Example A delayanddisruption claim

Cooper (1980) has described how a computer simulation based on influence diagrams was used to resolve a $500 million shipbuilder claim against the US Navy. By using the simulation to diagnose the causes of cost and schedule overruns on two multibillion dollar shipbuilding programmes, Ingalls Shipbuilding (a division of Litton Industries Inc.) quantified the costs of disruption stemming from US Navy-responsible delays and design changes. In the settlement reached in June 1978, Ingalls received a net increase in income from the US Navy of $447 million. It was the first time the US Navy had given such a substantial consideration to a delay-and-disruption-claim.

The need to appreciate fully the implications of knock-on effects in a project is clear, especially for activities late in an overall project sequence that may be considerably delayed, with possible contractual implications of great importance. As Example 8.5 illustrates, this process of appreciation can be greatly facilitated by appropriate diagramming of activity-source-response structures and their interdependencies.

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