In the complex world of construction claims, particularly those involving lost productivity, identifying the cause is often simpler than quantifying its financial impact. A recent federal court case in Montana highlights the challenges and requirements for expert testimony in such disputes. The case, Exxon Mobil Corporation v. AECOM Energy, delves into the intricacies of the Modified Total Cost Method and its application in a dispute over extended turnaround work at an oil refinery.

The Challenge of Quantifying Lost Productivity

Lost productivity claims arise when unforeseen circumstances or mismanagement lead to increased costs on construction projects. While pinpointing the cause can be relatively straightforward, calculating the exact financial impact poses significant challenges. This process often necessitates the involvement of experts who can provide reliable testimony to support these claims. In this context, the Modified Total Cost Method emerges as a critical tool for quantifying damages, offering a more nuanced approach compared to its unmodified counterpart.

The total cost method assumes that the contractor is owed the difference between actual costs and the bid amount. However, this method has been criticized due to concerns about bidding inaccuracies and performance inefficiencies. To address these issues, the modified version adjusts for proof requirements, ensuring that only justified additional costs are attributed to the responsible party. The court requires safeguards to ensure that the burden of excess expenditures falls on the appropriate party. In the modified method, the contractor must still prove four elements but with less stringent criteria, using the total cost method as a starting point and making adjustments based on various factors.

Judicial Scrutiny of Expert Testimony

The owner challenged the contractor's damage experts, arguing that they failed to meet the necessary criteria for proving the reasonableness of both the bid and the actual costs. The experts defended their methodology by referencing internal analyses showing favorable comparisons between the contractor's bid and other bidders, as well as the owner's own estimates. They also consulted with the contractor’s estimator team to gain deeper insights into the bid's foundation.

To address the reasonableness of actual costs, the experts made several adjustments to exclude costs not attributable to the owner. For instance, they subtracted hours submitted as cost-reimbursable, removed hours for workers who did not meet direct labor thresholds, and adjusted for weld quality deficiencies. These meticulous adjustments aimed to present a fair representation of the increased costs directly resulting from the owner's actions. The court's scrutiny underscores the importance of robust evidence and detailed analysis in supporting lost productivity claims, ensuring that only justified expenses are considered.