Babble On, Babylon

The Prime Minister of this fair island toured some of the project recently, although I am not sure exactly how much of it he saw from the seat of his helicopter as he rotored his way to his weekend retreat at Tryall. The point is that his people let the project’s people know he was coming to see the project. Upon hearing this, they immediately started milling about, moving equipment hither and yon, and generally making the sort of mess only possible when you have absolutely no clue. A lot of the activity just looks busy, and has little to do with any actual forward progress of the Works.

At least there is something going on. But first, the cynical recapitulation.

Once upon a time there was a large international contractor based in Korea. In an effort to expand his global operations, he pursued a couple of large infrastructure projects in the Greater Antilles. As is often the case when breaking into new territories, this contractor offered steep discounts to perform the work (often called, “buying the job”). Unknown to him was the fact that his local economy would collapse shortly after he signed the contract and that he would take a bath (often called, “taking it in the shorts”) on the foreign exchange market.

Unfortunately saddled with money problems, labor problems, utility problems, lack of site availability, his total lack of project and equipment management skills, and a quality control consultant not about to take anything less than what is required by the Contract, the poor contractor collapsed in a heap, having completed some thirty percent of the work in 125% of the contract period.

For reasons still not fully understood, the Client refused to sack the contractor, electing instead to keep him on board as coordinator and equipment supplier to the subcontractors that the Client was about to hire.

Now, on the surface, highway construction is a fairly simple process: build a culvert or two, cover them with dirt, pave the planet, add some paint and you have a road. The important thing is to perform the work in the correct order. Obviously, placing pavement prior to moving dirt is foolishness.

Obvious to you and me, maybe.

Anyway, the Client cut the unfinished product into smaller portions, hoping that these would be easily digested by various local contractors. The remaining Works were divided into several subcontracts, first the culverts, then the earthwork, then the pavement, and then the paint - seven disciplines in all. To add one more level of confusion, he also divided the work into three longitudinal sections, for a total of twenty-one contracts. These he let independently and then gave to The World’s Worst Contractor to coordinate. In addition, the Client wanted all of the work to be performed simultaneously and completed within fifteen months.

Of course, this new contracting scheme will cost considerably more than the Korean’s bid, so large money needs to come from somewhere to pay for it. In light of this, the Client has engaged in some very creative financing to defer the payments - each subcontractor has arranged for an independent bank loan to construct the Works. The applications for payment are presented to the various banks, who then write one check to the subcontractor, one check to the government for a down payment on future taxes, and one check to the government for the contract retainage. The government will then buy these loans,... later.

As is increasingly common here, the banks will end up owning more government paper. Sure, the government has promised to pay off these loans at a favorable interest rate, but I would certainly balk at the level of risk associated in making a loan to anyone who spends over eighty percent of his total revenues on debt servicing.

And of course, it comes as no surprise that each of the subcontractors envisioned his portion of the work as being free and clear of all obstacles, be they utilities, property acquisition issues, or other subcontractors. Now that they are on site, each subcontractor has to deal with the stark reality that the prime contractor has no idea as to how to properly coordinate everybody, to make sure that they do not get in each other’s way but mostly to ensure that downtime, delays, and excess overheads are minimized.

That would be a lot to ask from the World’s Worst Contractor.

Our unheeded suggestion from last year was that Contractor be given the boot, and that the project be retendered based upon a few longitudinal sections. This way, the few lucky subcontractors could manage their own piece of the work, from bottom to top, and not have to deal with inept scheduling from on high.

In the words of Sir Jagger, “You can’t always get what you want.”

Ultimately, the twenty-one packages were awarded to eight different contractors, so I will have only twenty-two payment applications to process each month,... and nine sets of shop drawings, coordination meetings nine times as long, and nine times the faces and names and conversations to remember. Actually, the number today is only seven, as two subcontractors have yet to get their funding approved and have yet to start any work. Any guesses as to which body of work those subcontractors were to build? Remember how paint followed pavement? Remember how pavement followed dirtworks?

Well, despite any idea the Client may have to the contrary, culverts still need to be constructed prior to earthworks, and the culvert contracts have yet to be awarded. Until the culvert subcontractors get on board, there really is no schedule, as no major and continuous portion of the Works can be complete without the construction of the necessary and required drainage improvements.

Shock? Dismay? Surprise? Not hardly.

What is refreshing is that some of the newly contracted local contractors are clever capitalists who actually want to complete the work and make a profit while they are at it. Of course, the specification means nothing to them, but that is why we are here. The money on this job will not be in the work, however, but in the delay claims, and we will have plenty. After a thorough review, I will recommend many of them, then the government will take advantage of the contractor’s bank loan to pay for them, and then pay off the loans,... later.

Grasshoppers on Ant World. But,... after months of nothing,... there is now something going on. Read More......