader in Managing Construction Risk ™

The Global Leader in Managing Construction Risk ™