## [[Risk Action Plan]] ### [[Risk Description|Description]] Due to disagreements between [[BUILT RIGHT CONSTRUCTION]] and [[Star Road Engineering]] regarding the scope and cost of design progression work beyond the original contract basis, there is a [[threat]] that claims for additional compensation may be submitted, which may lead to cost increases, strained project relationships, and potential schedule impacts from unresolved disputes. > [!abstract]- Risk Analysis — Key Assumptions & Current Controls (click to expand) > > **Key Assumptions:** > - Contract defines design progression as included in the Lump Sum Price; [[BUILT RIGHT CONSTRUCTION]] contends certain design changes exceed normal progression and constitute compensable change order work. > - Design progression scope is subject to interpretation — what constitutes ordinary development of the design vs. a change to the contract basis is a recurring source of contractor claims on design-build projects. > - [[BUILT RIGHT CONSTRUCTION]]'s $340,000 claim is based on 14 discrete design items; [[Luigi]]'s analysis suggests the claim is partially meritorious. > > **Current Controls:** Monthly cost tracking; design change documentation protocol per [[EXHIBIT D - COSTING SUMMARY AND PAYMENT TERMS]]; weekly design coordination meetings between [[Yoshi]] and [[Bowser]]. > [!abstract]- Sources of Information & References (click to expand) > > **Sources:** > - [[EXHIBIT D - COSTING SUMMARY AND PAYMENT TERMS]] — payment terms and cost tracking framework > - [[EXHIBIT G - GLOSSARY]] — definitions relevant to design progression scope and lump sum price > > **Attachments:** > - None on file ### [[Risk Mitigation Strategy]] **REDUCE** — Minimize the financial exposure and prevent escalation through rigorous documentation and structured negotiation. - Detailed documentation of all design changes with categorization (progression vs. compensable change). Each design item is being reviewed against the original contract drawings and specifications to establish the baseline against which progression is measured. - Weekly design coordination meetings between [[Yoshi]] and [[Star Road Engineering]] to align on design direction before changes are implemented — preventing disputed items from accumulating. - [[Luigi]] conducting independent analysis of all disputed items to provide [[Mario]] with a defensible position for negotiation. Analysis benchmarks each item against industry standards for design progression on design-build contracts. - Settlement framework to be proposed that separates the clearly compensable items ($185,000) from the disputed items ($120,000), allowing partial resolution while negotiating the remainder. ### Possible Additional Actions - Engage contract counsel to review the design progression scope language in [[EXHIBIT D - COSTING SUMMARY AND PAYMENT TERMS]] and [[EXHIBIT G - GLOSSARY]] for ambiguities that could support [[BUILT RIGHT CONSTRUCTION]]'s position. - Request [[Princess Peach]] mediate the remaining 5 disputed items ($120,000) if direct negotiation with [[Bowser]] reaches impasse. - Document all verbal design direction from [[Star Road Engineering]] to [[Yoshi]] in writing within 24 hours to prevent future "design direction vs. design change" disputes. ### Comments & Recommendations This risk has materialized into a formal claim. The partial merit of [[BUILT RIGHT CONSTRUCTION]]'s position (6 of 14 items totaling $185,000 appear legitimate per [[Luigi]]'s analysis) makes early settlement preferable to formal dispute resolution. Allowing this to escalate to arbitration would expose [[BUILT RIGHT CONSTRUCTION]] to litigation costs and schedule disruption disproportionate to the amounts in dispute. The 5 remaining items ($120,000) represent the contested territory where the contract language on design progression scope is least clear. A negotiated resolution splitting these items — even if suboptimal for [[BUILT RIGHT CONSTRUCTION]] — may be the most cost-effective outcome given litigation risk. ### Status - [ ] [[2026-02-19]] [[Luigi]] completed independent analysis of 14 disputed design items. 6 items ($185,000) appear to qualify as legitimate design changes beyond normal progression. 8 items ($155,000) fall within contractual design progression scope. Analysis shared with [[Princess Peach]] for owner review. ^status-2026-02-19 - 🟡 **Claim Analysis:** Of the 14 items, the 6 compensable items relate to structural reinforcement requirements identified after geotechnical investigation — not contemplated in the original design basis. - 📎 **Documentation:** Written analysis delivered to [[Princess Peach]] via [[Mario]] on [[2026-02-19]]. - [ ] [[2026-03-19]] [[Mario]] and [[Bowser]] met to discuss resolution framework. [[BUILT RIGHT CONSTRUCTION]] willing to withdraw 3 of the 8 disputed items. Remaining 5 items ($120,000) still under negotiation. ^status-2026-03-19 - ⚠️ **Negotiation:** Progress made — total disputed amount reduced from $340,000 to ~$305,000 after withdrawal of 3 items. Remaining gap is $120,000 on 5 contested items. - ⏳ **[[Contractor Design Progression Disputes - Settlement Proposal|Settlement Proposal]]:** [[Luigi]] to prepare settlement recommendation for the remaining 5 items by April 2. > [!abstract]- Status History (click to expand) > > - [x] [[2025-10-10]] Risk identified. [[Bowser]] raised concerns about scope of structural design changes at progress meeting. [[Mario]] directed [[Luigi]] to begin tracking disputed items separately. ^status-2025-10-10 > - [x] [[2025-12-15]] [[BUILT RIGHT CONSTRUCTION]] submitted formal notice of claim for $340,000 in design progression costs. [[Mario]] acknowledged receipt and requested supporting documentation. [[Luigi]] assigned to lead independent analysis. ^status-2025-12-15