After the construction phase of a large diameter heavy wall pipe was completed but before the warranty period ended, a large pipeline company was required to remediate a problem due to “workmanship” as identified by the owner/operator. On the company’s dime, they had to track back into the location and fix the issue. This required tapping into the contingency funds set aside by the company for such risks.
However, although the work was confined to environmental remediation, the cost to track back into the area was high. Because the line was in service, mats were required to be laid for the heavy equipment to travel on.
Workers, equipment and permits were needed to allow for the transportation, staging, and use of heavy equipment along with the identification and selection of workers.
This triggered the requirements that those working on the line be drug tested, have operator qualifications for working on a hotline, and coordinate with the company for appropriate representation. Rework of cross terrain work is a headache.
In this article, I will cover different ideas on mitigation.
Warranty clauses
Warranty clauses in the contract need to be assessed by legal counsel to reduce the risks of inadvertent assumptions of risks.
In today’s commercial environment, owners and operators are seeking ways to displace risks associated with construction projects. The high propensity for construction projects to exceed time or budget are motivators for owners to extend warranty periods and to shift the risks.
The extent of the warranty period both by time and effort should be factored in as a risk and have an associated contingency amount allocated.
How to mitigate warranty work should be on the mind of every project superintendent. In pipeline construction, it is not enough to have a weld that passes nondestructive examination (NDE) and nondestructive testing (NDT). Often times, weld x-rays or ultrasound documentation is not available to the contractor and is kept by the owner/operator.
As a result, the NDT in the form of hydrostatic or gas testing is the one method to ensure that the weld is effective.
Ovality and wall thickness anomalies revealed by the smart pig runs are another method which the construction firm can use to ensure that its work meets fit for duty. But there is a third method that can provide evidence of contractual compliance and fit for use.
Quality Assurance
Quality Assurance is an area that is fundamentally different than quality control. Although both have quality as a base word, quality control is the measurement of work and quality assurance is the adherence to stated procedures. There is a nuance here that should be considered.
If a welding inspector is testing to ensure that the interpass temperature is between two points or the preheat temperature meets a minimum amount, it stands to reason that the measurements are meeting the stated requirements. However, Quality Assurance looks at the procedures that surround the way the process is performed and is oftentimes outside of the inspector’s scope.
Two tools are available to strengthen the meets contractual requirements and due diligence in construction activities: Quality Audits and Inspection Test Plans.
Quality Audits
Quality Audits are performed by an individual whose focuses is on the procedure that governs the work. This individual typically does not carry testing devices or measurement tools as is often the case for an inspector. What the individual is adept at is the written specifications, procedures, and quality plans created in the pre-construction phase.
Through auditing of the crews, the auditor is providing evidence that the crew is working within the required procedure, is knowledgeable about the procedure, and often times has access to the procedure. Although often used, the adage that “we did it that way on the other project” is of no consolation and can lead to issues. If there is a deviation, the auditor will typically create a nonconformance document. This document is a good thing.
Nonconformance documents are tools the organization can use to improve the construction process, demonstrate that remediation of the nonconforming part was completed, and provides evidence to support the company.
Nonconformances are sent to the owner/operator for their review and notification. Sending the nonconformance to the company’s quality group builds trust, competency, and a paper trail.
Inspection Test Plans
The second type of document that supports the company’s position that the work was completed within specification is the Inspection Test Plan. Under ISO 9001:2015 section 8.5.1 Control of production and service provision, the organization has to monitor with appropriate control points, manufacturing or service processes.
Inspection test plans typically contain hold points, gates if you will, that allow for the holding of the process, witnessing of the process, or measurement of the process.
We often see this type of methodology in welding where the inspector has to view the interpass temperature before the other passes are started.
ITPs should be considered and implemented by the company in concert with the customer. Creating Inspection Test Plans with the customer provides for a collaborative working session where both parties agree on the outcome.
Having evidence during the construction phase that the work was performed in accordance with and within the stated procedures, specifications, and contractual requirements reduces the rework risk to the company.
Jobsight360 Construction Software
Over the last several years, the period of warranty work covering construction activities has increased in some market spaces. It is not uncommon to see warranty work periods in the 24 month time period.
As a result, the construction company must be diligent during the construction phase to ensure that methods, processes, and people are in place to mitigate and reduce the risk that warranty work will be performed. Using tools such as Inspection Test Plans, and Quality Audits, can reduce the chances that warranty work will be invoked by the owner/operator. More importantly, the company will have a paper trail available to defend against the invocation of the warranty clause.
With Jobsight360, you will have access to a host of tools to help you manage your risks, create and use inspection test plans, and quality audits.
Additionally, the comprehensive reporting tools will allow you to use the nonconformances and ITPs recorded in the system as a learning/teaching opportunity during the onboarding phase of your next construction project. Using the lessons learned from the previous project will create institutional knowledge that can go a long way in creating great owner/operator relationships.
For a good technical article concerning construction contract warranties, see Pecklaw.com’s article here.