Construction Dispute at Uranium Tailings Cell

Civil Construction Expert

Holloway worked as the Owner’s construction expert in this construction dispute at Uranium tailings cell. The project involved the construction of a 50-acre tailings cell at a mill in Utah. As summarized below, the Arbiter denied the Contractor’s claims and awarded our Owner-client a judgment of $3M in arbitration.

Case Abstract

The civil engineer prepared the Invitation to Bid and Contract documents; administered the permitting, bid evaluation and contract award processes; and was the Owner’s Construction Manager.  The process of soliciting and evaluating bids from the various construction contractors began in 2006. This culminated with the award of the construction contract in October 2009 for the lump sum of $4,339,350.00. Approximately one million cubic yards of rock and sand materials had to be blasted, excavated and hauled from the site.

The Contractor received the Notice to Proceed (NTP) on October 28, 2009 and site construction activities were underway by early November 2009. The Contractor’s construction operations, costs, efficiency and schedule were adversely impacted from the outset. These issues included the Contractor’s late mobilization and an equipment spread that varied from the Contractor’s bid spread.  By January 2010, the Contractor’s Principal suggested that, “The Owner should seriously consider taking over the project.” The Owner insisted that the Contractor complete its work, but the Owner agreed to pay the Contractor in advance, or “pay ahead.” This was to increase the Contractor’s cash flow and otherwise provide financial assistance to the Contractor. And, in February 2010, the Engineer prepared a change order. The Owner paid the Contractor $416,478 for costs for all adverse weather delay costs.

Nevertheless, on March 9, 2010, as the Contractor’s progress continued to fall further behind the baseline schedule. The Engineer reminded the Contractor that liquidated damages provisions of $4,000/day would be enforced. The Contractor immediately began to issue a wave of Change Order Requests, and schedule updates/time extension requests.  The Engineer and the Owner approved legitimate and well supported requests and Illegitimate and unsupported requests were denied.

Contractor had retained counsel

By as early as April 2010, the Contractor retained counsel, who became engaged in an exchange of claim-related letters with the Owner and the Engineer. From May to July 2010, the Contractor invoiced the Owner for rock excavation quantities that exceeded the quantities that formed the basis of the fixed price contract. On August 4, 2010, following the Engineer’s denial of the Contractor’s requests to be paid for additional rock quantities, the Contractor issued a termination notice, walked off, liened the job and terminated its work.

The Owner had overpaid the Contractor at that point. Nevertheless, the Owner was also forced to pay the amounts not paid by the Contractor to its subcontractors and to pay other contractors to complete the work at significant additional cost.  As a result of the Contractor’s breaches of contract, the Owner filed suit seeking to recover both the over payments and costs of completion from the Contractor.

The case was arbitrated before a single AAA arbiter. Holloway performed construction damages and liability, schedule delay and productivity analysis and testified in direct examination. The Arbiter ultimately ruled that the actual causes were recorded in the Project Record as follows:

Causes of the Contractor’s extra costs

1. Failure to include costs in the contract to cover risks identified pre-contract.
2. Failure to adequately price the full scope of work in the contract price.
3. Failure to foresee the cost of hauling the last 18% of rock out of pocket.
4. Failed attempt to blast to one foot above neatline (No bottom fill costs in contract)
5. Failed attempt to blast and not cause flyrock >6″ in fill matl – blasting costs.
6. Deciding to blast rather than scrape the site, rip the soil/rock, and blast what little rock may have been left with no overburden in-place.
7. Blasting under berm toes.
8. Over building slopes.
9. Not building a major direct haul route to the NW rock stock from the outset, rather than staying with the plated roads until May (i.e., the sides of a right triangle are ~35% longer than hypotenuse)
10. Not building a ramp in SW cell floor corner up to the upper SW areas, thereby avoiding the SW/NW/SW fill hauls.
11. Costs for bringing areas of overblast back within spec, e.g., prepared subgrade fill (>8″ depth), undocumented fill.
12. Failure to provide full crews daily.
13. Idle and Under-utilized equipment, i.e., Unskilled, inefficient equipment operators.
14. Failure to use Cut-To-Fill methods and eliminate scrapers from in-cell stockpile to cell fill.
15. Haul cost pricing error costs identified in Kerr’s affidavit.
16. Failure to drill/blast west side.
17. Delay in layout and drill (or rip) of available west slope cell.
18. Non-payable rock & soil hauls, i.e., plated roads, in-cell stockpiles, etc.
19. Extra equipment costs due to Late and no equipment demob.
20. Overwatering fills.
21. Stockpiling soil on the cell floor bottom thereby causing double-handle of finish soils, unpaid haul loads and extra costs.