The Forensic Estimator as Expert Witness
Posted: July 14, 2016 | Estimating
By Robert H. Pratt, FCPE
In the construction industry there are many types of professionals.
• Design professionals – including architects and engineers – with expertise in disciplines such as civil, geotechnical, structural, mechanical, electrical, acoustical, and an entire host of other fields.
• Estimating construction professionals, who quantify and develop an estimate for the cost of constructing what the design professionals have envisioned and defined through their drawings, specifications and, in recent years, digital models.
• Other construction professionals, including project schedulers, project managers, supervisors, and skilled trade workers.
It has been my experience that the vast majority of construction professionals strive to produce a project that they can all be proud of once it is completed. The reality is, “There is no such thing as a perfect set of plans,” and likewise, “There is no such thing as perfect execution of a perfect set of plans.”
So, when imperfection rears its ugly head – either in the design or the execution of a project – what happens? That obviously depends on the degree of imperfection. Minor flaws in a design or in work performed in the field can be remedied by simple adjustments or cosmetic repairs. There are, however, times when the magnitude of a design or construction mistake is quite substantial, expensive, and/or impossible to correct satisfactorily.
When problem projects arise with significant design errors, construction errors, or even unanticipated conditions resulting in significant cost or schedule overruns, another type of professional enters the scene. You probably guessed it: attorneys.
Attorneys who focus their practices primarily in the construction industry are usually engaged by the parties involved in a project that has serious design, construction, cost, or schedule issues. These attorneys are often members of the American College of Construction Lawyers and/or the Construction Law Forum of the American Bar Association. As soon as the attorneys are hired, it seems that another type of professional becomes necessary – forensic technical liability experts and forensic damages experts. Thus begins the process that culminates in what has been dubbed “the battle of the experts.”
One specialized type of forensic expert is the professional who is responsible for assimilating the opinions of all the other technical liability experts. He must assess the relevant opinions regarding causation of the various identified problems and determine an appropriate allocation of fault to one or more of the parties. He accomplishes this based on the technical information provided by, in some cases, a multitude of liability experts.
This type of professional must also be familiar with the various applicable contracts and subcontract agreements, and the terms that may govern the various parties’ entitlement to compensation. In the process, based on the opinions of the technical experts and other relevant information, this professional is called upon to quantify the scope of the issues or elements involved in the various claims and allegations and proposed solutions for remedying the various problems.
The professional who prepares such an analysis is called a Forensic Estimator or Damages Expert. The term “forensic” according to Webster, simply means “that which is suitable for judicature or debate.” Therefore, the Forensic Estimator is responsible for preparing an analysis and presentation suitable for a judge, jury, arbitrator, mediator, hearing officer, or any other party charged with making a decision or recommendation in a case.
A typical cost estimator for a general contractor (or a subcontractor) performs takeoffs of the work shown in the plans and specifications; procures prices for materials, equipment, subcontracts, and other costs; and then incorporates this information into an estimate of the costs that becomes part of a competitive or negotiated bid.
The Forensic Estimator does this and more. He must rely on the opinions of the other technical experts and on relevant dispute resolution language within the applicable contracts. Furthermore, he will frequently have to prepare a written report or narrative. This report elaborates upon and explains the rationale and reasoning underlying each element of cost included in the Forensic Estimate, and goes along with any arithmetical computation of the reasonable cost of the line items involved in the various claims and allegations.
Most disputes tend to be resolved through negotiation or mediation once the Forensic Experts on both sides have presented their findings in the form of a written report. Nevertheless, there are also many disputes that are not resolved early on, and the attorneys for each side end up taking depositions of both fact witnesses and expert witnesses. At this point in a case, many of the disputed issues become clearer and some are resolved and dismissed. If there are still unresolved issues, a case may end up going to arbitration or court.
In a trial setting, the Forensic Estimator or Damages Expert is usually the last witness for each party presenting evidence. This is because all of the fact witnesses and technical liability experts need to present their portion of the evidence before an arbitrator, judge, or jury can make any sense out of the summaries and conclusions that the Forensic Estimator has derived. It is important for Forensic Estimators to be articulate, both verbally and in writing. The Forensic Estimator needs to know and understand all of the relevant facts involved in a case in order to fulfill his essential role to the trier(s)-of-fact. He is not permitted to usurp the authority of the tribunal, but strives to give only those findings and conclusions that are beyond the tribunal’s expertise, in order to facilitate its proper decision.
In my experience, it is essential that Forensic Estimators study and become familiar with the terms contained in the AIA A201 General Conditions document, and the terms and conditions set forth in ConsensusDocs contracts such as the CD200, which is the ConsensusDocs’ Stipulated-Sum form of agreement between an Owner and General Contractor.
The ConsensusDocs family of contracts is about to celebrate ten years in existence. One notable fact regarding these documents is that over 40 industry organizations have had a seat at the table where the language contained in them has been drafted, modified, and updated to meet the changing environment in the construction industry. The goal was to incorporate language promoting “best practices” in the allocation of risk to the various contracting parties, and in key areas such as payment terms and the responsibilities and relationships of the parties regarding such topics as Building Information Modeling (BIM).
There is a distinct correlation between good contracts, best practices, clear understandings of the scope and quality of work required in a project, and the phenomenon of fewer significant problems … resulting in fewer disputes requiring forensic experts and resolution by third-party.
At one point, I thought that the advent of the concept of “Partnering” was going to bring an end to contract disputes, and eliminate the need for Forensic Estimators and Damages Experts altogether. However, there still seems to be many projects involved in some form of contractual distress or dispute. It is unlikely that, in my lifetime, the need for Forensic Estimators and other technical forensic experts in the construction industry will abate. But that doesn’t mean that all construction industry professionals shouldn’t strive for that elusive level of perfection, and perhaps, someday, we will have no need for forensic analysis.
About the author: Robert H. Pratt, FCPE, is currently chairman of the ConsensusDocs’ Content Advisory Council of the Coalition for the more than 40 endorsing organizations. He is the representative for the American Society of Professional Estimators. He and his firm are also active in the AGC, ABC, ASA, and the Construction Law Forum of the American Bar Association.