The opinion of the court was delivered by: Judge Simpson
Submitted: December 26, 2008
BEFORE: HONORABLE BERNARD L. McGINLEY, Judge, HONORABLE ROBERT SIMPSON, Judge, HONORABLE JAMES R. KELLEY, Senior Judge.
B. D-476 Contract Schedule 6
C. Knorr's Modification to the D-476 Schedule 7
D. Missing or Incorrect Grades/Elevations in PennDOT's Plans 10
E. Suspension of Work Due to Slope Instability 11
F. PennDOT's Changes to the Roadway Shoulder from Stations 1820 to 1844 15
G. PennDOT's Delay in Supplying Missing Roadway Grades/ Elevations in the Vicinity of the Box Culvert 18
H. "Semi-Final Inspection" 20
I. Knorr's Self-Inflicted Problems 20
J. Knorr's Claimed Damages 21
K. Knorr's Delay Damages 22
L. Knorr's Claimed Disruption-Related Damages 24
N. PennDOT's Counterclaim for Construction Engineering Liquidated Damages 27
B. Apportionment of Delay 34
C. Calculation of Period of Delay 40
1. Knorr's Paving Equipment 41
2. Delay in Providing Box Culvert Grades 42
D. Statute of Limitations 46
E. Construction Engineering Liquidated Damages 52
1. November 8 to December 7 57
A. MPT Disruption Claim 63
B. Computation of Delay Damages 66
C. Extended Home Office Overhead 68
1. Section 110.03(d)(7) 68
This matter presents cross-appeals of the Pennsylvania Department of Transportation (PennDOT) and Wayne Knorr, Inc. (Knorr) from a decision of the Board of Claims (Board). The parties' claims primarily arise out of various delays and disruptions encountered during a road improvement project on a state road in Armstrong County, Pennsylvania. The parties raise numerous contentions. Upon review, we affirm.
This case arises out of a contract between Knorr, a Pennsylvania highway contractor, and PennDOT for renovation of a 2.033 mile stretch of State Road 28 (SR-28) in Armstrong County between the boroughs of Distant and South Bethlehem.
In the spring of 1999, PennDOT solicited bids for the project. Knorr was the successful bidder for the contract. The primary elements of the project involved: addition of a third, truck-climbing lane to the existing two-lane road; renovation and widening of the roadway shoulder along SR-28's northbound lane; and, demolition and replacement of an existing bridge. The contract called for Knorr to complete the project within 368 days of PennDOT's Notice to Proceed for a base contract price of $3,963,884.40.
After a brief initial delay (which is not at issue here), PennDOT issued the Notice to Proceed on August 12, 1999, resulting in a planned contract completion date of August 13, 2000. As a result of various delays and disruptions, however, Knorr did not complete the project as scheduled. Rather, the project was considered substantially complete as of December 7, 2000. Knorr continued to perform a small amount of contract and force-account*fn1 work intermittently until August 2001.
Knorr subsequently filed a complaint with the Board seeking $825,273, plus interest for alleged acts and omissions by PennDOT that caused Knorr to incur delay and disruption damages. Hearings ensued before the Board.
Following 10 days of hearings, about 2100 pages of testimony, and more than 200 exhibits, the Board issued a comprehensive opinion, consisting of 305 findings of fact, 85 conclusions of law and more than 50 pages of discussion. A summary of the Board's findings follows.
Knorr is a corporation with offices at 7925 Old Berwick Road, Bloomsburg, Pennsylvania. During the period relevant to this litigation, James Knorr, son of Wayne Knorr, served as president of Wayne Knorr, Inc.
On August 3, 1999, PennDOT and Knorr executed Contract No. 101131 (Contract), for the rehabilitation and expansion of a roughly two-mile portion of SR-28. The project involved the expansion, renovation and repaving of the roadway between Stations*fn2 1776 and 1883.
Moving generally in a southerly-to-northerly direction, the proposed roadway renovation and lane expansion was to begin at Station 1776, near the Borough of Distant, and terminate in the Borough of South Bethlehem at Station 1883. At Station 1780, the plans called for new construction of a third lane on the west side of the roadway to be used as a truck-climbing lane. The proposed three-lane stretch of roadway continued for approximately 1.12 miles, where the highway transitioned from three lanes back to two lanes.
The area to be widened to create the truck-climbing lane was located primarily on the west side of the project, adjacent to the southbound travel lane, but it also included a portion of the east side of the project between Stations 1780 and 1813. On the side opposite the new truck-climbing lane and elsewhere along the project, the plans called for renovation of the roadway shoulder. Renovation of the roadway shoulder was to be done, for the most part, by removing (milling) the top of the shoulder material and replacing it with four inches of paving material. In some areas, however, the plans called for "full-depth widening" of the roadway shoulder (excavating down 19 inches and laying new sub-base and paving materials). On the side opposite the new truck-climbing lane between Stations 1820 and 1834, the plans called for renovation of the shoulder by the four-inch milling method. On the side opposite the truck-climbing lane between Stations 1834 and 1844, the plans called for a combination of the four-inch milling method and full-depth widening of the shoulder.
In addition, slightly north of the new truck-climbing lane, between Stations 1851 and 1852, SR-28 crosses a small creek called Bostonia Run. The Contract plans called for demolition and replacement of the existing bridge over Bostonia Run, with construction to be phased in such a way as to allow simultaneous installation of new bridging while maintaining one travel lane for traffic at all times. The new bridging was to be fabricated from matching "box culvert" sections.
The Contract plans provided for the roadway renovation work to be constructed in accordance with PennDOT's project specifications, plans and schedule. Among other things, the Contract utilized PennDOT's "1994 Publication 408 Specifications" (408 Specifications). Board of Claims Op., 7/25/08, Finding of Fact (F.F.) No. 6.
B. D-476 Contract Schedule
As to the schedule to be used for construction activities on the project, Section 108.03 of the 408 Specifications, relating to performance and progress on a construction project, states, in relevant part, "if no schedule is presented for approval [by the contractor] at the preconstruction meeting, the schedule contained in the contract will be the official schedule for all purposes .." F.F. No. 16. Included in PennDOT's bid package for the project was a Form "D-476 Distribution of Contract Time," which is a "straight line diagram of construction sequence and activities." F.F. No. 15.
On July 30, 1999, representatives of PennDOT and Knorr attended a preconstruction meeting, at which a PennDOT representative noted Knorr would submit a critical-path-method (CPM) schedule. About a week later, however, John Fry, PennDOT's Engineering District 10-0 Assistant Engineer for Construction, issued the Notice to Proceed and indicated Knorr "outlined [its] method of procedure and agreed that it [would] be carried on in accordance with our Schedule of Operations on Form D-476 .." F.F. No. 18.
Although Knorr may have indicated it would submit a CPM schedule, both Fry and Sarah Cunningham, PennDOT's Assistant Construction Engineer, explained it was not uncommon on PennDOT projects for a contractor to use the D-476 form as the official schedule of construction activities. Fry also testified Knorr had the right to use the D-476 schedule as the official schedule. During her testimony, Cunningham confirmed that during the preconstruction meeting Knorr indicated it would conduct its sequence of construction basically in accordance with the D-476 schedule. Cunningham had no objection to that arrangement. In fact, no PennDOT official involved on the project objected to Knorr's use of the D-476 schedule as the official project schedule, and no PennDOT official ever requested a CPM schedule in writing. In addition, Knorr never submitted a CPM schedule to PennDOT for approval.
In short, Section 108.03 of the 408 Specifications and PennDOT officials managing the SR-28 project contemplated the D-476 schedule would become the official schedule for the project if the contractor did not provide an alternative schedule approved by PennDOT. Because Knorr did not provide an alternative schedule, the D-476 schedule became the official project schedule.
C. Knorr's Modification to the D-476 Schedule
Knorr's principal scope of work on the project was the addition of the truck-climbing lane, which required Knorr to excavate large amounts of dirt from the slope on the west, uphill side of the project.
The D-476 schedule provided excavation work on the project was to begin November 1, 1999 and be completed by April 23, 2000, while drainage work was to begin December 5, 1999 and finish May 14, 2000. The D-476 schedule also showed sub-base and paving work was to begin on April 10, 2000 and conclude on July 29, 2000.
Although PennDOT's D-476 schedule showed Knorr working throughout the winter of 1999-2000, the only major construction activity shown during this time was the above-referenced drainage work. PennDOT's D-476 schedule also showed Knorr was to install the box culvert replacement across Bostonia Run between August and November 1999.
However, Section 401.3 of the 408 Specifications contained a general prohibition on roadway paving between October 31 and April 1. The D-476 schedule showed Knorr's work on the box culvert replacement, which required at least some paving adjacent to the box culvert, would extend beyond this general paving prohibition.
The Board found Knorr had reasonable and significant concerns that the box culvert replacement could not be completed before PennDOT's prohibition on winter paving. Among these concerns was the fact that working through the winter would greatly decrease efficiency and raise safety and practicality issues. Knorr did not believe it could safely run equipment on the hillside during winter weather and did not deem it safe to redirect traffic or place flagmen on the roadway during winter. Because of these concerns, which the Board found were reasonable and well-founded, Knorr instituted a "winter shutdown" from approximately December 15, 1999 to March 15, 2000, which roughly corresponded to the seasonal prohibition against winter paving in the 408 Specifications.
In order to compensate for not working over the winter months and to address the practical inability to replace the box culvert before winter, yet maintain the overall progress required by the D-476 schedule, Knorr significantly accelerated its bulk excavation and drainage work in the summer and fall of 1999. Knorr commenced excavation work on August 23, 1999 and commenced drainage work on August 31, 1999. By accelerating its bulk excavation and drainage work, and largely completing those tasks before temporarily ceasing work on the project around December 15, 1999, Knorr had ample time to replace the box culvert and perform its sub-base and paving work in a timely manner per the D-476 schedule when it remobilized on the project around March 15, 2000.
By March 15, 2000, Knorr completed the preparations necessary to commence most of its sub-base and paving work, which the D-476 schedule anticipated beginning around April 10. Despite its readiness to replace the box culvert and begin sub-base and paving activities so as to maintain the D-476 schedule, Knorr alleged it was delayed in its work from this point until substantial completion of the project due to numerous acts and omissions by PennDOT. These acts and omissions included: design conflicts in the nature of numerous missing or incorrect grades/elevations in PennDOT's plans (cross sections and profiles); suspension of work in the area of the truck-climbing lane because of slope instability as well as PennDOT's extended delay in addressing this problem; PennDOT's delay in providing redesign specifications for a portion of the roadway shoulder; PennDOT's delay in supplying missing roadway grades in the vicinity of the box culvert bridge; and, PennDOT's failure to timely schedule a semi-final inspection on the project.
Because of certain extra work performed on the project, PennDOT granted Knorr a 45-work-day Contract extension (61 calendar days) in August 2000, resulting in a revised Contract completion date of October 13, 2000.
D. Missing or Incorrect Grades/Elevations in PennDOT's Plans
In late-December 1999, Knorr's then-project foreman wrote to Sarah Cunningham to inform her of certain problems on the project. Among other things, the letter stated "the profile grade point does not match the cross section plotting" in several portions of the project. F.F. No. 86. The letter also stated "there are no super elevations given on the plans" for two other portions of the project. Id. The letter noted Knorr "enclosed a copy of the cross sections of the existing pavement on the entire project [taken] on December 7, 1999." Id. The purpose of the letter was to request PennDOT resolve certain design issues during the winter shutdown so when Knorr returned to work in March 2000 it could begin widening the roadway and paving the areas where the missing or inconsistent elevation information was needed.
In March 2000, Knorr received "revised cross-slopes" from PennDOT. About a month later, Knorr received revised roadway "grades and elevations." Upon receiving the revised grades/elevations, Knorr could not immediately begin sub-base and paving work; rather, it needed to recompute the roadway profiles and cross-sections based on this revised information.
When Knorr received the revised elevations, personnel from Knorr and PennDOT completed the necessary recomputation of roadway grades/elevations and revised cross sections and paving commenced on April 13, 2000. The Board determined the reasons for the delay in supplying the revised elevations from the date of Knorr's request were never explained, and the evidence presented by PennDOT did not provide an explanation.
The Board stated the missing and incorrect elevations on PennDOT's initial plans were a material cause of delay and disruption to Knorr's sub-base and paving work. The Board stated PennDOT delayed and disrupted Knorr's progress in its sub-base and paving operations because PennDOT did not timely supply the necessary elevations. The Board determined this delay and disruption occurred from March 15 until April 4, 2000, the date on which Knorr received a sufficient portion of the revised grades/elevations to commence this work. By failing to supply the necessary roadway grades/elevations in a timely manner, PennDOT failed to provide plans adequate to construct the roadway in a timely manner, failed to take steps necessary to ensure progress on the project, and actively interfered with Knorr's sub-base and paving operations.
E. Suspension of Work Due to Slope Instability
A large part of the Contract work involved creation of a third lane for truck-climbing, which was to run uphill and southward beginning at Station 1837 and ending at Station 1813 (approximately 2400 feet). In order to create this truck-climbing lane, Knorr had to excavate a substantial portion of the hillside between the two stations adjacent to the southbound travel lane. This truck-climbing lane was also to have along its entire western length an eight-foot wide "drop zone" along the bottom of the slope to catch any rock or other material that might slide down the excavated slope.
In September 1999, Knorr notified PennDOT that a part of the slope created when Knorr excavated the hillside appeared unstable. Sometime after commencement of the winter shutdown, two areas of the slope immediately west of the truck-climbing lane failed. Although these areas were limited in length, a "fault line" that reflected an initial cracking of earth along the slope ran through a substantial portion of the 2400-foot length of the newly cut slope. While awaiting direction as to how PennDOT wished to address the failures and apparent slope instability, Knorr ceased work on the 2400-foot stretch along the southbound truck-climbing lane over concern that further slope failures and future corrective work would ruin any sub-base and paving work laid down to create the new truck-climbing lane before the slope problem was addressed.
In March 2000, PennDOT personnel were on-site to examine the slope failure. A PennDOT representative recommended Knorr dig the loose material from the slide areas and place geotextile material and rock in the excavated area. For the remaining length of the slope, the representative recommended Knorr wait until an area of the slope failed and then fix it in the same manner.
Knorr disagreed with this proposed solution. Instead, Knorr wanted PennDOT to either lay back parts of the slope to a lesser angle of incline or to re-excavate and place rock along the length of the slope to prevent further sliding of soil and rock down the slope. This was due in part to the fault-line crack that appeared through most of the slope cut. Shortly thereafter, PennDOT officials and Knorr personnel attended a project progress meeting. At the meeting, Sarah Cunningham instructed Knorr to repair only the failed areas of the slope substantially as per the method recommended by PennDOT's representative.
In mid-April 2000, PennDOT representatives were again on-site to review the slope failure problem. The representatives informed Knorr the slope would be cut back to the cross-section limits, the loose material would be removed, an 18-inch combination drain and piping would be installed, and, after the affected areas of the slope drained, a final solution would be proposed.
In early-May 2000, PennDOT personnel directed Knorr to perform slope repairs from Station 1826 through 1834 on a force-account basis. Between May 3 and 8, 2000, Knorr performed slope repair #1, between Stations 1826 and 1827.
In order to perform slope repair #2, PennDOT first had to obtain permission to enter land managed by the Pennsylvania Game Commission, which it received. PennDOT then made additional revisions to its slope repair protocol for slope repair #2. In late-June 2000, Knorr performed slope repair #2, from Station 1827 to Station 1827 as directed by PennDOT. In late-August 2000, PennDOT inspected and approved slope repair #2. About two weeks later, PennDOT inspected and approved slope repair #1.
The Board determined Knorr's concern that the magnitude of failure along the 2400-foot length of newly cut slope would be much more extensive than the portion that actually failed was reasonable. The Board determined the distinct possibility existed that Knorr would have had to bring heavy equipment over newly paved portions of the roadway to repair areas of the slope that experienced failure even with the presence of the eight-foot wide drop zone had Knorr proceeded with its sub-base and paving work along the truck-climbing lane. The Board stated such repair efforts would have significantly damaged any newly laid sub-base or paving in the truck-climbing lane. The Board also determined Knorr's position on this issue, that it wanted the slope problems resolved before continuing sub-base and paving work for the truck-climbing lane, and its suspension of work until repairs were completed, was reasonable.
The Board stated PennDOT's initial failure to provide plans that did not result in slope instability and its lengthy consideration of the slope-instability issue were the material cause of the delay and disruption to Knorr's sub-base and paving operations along the 2400-foot stretch of the truck-climbing lane. As a result, Knorr's sub-base and paving work could not reasonably begin along this stretch until late-June 2000.
According to the D-476 schedule, by the time sub-base work actually began in the area of the truck-climbing lane from Station 1813 to Station 1837, the work was well behind schedule and only about a month remained to complete all paving on the project. By failing to timely address the slope instability and slope repair problems, PennDOT failed to provide adequate plans and direction regarding design specifications necessary to construct the roadway in a timely manner, failed to take steps necessary to ensure progress of the project and actively interfered with Knorr's sub-base and paving operations. The Board determined that even if Knorr was compensated for the actual labor and material used to perform the slope repairs on a force-account basis, it was not compensated for the time lost waiting for PennDOT to finally address the slope repair and instability problem and to direct Knorr how PennDOT wished it to perform the extra work of actually doing the slope repairs.
F. PennDOT's Changes to the Roadway Shoulder from Stations 1820 to 1844
On April 13, 2000, after returning to the project following the winter shutdown, and after resolving the missing roadway grades/elevations issue, Knorr attempted to begin paving operations on the portions of roadway relatively unaffected by the slope instability. Between Stations 1820 to 1834, the Contract required Knorr to resurface two to four feet of the roadway shoulder by milling it down and replacing it with approximately four inches of blacktop. However, PennDOT subsequently received a report of roadway shoulder and/or temporary pavement cracking along a 77-foot segment at Stations 1783 to 1784. This area was milled and overlaid with the four inches of blacktop in the same manner as Knorr was to mill and overlay the shoulder at Stations 1820 to 1834. Because of the failing pavement between Stations 1783 and 1784, PennDOT decided to change the method for widening the roadway shoulder between Stations 1820 to 1834.
In May 2000, Knorr was advised PennDOT would change its method for widening the roadway shoulder between Stations 1820 to 1834. However, Knorr was not advised of the details of the new specifications for widening the shoulder between Stations 1820 and 1834 until they were approved by PennDOT on May 9, 2000. The change required Knorr to perform "full-depth" widening of the shoulder.
Even on May 9, 2000, Knorr did not receive written plans from PennDOT for the changes to the roadway shoulder widening from Stations 1820 to 1834. Instead, Knorr was directed to build it as it had the other full depth widening shoulder areas. As a result, Knorr was delayed and disrupted in its work between Stations 1820 to 1834 from May 1 until May 9, 2000.
Knorr claimed the new specifications by which it was required to widen the roadway shoulder from Station 1820 to Station 1834 required it to cut back into the existing roadway further than the four inch milling specification required. According to Knorr, this meant there was now only 18 to 19 feet of roadway width between Stations 1820 to 1834, and, as a result, Knorr did not have two 10-foot travel lanes to allow unrestricted traffic to travel through Stations 1820 to 1834 during shoulder reconstruction. Thus, Knorr had flagmen directing traffic along this stretch 24 hours-a-day during the revised shoulder renovation work. However, the original four-inch milling method for renovating the roadway shoulder from Stations 1820 to 1834 would also have intruded into the adjacent travel lane during milling and would also have required flagmen to direct traffic through the area during the shoulder reconstruction. In addition, Knorr completed the entire revised widening procedure in about 44 hours. As a result, the Board determined PennDOT's change to the roadway shoulder reconstruction from Stations 1820 to 1834, in and of itself, did not materially increase Knorr's costs for flagmen or maintenance and protection of traffic (MPT).
Between Stations 1834 to 1844, the original Contract plans required Knorr to perform some full-depth widening of the roadway shoulder by approximately two to three feet. For Stations 1834 to 1844, however, PennDOT also changed the original plan by expanding the already planned full-depth shoulder widening by an additional five to six feet. PennDOT's decision to expand the width of this roadway shoulder required PennDOT to furnish new grades/elevations before Knorr could proceed with this work. However, Knorr did not receive a final plan for the widening of the roadway shoulder until July 19, 2000. Thus, Knorr was delayed and disrupted in this roadway shoulder work from May 1 to July 19, 2000.
The Board determined that by changing the original plans for roadway shoulder renovation in these areas, and by failing to provide timely direction or plans adequate to construct the changes to the roadway shoulder, PennDOT failed to provide adequate plans to construct the roadway in a timely manner and actively interfered with Knorr's shoulder renovation work. However, the Board determined PennDOT's change to the original plans for roadway shoulder renovation between Stations 1820 and 1844 did not materially alter Knorr's ability to maintain two travel lanes for traffic and did not cause Knorr to incur a material increase in MPT costs.
G. PennDOT's Delay in Supplying Missing Roadway Grades/Elevations in the Vicinity of the Box Culvert
The Contract plans also called for demolition and replacement of an existing bridge across Bostonia Run between Stations 1851 and 1852. The new bridge was to be fabricated from matching pre-cast concrete box culvert sections and was to be installed in two phases so as to allow one travel lane for traffic at all times.
The D-476 schedule showed work on Phase I of the box culvert was to occur between August 24 and September 24, 1999, while work on Phase II was to occur between October 1 and November 7, 1999. During late-summer 1999, however, Knorr decided to delay replacement of the box culvert until spring 2000 and instituted a suspension of work on the project during the winter shutdown.
On March 15, 2000, Knorr re-mobilized and commenced work on the box culvert bridge. Work on Phase II could not commence until the Phase I half of the bridge was demolished and the Phase I box culvert sections were installed. After shifting traffic over to the Phase II traffic lane and removing the Phase I lane portion of the bridge, Knorr constructed the concrete footers for the Phase I box segments in late-March 2000. Knorr set the Phase I lane box in place approximately two weeks later.
Sometime shortly before Knorr set the Phase I box culvert section in place, however, Knorr employees apparently found incorrect elevations for a portion of the roadway running up to and around this box culvert. The problems with the roadway grades/elevations persisted through April 2000.
On May 17, 2000, Knorr finished backfilling the site of the Phase I box culvert section. Because of uncertainty regarding grades/elevation around the box culvert, however, Knorr performed no further work on or around the box culvert until it received revised grades and elevations for the area from Stations 1845 to 1854.
The parties presented conflicting evidence as to when Knorr received the revised grades and elevations. Ultimately, the Board determined PennDOT did not provide Knorr with the final corrected grades/elevations needed to construct the roadway adjacent to the box culvert until July 10, 2000. Within a day or two of receiving the corrected roadway grades/elevations, Knorr commenced the work necessary to begin paving the Phase I lane of the box culvert, which progressed through August 2, 2000, at which time Knorr paved the Phase I lane portion of the box culvert bridge. On August 7, Knorr switched traffic over to the Phase I travel lane and commenced work on Phase II of the box culvert. Knorr completed Phase II of the box culvert in the late summer of 2000.
The Board determined PennDOT caused the delays and disruptions to the paving operations on the roadway around the box culvert because of its failure to supply adequate roadway grades/elevations to construct the roadway in a timely manner. The Board stated this failure, which delayed and disrupted Knorr's sub-base and paving work persisted from April 11 until July 10, 2000. The Board determined that by failing to supply the necessary roadway grades/elevations in a timely manner, PennDOT failed to provide plans adequate to construct the roadway in a timely manner, failed to take steps necessary to progress the project and actively interfered with Knorr's sub-base and paving operations around the box culvert.
H. "Semi-Final Inspection"
On November 8, 2000, Knorr requested PennDOT conduct a semi-final inspection of its work on the project. By letter dated November 17, 2000, PennDOT notified Knorr a semi-final inspection meeting would occur on December 7, 2000. At the semi-final inspection meeting, a list of items was produced that Knorr had to complete to finish the project. This list included work to be completed under the original Contract terms as well as extra work to be paid by force-account payments. Nevertheless, work on the project was considered substantially complete as of the December 7, 2000 inspection.
Knorr asserted PennDOT delayed completion of the project by delaying the inspection it requested on November 8 until December 7, 2000. However, the Board concluded the evidence was insufficient to show PennDOT unduly delayed the ...