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1997-23 Adopting Findings of Fact and Conclusions of Law in the Matter of MKB Constructors, J.V. vs. Kodiak Island Borough. (Peterson Elementary Remodel).KODIAK ISLAND BOROUGH RESOLUTION NO. 97 -23 A RESOLUTION ADOPTING FINDINGS OF FACT AND CONCLUSIONS OF LAW WHEREAS, the Kodiak Island Borough, as owner of Peterson Elementary School, and MKB Constructors, J.V. entered into a contract for renovation of Peterson Elementary School; and WHEREAS, certain disputes developed between the parties culminating in the filing of a lawsuit by MKB Constructors, J.V. against the Kodiak Island Borough in the United States District Court for the District of Alaska, Case No. A95 -0301 CV (JKS); and WHEREAS, Judge James K. Singleton, Jr. ordered the parties to comply with the dispute resolution provisions of their contract, which are set forth in section 00706 of the contract; and WHEREAS, MKB Constructors, J.V. filed an appeal; and Introduced by: Mayor Selby Requested by: Borough Attorney Drafted: Borough Attorney Introduced: 06/10/97 Adopted: 06/10/97 WHEREAS, the Kodiak Island Borough Assembly, through its Hearing Examiner Stanton Phillip Beck, held a hearing on April 14, 15, and 16, 1997 at which both the Kodiak Island Borough and MKB Constructors, J.V. submitted testimony and documentary evidence; and WHEREAS, the Hearing Examiner has propounded proposed findings of fact and conclusions of law which were furnished to both parties; and WHEREAS, the Kodiak Island Borough and MKB Constructors, J.V. have had the opportunity to present arguments regarding the proposed findings of fact and conclusions of law to the full Assembly; NOW, THEREFORE, BE IT RESOLVED BY THE ASSEMBLY OF THE KODIAK ISLAND BOROUGH that: Section 1: The Kodiak Island Borough Assembly adopts the Findings of Fact and Conclusions of Law of Stanton Phillip Beck as its Findings of Fact and Conclusions of Law. Kodiak Island Borough, Alaska Resolution No. 97 -23 Page 1 of 2 Section 2: This resolution is final agency action pursuant to Alaska Rule of Appellate Procedure 602(a)(2). Pursuant to said Rule, appeal may be taken to the superior court withing 30 days from the date on which this resolution is mailed or otherwise distributed to the appellant. ATTEST: ADOPTED BY THE ASSEMBLY OF THE KODIAK ISLAND BOROUGH THIS TENTH DAY OF JUNE, 1997 k.)e7 rvz 7 /< ,c.z Donna F. Smith, CMC /AAE, Borough Clerk KODIAK ISLAND BOROUGH e me M. Selby, y , Boro Robin Heinrichs, Presiding Officer Kodiak Island Borough, Alaska Resolution No. 97 -23 Page 2 of 2 LANE POWELL SPEARS LUBERSKY LLP Law Offices 550 W. 7th Ave. Suite 1650 Anchorage. AK 99501 -3568 ;07)277- -9511 JAMIN, EBELL, BOLGER & GENTRY A Professional Corporation f.ir 1 5 1997 SEATTLE, WASHiM APPEAL TO THE KODIAK ISLAND BOROUGH ASSEMBLY In the Matter of the Claim of ) MKB CONSTRUCTORS, J.V., ) FINDINGS OF FACT AND v. ) CONCLUSIONS OF LAW KODIAK ISLAND BOROUGH ) INTRODUCTION On December 20, 1993, the Kodiak Island Borough (hereafter "KIB ") and MKB Constructors (hereafter "MKB ") entered into a construction contract for the renovation and expansion of Peterson Elementary School. A notice to proceed was issued on the same authorizing MKB to begin work on or before January 10, 1994. Exh. 2 . ) Construction commenced on or about January 14, 1994. day, (KIB MKB assigned Mr. Aronson as site superintendent, with the intention of replacing him with Mr. Parker in May. Mr. Aronson remained on site until late March and Mr. Parker arrived on site on May 17. Mr. Clark was acting site superintendent for the period between Mr. Aronson's departure and Mr. Parker's arrival. The original Contract Substantial Completion date was August 10, 1994. The Contract work was not completed by this date. FINDINGS OF FACT AND CONCLUSIONS OF LAW - 1 LPSEA J:\DOI \DSMCODIAK \10343DSI.PLD LANE POWELL SPEARS LUBERSKY LLP Law Offices 550 W. 7th Ave. Suite 1650 Anchorage, AK 99501 -3568 )7)277 -9511 Rather, the classroom areas of the project were completed by August 29 and the balance of the project was completed some time later. (MKB Exh. 10.) On October 31, 1994 MKB submitted Change Proposals A through M to KIB. KIB considered the Change Proposals and responded on December 7, 1994. MKB was not satisfied with KIB's response and, on April 4, 1995, reasserted Change Proposals A through D and I through M. In addition, MKB presented new Change Proposals N through S. On April 10, 1995, MKB made an oral presentation supporting its Change Proposals to KIB and understood KIB would respond to the Change Proposals by May 10, 1995. KIB did not respond. MKB filed suit in the United States District Court For the District of Alaska at Anchorage on August 4, 1995. On June 19, 1996, KIB proposed a partial settlement to MKB. KIB offered to pay MKB $253,363.84 (retention owed, approved Change Proposals, and contract balance owed), plus interest. Further, KIB proposed that the remaining claims, as presented to the District Court, not be prejudiced. MKB rejected KIB's proposal. Subsequently, the District Court ordered MKB to exhaust its remedies under Contract by presenting its claims to the Kodiak Island Borough Assembly (the "Assembly "). Hearings before the Assembly were held on April 14, 15, and 16, 1997. Both parties submitted testimony and documentary evidence. The record of the Assembly hearing therefore consists of the witness testimony, briefing, KIB Exhibits 1 through 27, MKB FINDINGS OF FACT AND CONCLUSIONS OF LAW - 2 LPSEA /: \DGI \DSI\KODIAK \10343DS1.PLD LANE POWELL SPEARS LUBERSKY LLP Law O 550 W 7th Ave. Suite 1650 Anchorage. AK 99501 -3568 07)277-9511 Exhibits 1 through 25, two exhibit notebooks presented by MK'B, a claim notebook presented by MKB, a change order proposal notebook presented by MKB, the project manual presented by KIB, and a book of photographs presented by KIB. This record forms the basis for the following findings of fact and conclusions of law. Pursuant to the Contract, decisions of this Assembly "shall be final and conclusive unless determined by a court of competent jurisdiction to have been fraudulent, or capricious, or arbitrary, or so grossly erroneous as necessary to imply bad faith." Contract, § 00706.A. Accordingly, if either party elects to further pursue its claims, it must do so in a court of law, absent mutual agreement of the parties to the contrary. SCOPE OF HEARING In its Pre - Hearing Brief, KIB claims that the scope of the Assembly's hearing is limited to those issues presented in MKB's Notice of Appeal dated October 7, 1996. Accordingly, KIB asserts that this appeal includes only the following issues: - late submittal turnaround - parapet height - structural steel framing - Change Proposal I (8" waterline) - Change Proposal M (temporary power) - Change Proposal N (concrete demolition) - Change Proposal 0 (additional bracing) - Change Proposal P (removal and reinstallation of new window) Accordingly, KIB implicitly contends that the following issues cannot be heard by the Assembly: - Change Proposal A (roof modifications) - Change Proposal B (fuel tank slab) - Change Proposal C (acoustical ceilings) - Change Proposal D (TV and phone Lines) FINDINGS OF FACT AND CONCLUSIONS OF LAW - 3 LPSEA 1: \DG1 \DSRKODIAK \10343DS1.PLD LANE POWELL SPEARS LUBERSKY LLP Law Offices 550 W 7th Ave. Suite 1650 Anchorage, AK 99501 -3568 )7)277 -9511 - Change Proposal J (water service to boiler) - Change Proposal K (tar covered exterior gym wall) - Change Proposal L (steel door frames) - Change Proposal Q (acceleration) - Change Proposal R (subcontractor damages) - Change Proposal S (preparation of change orders) However, it appears that Change Proposal A is part of MKB's structural steel framing and parapet claims, and Change Proposals L and Q are part of MKB's late submittal turnaround claim. Hence, KIB is challenging MKB's right to raise Change Proposals B, C^ ',D, J, K, R, and S. As expressed in the contract, The decision of the Contracting Officer shall be final and conclusive unless, within 30 days from the receipt of such copy, the Contractor mails or otherwise furnishes to the Kodiak Island Borough Assembly a written appeal. The Notice of Appeal shall include specific exceptions to the Contracting Officer's Decision, including specific provisions of the contract relied upon. General assertions that the Contracting Officer's Decision is contrary to law or, to fact, are not sufficient. Contract, § 00706.A. Thus, failure to provide timely notice or identification of specific issues in the Notice of Appeal can be grounds for refusing to hear those issues. The Contract's 30 -day notice provision protects KIB from stale claims and provides the Contractor with express guidance and notice of its rights. Similarly, the requirement for including all issues in the Notice of Appeal protects KIB from "surprise" claims assures that KIB and the Assembly can adequately prepare to consider the issues presented. The District Court waived the 30 day limit for notifying the Assembly of issues to be appealed. FINDINGS OF FACT AND CONCLUSIONS OF LAW - 4 LPSEA J: \DGI \DSIU(ODIAK \l0343DSI.PLD and LANE POWELL SPEARS LUBERSKY LLP Law Offices 550 W. 7th Ave. Suite 1650 Anchorage. AK 99501 -3568 07)277 -9511 When considering the evidence presented at the hearing, the pre - hearing briefs, and the proposed findings of fact and conclusions of law, it is reasonable to conclude that consideration of Change Proposals B, C, D, J, K, R, and S will not prejudice KIB through surprise. These change proposals were presented to and considered by KIB long before presentation to the Assembly. The record reflects that KIB and its experts have thoroughly analyzed and prepared positions regarding these change proposals. Consequently, and in keeping with the intent of the District Court's Order, the Assembly will consider the testimony and evidence presented on all Change Proposals (A through D; J through S) presented by MKB, and render decisions related thereto. ISSUES CONCEDED BY KIB In its opening statement, KIB conceded that the following payments are due to MKB: Contract Retention $155,068.84 Unpaid Contract Balance $32,416.00 Change'Order Concessions $65,875.00 Prejudgment interest - January 1, 1995 through June 19, 1996. Therefore, the issues and dollar amounts (amounts claimed by MKB (MKB Exh. 25) less amount paid and /or conceded by KIB) to be considered by the Assembly, include: Change Proposal A (roof modifications) $15,194 Change Proposal B (fuel tank slab) $0 Change Proposal C (acoustical ceilings) $1,023 Change Proposal D (TV and phone Lines) $1,670 Change Proposal I (Water Main in USGS Area) $9,207 Change Proposal J (Water Service - Boiler) $0 Change Proposal K (tar covered exterior gym wall) $4,302 Change Proposal L (steel door frames expediting) $3,712 Change Proposal M (Temporary Power Hook -up) $2,400 Change Proposal N (Concrete Demolition) $19,317 FINDINGS OF FACT AND CONCLUSIONS OF LAW - 5 LPSEA J: \DGI\DSI\KODIAK \I0343DS1.PLD LANE POWELL SPEARS LUBERSKY LLP Law Offices 550 W. 7th Ave. Suite 1650 Anchorage. AK 99501 -3568 07)277 -9511 Change Proposal 0 (Bracing Existing Structure) $3,426 Change Proposal P (Remove and Reinstall New Window) $745 Change Proposal Q (acceleration and delay) $251,127 Change Proposal R (subcontractor damages) $126,490 Change Proposal S (preparation of change orders) $300,000 SUBTOTAL $738,613 Prejudgment interest (depending on total award) Finally, KIB originally claimed offsets totalling $51,401.20 for work required, but not performed, under the Contract. However, the evidence presented to the Assembly is insufficient to support the award of this offset. CHANGE PROPOSALS A THROUGH S A. Change Proposal A - Roof Modifications (MKB Total Claim: $45,999; KIB Paid and /or Conceded: $30, Amount Contested: $15,194; Awarded: $0) Change Proposal A combines a number of claims regarding roof steel design errors. KIB concedes that MKB is entitled to compensation as requested, less amounts attributable to the rework of prefabricated parapet soffits. KIB contends that the ordering of the soffits without verification of the drawing dimensions was unreasonable and contrary to the terms of the Contract. MKB asserts that it was not required to verify drawing dimensions In Change Proposal A MKB also attributes 8 days of project delay to the parapet wall redesign and 29 project delay days to design errors in the new structural steel connections at the Lobby. KIB contends that the design errors did not cause delay in the critical path of the project schedule. "Unlike design professionals, project owners owe purely contractual duties as to the accuracy of designs. When provi New FINDINGS OF FACT AND CONCLUSIONS OF LAW - 6 LPSEA 1: \DGI \DSI\KODIAK \I0343DSI.PLD 805; ding plans and specifications to the contractor, an owner makes an LANE POWELL SPEARS LUBERSKY LLP Law Offices 550 W. 7th Ave. Suite 1650 Anchorage. AK 99501 -3568 907)277 -9511 implied warranty that they will be sufficient for their particular purpose." State v. Transamerica Premier Ins. Co., 856 P.2d 7660 772 (Alaska 1993); citing Fairbanks N. Star Borough v. Kandik Cont: s. Inc. & Assocs., 795 P.2d 793, 797 (Alaska 1990). "If defective specifications cause the contractor to incur extra costs in performing the contract, then the contractor may recover these costs that may result from the breach of implied warranty. Transamerica, 856 P.2d at 772. To prove breach of warranty, a claimant must show: (1) defective or inadequate plans or specifications; (2) reasonable reliance on the plans; (3) actual disruption or delay; and (4) actual damages. See Kandik, 795 P.2d at 797. 1. Parapet Soffit Rework MKB ordered pre- fabricated parapet soffits in February 1994, using the dimensions provided on the drawings. KIB argues that 1IKB's reliance on the drawings was not reasonable because the Contract required MKB to verify all existing conditions prior to construction: General contractor and all subcontractors should verify all existing conditions prior to commencement of construction. Some project requirements are shown diagrammatically and reference existing construction. Drawing G -1, Note 1; The highest existing roof, parapet, metal roof edge . elevation, shall determine the elevation of all other roof, parapet, metal roof edge conditions around the perimeter of existing and new construction. Some existing roof parapet conditions may require no change, other existing conditions may require removal and storage of existing metal roof edge and raising parapet with new . wood blocking and reinstallation of existing metal roof FINDINGS OF FACT AND CONCLUSIONS OF LAW - 7 LPSEA t: \DGI \DSI \KODIAK \I0343DS1.PLD LANE POWELL SPEARS LUBERSKY LLP Law Offices 550 W. 7th Ave. Suite 1650 Anchorage. AK 99501 - 3568 707)277 -9511 edge, plus extending vertical inside leg on back side of existing metal roof edge to cover wood blocking. Drawing A -10, Note 4. These drawing notes do not require that the contractor verify all dimensions provided on the drawings. However, the notes can be reasonably interpreted as informing the contractor of the perils of remodeling work and the need to check existing conditions at least in critical areas or areas where the drawings present some uncertainty. The parapet soffits attach to the existing building structure. Mr. Sundstrom testified that he ordered the parapet soffit s in February 1994 without field verifying the dimensions of the existing structures. Further, drawing A10, detailing the parapet soffits, does not fully dimension the soffits. This lack of complete dimensions, coupled with the drawing notes referenced above, should have cautioned MKB that some verification was required. However, MKB failed to take caution and, as testified by Mr. Sundstrom, "scaled" the drawings to determine the complete soffit dimensions. This Assembly finds that scaling drawings to obtain fabrication information on a remodel project is not reasonable. Even where dimensions are shown, they are never exact in previously remodeled conditions such as those present on this Project. The reasonable course of action on a remodel project, and especially in light of Note 4 on drawing A -10, would have been to either *ield FINDINGS OF FACT AND CONCLUSIONS OF LAW - 8 LPSEA 1: \DG11DSIVCODIAK \10343DS1.PLD LANE POWELL SPEARS LUBERSKY LLP Law Offices 550 W. 7th Ave. Suite 1650 Anchorage. AK 99501 -3568 07)277-9511 verify or request clarification from the architect prior to fabrication of the soffits. The Assembly finds that the cost of reworking the parapet soffits is attributable to MKB's failure to verify existing field conditions and the soffit dimensions prior to ordering the prefabricated soffits. Accordingly, the Assembly finds that MI4B is not entitled to the $15,194 contested in Change Proposal A. amount is attributed to the soffit rework by Mr. Heather and amount was not contested by MKB. 2. Lobby Steel Design Error MKB claims that the design error regarding the steel eleva of MKB for the costs of refabricating the roof steel implic as a result of its reliance on the drawings. See Kandik, 795 3.) FINDINGS OF FACT AND CONCLUSIONS OF LAW - 9 LPSEA 1: \DGI\DSIUCODIAK110343DSI.PLD This t he tion and connection between the new lobby and existing library caused a 29 day delay in the project schedule. It is undisputed that the steel elevations presented on the drawings were erroneous. (MKB Exh. 3.) Further, KKB's compensation i t: ly concedes that MKB reasonably relied on the plans and was disrupted P. 2d at 797. Therefore, it must be determined whether the design error actually disrupted or delayed MKB. Id. The testimony and exhibits provided to the Assembly identify a number of roof steel design problems. The first involves the connection between the new addition roof steel and the gymnasium. This problem was first identified by MKB on May 10, 1994. A workable solution was provided by GDM on the same day. (MKB ,Exh. LANE POWELL SPEARS LUBERSKY LLP Law O 550 W 7th Ave. Suite 1650 Anchorage. AK 99501 -3568 907)277 -9511 The second roof steel design errors affected the structural connection at Entry 146 and 101. The record does not suppcErt a conclusion that any project delay is associated with correctipn of these errors. The entry parapets do not appear to be on the project critical path. Accordingly, the Assembly finds that no project delay resulted from these design errors. The final roof steel error involved the connection between the new and existing structures at the library. On June 1, MKB notified GDM that the steel connection detailed on the drawings was Proposal A.) GDM did not provide a June 21. (Id.) The new design was of its receipt. (Project Photographs; unworkable. (MKB Change workable solution until implemented within days Testimony of R. Parker.) The project photographs indicate that installation of structural steel in the new addition proceeded throughout June, progressing not far behind block wall installation from the side of the gymnasium to the lobby and library areas. This actual progress, viewed in light of MKB's construction schedule and the project photographs, is relevant to the amount of impact that may have resulted from the roof steel design errors. The MKB project schedule indicates that the block walls for the new lobby were to be completed by April 7, 1994. If the block wall had been on schedule, the roof steel design error would have been discovered before early May. Instead, the error was discovered on or about June 1. At the time the design error* was discovered, block wall installation, an activity necessarily FINDINGS OF FACT AND CONCLUSIONS OF LAW - 10 LPSEA1:\DGI \DSI \!CODIAKUO34 DSI.PLD roof east LANE POW ELL SPEARS LUBERSKY LLP Law Offices 550 W. 711: Ave. Suite 1650 Anchorage, AK 99501 -3568 107)277- -9511 preceding installation of the lobby steel, was approximatel days behind schedule. (Project Photographs; MKB's February schedule; MKB Exh. 10.) As discussed in Change Proposal Q, below, the block wall delay is attributable to MKB, not KIB. Further, project schedule indicates that the roof structural steel scheduled for installation from April 8 -14. The block walls, however, were not available for the start of structural Steel erection until late May or early June. (Project Photographs.) The record does not present sufficient information to precisely segregate the effects of the roof steel elevation errors and the block wall delay. However, the project photographs indicate the roof structural steel installation was ongoin in June, but had not progressed to the effected area until after 17. Although this lack of progress may be attributable, in part, to the discovery of the error on or about June 1, 1994, there is no credible evidence to support such a finding. The final solution to the connection problem was provided on or about June 21, installation of the affected roof steel immediately thereafter. While the Assembly believes that the project was already delayed at this time by the block wall construction and other MKB deficiencies, the record does not adequately allow for segregation of the effects; consequently, the Assembly finds that 8 days of delay are attributable to KIB. This delay starts on June 17, time that the steel erector was ready to install the affected steel, and runs through June 25, providing 4 days after the FINDINGS OF FACT AND CONCLUSIONS OF LAW - 11 LPSEA 1: \DGI\DSI\KODIAK \10343DSI.PLD 54 1994 the was June and the LANE POWELL SPEARS LUBERSKY LLP Law O 550 W. 7th Ave. Suite 1650 Anchorage, AK 99501 -3568 )07)277 -9511 resolution for steel delivery and fabrication. (MKB Change Proposal A.) B. Change Proposal B - Fuel Tank Slab (MKB Claim: $882; KIB Paid and /or Conceded: $882; Amount Contested: $0; Awarded: $0) KIB agreed that this work was a Contract change and has conceded that payment is due in the amount claimed by MKB. C. Change Proposal C - Acoustical Ceilings (MKB Claim: $128,138; KIB Paid and /or Conceded: $127,11 ; Amount Contested: $1,023; Awarded: $1,023) Contract changes regarding the acoustical ceilings were performed on a time and material basis. KIB has already paid $121,932 of the $131,453 claimed by MKB. KIB concede$ an additional $5,183, leaving $1,023 in dispute. The dispute appears to lie in possible invoicing discrepancies identified by Mr. Heather and /or Mr. Hobgood. However, the record lacks evidence substantiating KIB's claims that the invoices are inaccurate. The Assembly therefore finds that KIB has failed to rebut the expanses claimed and, accordingly, awards the $1,023 contested. D. Change Proposal D - Extend TV and Phone Lines (MKB Claim: $10,985; KIB Paid and /or conceded: $9,$15 Amount Contested: $1,670; Awarded: $1,670) In change proposal D, MKB claims costs incurred for work added to the contract by KIB after MKB bid the project. KIB concedes $9,315 of the $10,985 claimed, leaving $1,670 in dispute. The dispute appears to lie in invoicing discrepancies. Mr. Heather testified that the costs invoiced for digging the trench associated with the cables is $1,670 too high. Mr. Sundstrom, on the ether hand, testified regarding the necessity for the trenching. FINDINGS OF FACT AND CONCLUSIONS OF LAW - 12 LPSEA JAW I \ DS! \KODIAK \10343DSI.PLD The LANE POWELL SPEARS LUBERSKY LLP Law Offices 550 W. 7th Ave. Suite 1650 Anchorage, AK 99501 -3568 V7)277-9511 record lacks credible evidence substantiating KIB's claims tha invoices are inaccurate and /or that portions of the work should not have been undertaken. The Assembly therefore finds that KIB has failed to rebut the expenses claimed and, accordingly, awards the $1,670 contested. I. Change Proposal I - Water Main Work in the "USCG Ar (MKB Claim: $10,043; KIB Paid and /or Conceded: $837 Amount Contested: $9,206; Awarded: $0) In Change Proposal I, first presented to KIB on October 1994, MKB requests additional compensation for installation o the 8" water main located outside the school building in the USCG 4Irea. "Unlike design professionals, project owners owe pi.re: contractual duties as to the accuracy of designs. When providing plans and specifications to the contractor, an owner makes an implied warranty that they will be sufficient for their particular purpose." State v. Transamerica Premier Ins. Co., 856 P.2d 766„ 772 (Alaska 1993); citing Fairbanks N. Star Borough v. Kandik Contr., Inc. & Assocs., 795 P.2d 793, 797 (Alaska 1990). "If defective specifications cause the contractor to incur extra costs in performing the contract, then the contractor may recover these costs that may result from the breach of Transamerica, 856 P.2d at 772. To prove breach of warranty, a claimant defective or inadequate plans or specifications; reliance on the plans; (3) actual disruption or actual damages. See Kandik, 795 P.2d at 797. FINDINGS OF FACT AND CONCLUSIONS OF LAW - 13 LPSEA 1: \DG1 \DSI\KODIAK110343DS1.PLD the ea" 31, implied warranty. must show: (1) (2) reasonable delay; and (4) LANE POWELL SPEARS LUBERSKY LLP Law Offices 550 W. 7th Ave. Suite 1650 Anchorage. AK 99501 -3568 07)277 -9511 MKB and KIB provided the Assembly with opposing interpretations of Civil drawings C2, C3, C4, and Mechanical drawing M4. MKB asserts that the civil drawings clearly show that the water main was not within the scope of the Contract. asserts that drawing C -2 clearly defines the Coast Guard's scope of work, placing the water main within the Contract scope of work. KIB further relies on Mechanical drawing M4, whereupon it is noted: "New 8" Fire Protection Water Line See Site Plan." Although we find that the clarity of the drawings in the scope of work in the USCG Area may be in question, KIB's position compelling. Moreover, and in any event, Assembly finds that MKB's conduct during construction dispositive on whether this item is compensable. The issue of whether the 8" water main was included in Blondin regarding the water main, MKB expressly interpreted hearing. FINDINGS OF FACT AND CONCLUSIONS OF LAW - 14 LPSEA J:1DGIlDSI\XODIAK \10343DSI.PLD KIB defiling we find the is the contract scope of work was raised to MKB by Blondin sometime before May 3, 1994. On May 3, 1994, in response to an inquiry from drawings to include the water main within the Contract scope of work. (KIB Exhibit 6.) MKB's interpretation of the drawings, as presented to Blondin, is remarkably similar to KIB's interpretation of the drawings. Further, while it might be assumed that MKB's letter to Blondin was merely provided to protect MKB's interests in the event that KIB disagreed with Blondin's drawing interpretation, MKB made no attempt to explain the content of its letter at the t: he LANE POWELL SPEARS LUBERSKY LLP Law Offices 550 W. 7th Ave. Suite 1650 Anchorage, AK 99501 - 3568 107)277- -9511 The Assembly finds that MKB neither relied on the cont drawings in the manner claimed in Change Proposal I, nor damaged by such reliance. Further, the record does not support MKB's assertion that it provided timely written notice of claim to KIB. The Contracting Officer may at any time, by a written Change Order and without notice to the Sureties, make changes in the Contract Documents of the Contract if within its general scope. . . . Any claim of the Contractor for adjustment under this article must be asserted in writing within 30 days from the date of receipt by the Contractor of the notification of change. Contract, § 00707.3, Changes to the Contract Documents. The record indicates that MKB did not unequivocally notify KIB of the water main issue until October 31, 1994, when MKB first submitted Change Proposal I. (KIB's Notice of Appeal refers to earlier documlents that address the water main, but these documents are not present in the record.) The October notice occurred months after the water main was actually installed. (MKB Exh. 10.) Accordingly, ract was this the Assembly finds that MKB failed to provide timely notice of Change Proposal I, as required by the Contract. J. Change Proposal J - Water Service (MKB Claim: $8,092; KIB Paid and /or Conceded: $8,092 Amount Contested: $0; Awarded: $0) In Change Proposal J, MKB requests compensation for rewoxk:ing the water service to the boiler. KIB agreed that this work was a Contract change and agreed to pay the amount requested by MK. K. Change Proposal K - Exterior Gym Wall (MKB Claim: $13,322; KIB Paid and /or Conceded $9,00 Amount Contested: $4,302; Awarded: $2,562) FINDINGS OF FACT AND CONCLUSIONS OF LAW - 15 LPSEA J: \DGI\DSIUCODIAK \I0343DSI.PLD LANE POW ELL SPEARS LUBERSKY LLP Law Offices 550 W. 7th Ave. Suite 1650 Anchorage. AK 99501 -3568 907)277-9511 I I Designated interior corridor walls were originally designed to be sheet rocked and then overlaid with cork and fabric. A design change eliminated the cork and replaced it with 1/4" sheet MKB claims $13,322 for this change and KIB concedes $9,020 of the claim, leaving $4,302 in dispute. Limited evidence was presented on this issue. Mr. Sundstrom testified that MKB purchased the cork before the design change was issued, that the cork could not be returned for credit, and the cork is now available for KIB's use. This testimony was not disputed and reiterates MKB's April 4, 1995 claim. Mr. He4ther testified that, although the amounts claimed by MKB are unreasonable for the work to be performed, MKB failed to provide a credit for cork board installation. This assertion was rebutted by MKB. Rather, MKB indicated that sheet rock installation is more expensive than cork installation. Mr. He disagreed. Both arguments disregard the contents of the appli Change Order Proposal, the contents of which were not plac issue by KIB. Just as MKB is entitled to payment for changes to the documents, KIB is entitled to credits. "If such changes FINDINGS OF FACT AND CONCLUSIONS OF LAW - 16 LPSEA 1:\DGl \DSI\KODIAK \10343DS1.PLD that not not ther able d in contract cau$e an increase or decrease in the Contractor's cost of, or time required for, performance of the Contract, an equitable adjustment shall be made and the Contract modified in writing accordingly." Contact, § 00707.B., Changes to Contract Documents. MKB's assertion that it purchased and cannot return the unused cork is undisputed. The change eliminating the need for cork was LANE POWELL SPEARS LUBERSKY LLP Law offices 550 W 7th Ave. Suite 1650 Anchorage, AK 99501 -3568 i7)277 -9511 the result of a KIB- initiated design change. Consequently, Assembly finds that KIB should compensate MKB for the cork and should deliver the cork to KIB. Further, the Assembly finds that KIB should be credited the installation costs that would have been associated with cork if it had been installed. The testimony presented at the hearing and the MKB claim document of April 4, 1995 support the assertion that no such credit was provided by MKB. The Asse ly concludes that the cost of installing the cork is $820, the ost shown in Change Proposal K. Therefore, MKB's claim installation costs is reduced by $820 plus 15% markup for a total reduction of $943. Finally, Mr. Heather testified that the freight charges presented in Change Proposal K included items other than t ose necessary to execute the design change and that, as a result, the changes should be reduced to $600. This testimony was undisputed and the Assembly found the testimony to be credible. Therefore, the Assembly finds that the freight costs presented in C ange Proposal K should be reduced to $600, resulting in a reducti n of $797 ($1,293 [total freight charges] - $600 + 15% [markup]). In summary, the Assembly finds that MKB is entitled to $ ,562 of the $4,302 disputed in Change Proposal K. FINDINGS OF FACT AND CONCLUSIONS OF LAW - 17 LPSEA 1: \DGI \DSI\K ODIAKUO343DSI.PLD the MKB ith the for LANE POW ELL SPEARS LUBERSKY LLP Law Offices 550 W 7th Ave. Suite 1650 Anchorage. AK 99501 -3568 X07)277- -9511 L. Change Proposal L `- Steel Door Frame Expediting (MKB Claim: $20,879; KIB Paid and /or Conceded: $17, Amount Contested: $3,712; Award: $3,712) In Change Proposal L, MKB claims that it expended $21,42 expediting the hollow steel door frames and for other miscellaneous Contract changes. KIB does not dispute the compensability of the expediting, but disputes $3,712 of the charges that MKB assigned to field modifications of one or more frames. KIB asserts that MKB failed to field check the frame dimensions prior to ordering the frames. At the hearing, Mr. Sundstrom testified in detail that MK did field check the area where the frames required rework. Mr. Sundstrom's testimony is supported by MKB Exhibit 20. This testimony and documentation are largely undisputed by KIB. Accordingly, the Assembly finds that MKB is entitled to full compensation for Change Proposal L. M. Change Proposal M - Temporary Power Connection (MKB Claim: $7,471; KIB Paid and /or Conceded: $5,071 Amount Contested: $2,400; Awarded: $2,400) FINDINGS OF FACT AND CONCLUSIONS OF LAW - 18 LPSEA is \DGI \OSIUCODIAK110343DS1.PLD 167 in MKB provided temporary power to the project for three weeks by making a temporary hook -up to energize the building elect system. MKB claims that KIB was required to provide power throughout the project. KIB claims that the contract require the Contractor, not KIB, to supply temporary power: ` Note that MKB Exh. 25 appears to eliminate MKB's claim for additional wall sheathing under Change Proposal L, but failed to eliminate the associated mark -ups. Accordingly, the Assembly concludes that MKB claims $20,879 under Change Proposal L. LANE POWELL SPEARS LUBERSKY LLP Law Offices 550 W. 7th Ave. Suite 1650 Anchorage, AK 99501 -3568 97)277 -9511 Kodiak Island Borough will pay for all normal electrical power usage during the duration of the project so long as the power is taken through the existing service to the building. Contract, § 01510, Temporary Services, ¶ 3.01.b. (KIB Exh. 22 The parties dispute the meaning of this contract language whether the need to supply additional temporary power reasonably expected or, rather, caused by KIB. The Assembly finds that KIB's interpretation is reasonable. The contract language does not express or imply the building power will not be available during construct Rather, the language strongly implies the opposite, namely, normal power can be drawn from the building service "during duration of the project ". Accordingly, the Assembly finds that is entitled to full compensation for Change Proposal M. N. Change Proposal N - Added Cost of Concrete Demoliti (MKB Claim: $19,317; KIB Paid and /or Conceded: $0 Amount Contested: $19,371; Awarded: $0) The Contract clearly requires notice of claims before the work identified in the claim is performed. The Contractor shall promptly, and before such conditions are disturbed, notify the Contracting Agency in writing of: . . . physical conditions at the site differing materially from those ordinarily encountered and generally recognized as inherent in work of the character provided for in this Contract. . . . Contract, General Conditions, § 00707.B. Likewise, claims based on changes must be asserted within 30 days. Id. The requirement prompt, written notice can be satisfied through oral notice when the oral notice is clear and provides actual notice that the contractor believes it has encountered a differing condition. Teal FINDINGS OF FACT AND CONCLUSIONS OF LAW - 19 LPSEA 1: \DGI\DSIUCODIAK \10343DS1.PLD and was not hat on. hat the MKB n for LANE POW ELL SPEARS LUBERSKY LLP Law O1j4ces 550 W. 7th Ave. Suite 1650 Anchorage, AK 99501 -3568 7)277 -9511 & Co., Inc. v. City of Dillingham, 923 P.2d 89, 94 n. 4 (Alaska 1996). Tentative or equivocal notice that there may be a diffe ing site condition is not sufficient to replace the written notice requirements. Id.; citing Blankenshi• Construction C State Highway Commission, 222 S.E.2d 452, 461 (N.C. App. 1976) MKB claims that it encountered differing site conditions because one concrete wall that was to be demolished contained more rebar than anticipated. According to MKB, the concrete %tall reinforcing constituted an unknown physical condition of an unus nature differing materially from those ordinarily encountered and generally recognized as inherent in work of the character provided for in the contract. MKB further asserts that it notified KIa of the changed condition, citing Daily Record of Work Progress, Report Nos. 3 and 14. Neither of the daily reports cited by MKB offers unequivocal, or even equivocal, notice that rebar discovered in a concrete all constituted an unknown physical condition. As quoted in MKB's re- Hearing Brief, Daily Report No. 3 refers to design clarificat'ons and Daily Report No. 14 refers to removal of a block w -1 Moreover, MKB asserts that, on July 20, 1994, KIB waived the novice requirement in favor of aggregation of claims. Even if suc an agreement was made, it is unreasonable to assume that the scop- of such an agreement included claims for work completed months be ore for which no timely notice was provided. Further, evidence presented at the hearings identifying the alleged condition was contradictory and not credible. Mr. Gorr FINDINGS OF FACT AND CONCLUSIONS OF LAW - 20 LPSEA 1:\ DC11DSI\ICODIAK \10343DSI.PLD LANE POWELL SPEARS LUBERSKY LLP Law Offices 550 w. 7th Ave. Suite 1650 Anchorage. AK 99501 - 3568 107)277- -9511 testified and presented photos of demolition of a concrete all with rebar of an indiscernible size. Mr. Sundstrom testi ied regarding a double mat of rebar representing the unknown condition, but failed to identify the particular wall where the condition was encountered. Mr. Clark, who was on site at the time the concrete was demolished, testified that the subject wall contained two Mats of # 9 bar, where he expected to find 1 mat of # 8 bar. Mr. Clark did not view the alleged changed condition as worthy of repor6.ng as a contract change condition, and testified that he did of course, expect to find some rebar in the wall. Thus, while rebar as incidental to the construction and demolition proc Tentative and equivocal notice condition is not sufficient requirements. Dillingham, 923 P.2d 89, 94. Further, MKB's post facto assertion that demolition of FINDINGS OF FACT AND CONCLUSIONS OF LAW - 21 LPSEA JAM! \DSIUC ODIAK\10343DSI.PLO Mr. Clark presents the most credible account of the alleged changed condition, he also presents the most credible dismissal ofithe ess. that there may be a differing site to replace the written notice this single wall delayed the project for eight days is not credible. Mr. Clark testified that he was on schedule at the end of A ril, over a month after the wall was demolished. Accordingly, the Assembly finds that no delay time should be assigned to this tem. The record does not indicate any notice of delay rega ding this claim element until April 1995, over a year after the wal was demolished. MKB failed to provide KIB with timely and ade ate notice that its discovery of more rebar than expected in a single concrete wall was an unknown physical condition of an unt_sual LANE POW ELL SPEARS LUBERSKY LLP Law Offices 550 W. 7th Ave. Suite 1650 Anchorage, AK 99501 -3568 907)277 -9511 nature differing materially from those ordinarily encountere• and inherent in work of the character provided for in the Contrast or that the difficulty encountered, if any, was not attributable to construction means or methods. Accordingly, the Assembly find that MKB is not entitled to either compensation or schedule adjus meant for Change Proposal N. O. Change Proposal 0 - Additional Bracing of Exi -ting Structure (MKB Claim: $3,426; KIB Paid and /or Conceded: $0 Amount Contested: $3,426; Awarded: $0) In Change Proposal 0, MKB claims that it encountered -reas where it had to brace the roof structure beyond those identifi: d in the Contract. This change was first identified by MKB on Apr '1 4, 1995, over a year after the alleged changed condition was encountered. The discussion regarding Change Proposal N, su•r., is equally applicable to this Change Proposal. The requirement for prompt, written notice can be satisfied through oral notice when the oral notice is clear and provides actual notice that the contractor believes it has encountered a differing condi ion. Neal. MKB presented no evidence that it provided KIB with unequivocal notice of this alleged unknown physical condition. Accordingly, MKB has waived any claim for additional compens -t for this item. In addition, the Assembly finds that we believ- the contract documents clearly establish the requirement to suppor the existing structure. The fact that MKB was paid for other additional bracing is not relevant to this inquiry. FINDINGS OF FACT AND CONCLUSIONS OF LAW - 22 LPSEA 1: \DGI \DSI\1CODIAK \10343DSI.PLD LANE POWELL SPEARS LUBERSKY LLP Law Offices 550 W 7th Ave. Suite 1650 Anchorage. AK 99501 -3568 07)277 -9511 P. Change Proposal P - Window Removal and Replacement (MKB Claim: $745; KIB Paid and /or Conceded: $0 Amount Contested: $745; Awarded: $0) In Change Proposal P, MKB requests compensation for the removal and reinstallation of an unidentified window. This ch =n.ge was first identified by MKB on April 4, 1995. The actual dat- of the window removal and reinstallation was not identified, but it is reasonable to assume that it occurred during construction in 1:94, at least six months before MKB provided notice of this ch =n.ge proposal to KIB. The notice requirements expressed in the discussions regarding Change Proposals N and 0, supra, are equ -ily applicable to this Change Proposal. MKB presented no evidence hat it provided KIB with notice of this alleged unknown physical condition. Moreover, the evidence presented was indicativ- of noncompensable deficient contractor work; the evidence offere• to the contrary by MKB was unpersuasive. Accordingly, the Asse )ly denies additional compensation for this item. Q. Change Proposal Q - Acceleration and Expanded Over ead (MKB Claim: $251,127; KIB Paid and /or Conceded: $0 Amount Contested: $251,127; Award: $60,851) In Change Proposal Q, MKB claims that it incurred additional costs resulting from delays attributable to KIB. Specifically, MKB asserts that KIB is responsible for 61 days of project dela and that MKB suffered damages in the form of extended project ove head and extended home office overhead. Further, MKB claims that lIB's failure to acknowledge delays caused MKB to suffer acceler -tion damages in the form of labor inefficiencies, overtime premiums, expediting costs, and additional clean -up costs. FINDINGS OF FACT AND CONCLUSIONS OF LAW - 23 LPSEA 1: \DGI \DSI \KODIAK \10343DSI.PLD LANE POWELL SPEARS LUBERSKY LLP Law Offices 550 W. 7th Ave. Suite 1650 Anchorage, AK 99501 -3568 7)277 -9511 MKB asserts that KIB delayed the project as follows: (1) extended boiler shutdown preventing the start of interior fin'sh work (35 days); (2) extended demolition time due to unidentif'ed rebar found in one concrete wall (8 days); (3) addition of ew foundation walls at room 163 and in miscellaneous areas (6 day (4) delay in processing hollow metal door frame submittal (40 days); and (5) roof steel design errors causing a delay in r•of steel erection (divided into delays of 8, 27, and 29 days). KB fails to adequately address the delay in masonry work as a delay factor. However, as discussed below, analysis of the masonry delay is essential in assessing the effect of the delays that MKB alle•es are the responsibility of KIB. A. Delays 1. New Lobby Masonry Delay. Project construction commenced on or about January 18, 1994, Also, it appears that MKB transmitted revised schedules to KI March, April, June, and July. (Testimony of Mr. Sundstrom; Letter 17, dated June 17, 1994.) MKB's February 1994 project schedule indicated slab on grade were to be installed from March 14 through March FINDINGS OF FACT AND CONCLUSIONS OF LAW - 24 LPSEA 1: \DGI \DSl \KODIAK \10343DS1.PLD ); with Mr. Aronson assigned as MKB's superintendent. MKB's fist project schedule was produced by Mr. Sundstrom, MKB's project manager, in early February 1994, two weeks after the commence ent of work and six weeks after the Notice to Proceed was iss ed. i n MKB hat installation of footings for the New Addition was to occur from March 10 through March 11; that masonry blocks from footing to 18; LANE POWELL SPEARS LUBERSKY LLP Law Offices 550 W. 7th Ave. Suite 1650 Anchorage, AK 99501 - 3568 907)277-9511 that the slab on grade was to be poured from March 23 through M =rch 24, and that the above -grade block walls were to be erected M =rch 25 through April 7. (MKB Project Schedule.) None of these d =tes were met. (Heather As -Built Schedule; Gorr As -Built Sum ary Schedule; Brunell As -Built Schedule; Project Photographs.) As indicated by the project photographs, excavation for the new addition ( "Lobby Area ") footings started on or about Marc l 14 and the final footings were not poured until March 30. Below- rade block work was not completed before March 25, and the slab -on- rade was not completed before May 4. Moreover, above -grade block -work did not start until April 29, 34 days after the scheduled ate. Completion of the walls did not occur before late June. The earthwork, footings, below -grade walls and above grade walls were all on the critical path of the MKB schedule. Thus, the Ass mbly finds that by April 1994, the project was significantly b h:Lnd schedule. Consequently, the Assembly finds that any delay analysis based on the MKB February 1994 schedule for the period after April FINDINGS OF FACT AND CONCLUSIONS OF LAW - 25 LPSEA 1: \DGI\DS1 XODIAK \10343DS1.PLD is suspect because the schedule, as presented, was no lnger representative of the requirements necessary to complete the project by August 10, the Contract Substantial Completion date. Ironically, and perhaps tellingly, the schedules that MKB claims to have submitted to KIB in March, April and July 199 are not a part of the record. Further MKB's June 1994 "Up ated Schedule" does not accurately reflect the actual timin of activities described above. (MKB Exh. 18) Thus, it is unclear 1994 LANE POWELL SPEARS LUBERSKY LLP Law Offices 550 W. 7th Ave. Suite 1650 Anchorage, AK 99501 -3568 (907)277 -9511 whether MKB contemplated the effect of critical path dela s in Lobby Area construction during the first five months of the project. It is clear, however, that Mr. Aronson and his succe•.sor, Mr. Clark, did not contemplate any affects resulting from 'hose delays. Mr. Clark testified at the hearings that he though ■ the project was on schedule as of the end of April. Both MKB and KIB acknowledge that a delay in delive y of concrete CMU materials and some inclement weather caused a po tion of the masonry delay. Further, KIB asserts poor coordination of project activities by MKB, coupled with less than ami able relations between the masonry contractor and MKB, added t• the masonry work delay. (Testimony of Heather.) MKB pro ides additional justification for the delay in Lobby Area CMU construction through Mr. Gorr, who testified that owner - caused delays at the New Storage Area caused the masonry contractor to work out of sequence, thereby causing a "global" delay i the masonry work. The Assembly finds Mr. Gorr's explanation to be incred'ble. First, the New Storage Area is physically isolated from the obby Addition, rendering any claim that activity in one of these =yeas was a necessary predecessor to activity in the other cot. Further, even as scheduled, Lobby masonry activities were sequ -n.ced ahead of New Storage Area Masonry activities. Accordingly the Assembly finds that any delay related to the New Storage Area concrete and masonry work did not delay the concrete and masonry work at the Lobby Area. FINDINGS OF FACT AND CONCLUSIONS OF LAW - 26 LPSEA 1:\DG1 \DSI\KODIAK \10343DS1.PLD LANE POWELL SPEARS LUBERSKY LLP Law Offices 550 W. 7th Ave. Suite 1650 Anchorage, AK 99501 -3568 " -9511 The Assembly finds that MKB has offered no credible evid =nce to indicate that the masonry delay in the New Lobby Area is attributable to KIB. Further, the Assembly notes that MKB fa led to recognize the effect of this delay until sometime in May 1'94. It is clear from the record that MKB still does not acknowledge the extent and effect of the delays in masonry work at the Lobby A ea. The Assembly finds that the project was approximately 54 nays behind schedule on June 1, 1994. Further, the Assembly finds his delay is wholly attributable to MKB. 2. Boiler Shutdown. During construction, an existing boiler system was use to heat the school. On April 4, 1994, the boiler was shut down inspection and a determination of what rework would be neces for the system to be fully functional for the completed sch The boiler shutdown was expected to last only a few days. Howe the system was not restarted until May 10, 1994. The dates duration of the boiler shutdown are undisputed. MKB claims that this extended boiler shutdown caused a pro delay of 35 days. (MKB Exh. 10.) Specifically, MKB claims tha six week boiler shutdown prevented the GWB contractor from t and finishing the GWB as scheduled. (MKB Claim Notebook.) claims that KIB was aware that the boiler was in need of rework at the time MKB bid the project, but failed to inform M the extent of rework anticipated. Consequently, MKB did not on the boiler being shut down for a long duration. FINDINGS OF FACT AND CONCLUSIONS OF LAW - 27 LPSEA J: \DGI \DSIUCODIAK \10343DSI.PLD n for ary ol. er, and ject t he ping MKB ajor B of plan LANE POW ELL SPEARS LUBERSKY LLP Law Offices 550 W 7th Ave. Suite 1650 Anchorage. AK 99501-3568 °07)277 -9511 It is well settled in this court that where the Government possesses special knowledge, not shared by the contractor, which is vital to the performance of the contract, the Government has an affirmative duty to disclose such knowledge. Morrison - Knudsen Company, Inc. v. Alaska, 519 P.2d 834, 841 (A1 -ska 1974); cquotinq Helene Curtis Industries. Inc. v United Sta ■es, 312 F.2d 774, 160 Ct.C1. 437 (1963). We read these cases as establishing the following test for imposing a duty to disclose upon the state: did the state occupy so uniquely- favored a position with regard to the information at issue that no ordinary bidder in the plaintiff's position could reasonably acquire that information without resort to the State? Morison - Knudsen, 519 P.2d at 841. Of course, the duty is not imposed unless the special knowledge is vital to the performanc- of the contract. Id. In the case at hand, MKB claims that KIB had supe ior knowledge regarding the need for an extended boiler shutdown c aim because KIB was aware, prior to bid, that the boiler might eed extensive work. The Assembly finds that KIB did have such supe ior knowledge. (EnCon letter, dated October 11, 1993 (KIB 0171 ►).) Thus, if MKB can demonstrate that the extended boiler shutdown delayed the GWB installation and finish, the delay will be attributable to KIB. The first reference to the boiler shutdown presented in the record is in the project meeting minutes of April 27, 1994. The minutes reflect a concern by the GWB contractor that the start •ate for heat would impact his "final stage." However, when asked whether he was on schedule, the contractor indicated that "Mik may FINDINGS OF FACT AND CONCLUSIONS OF LAW - 28 LPSEA 1:IDGI\DSI000DIAK\10343DSI.PLD LANE POWELL SPEARS LUBERSKY LLP Law O 550 W 7th Ave. Suite 1650 Anchorage. AK 99501 -3568 ' have prep." The minutes do not indicate that the GWB contract work was actually impacted by the boiler shutdown and do not provide notice that the boiler shutdown actually has delayed the project. Curiously, at the April 27th meeting, the GWB contractor indicates that his original start date was scheduled for Febr ary 20. The MKB project schedule of February 1994 indicates that GWB installation was to start on April 28 in Corridor 102 and on M:y 5 in Corridor 125. Mr. Sundstrom at his deposition indicated hat MKB was not planning and was not ready to install GWB before A 28. ( Sundstrom pp. 196 -99.) Using the dates provided on the project schedule, and utilizing the undisputed boiler restart •ate of May 10, a delay of 12 days on the GWB installation c•uld reasonably have resulted from the boiler shutdown. However, as testified by Mr. Parker, even though framing had been installed in the Corridor 102 area when he arrived on sit- on May 17 or 18, GWB was not yet installed. Further, Mr. Clark testified that the boiler shutdown did not affect GWB work. Mr. Clark further testified that he thought the project was on schedule at the end of April, three weeks before Ron Parker's arri al. Accordingly, it is reasonable to assume that the boiler shutdown did not impact the installation and finishing of GWB. On May 11, 1994, in response to a KIB letter regarding construction progress, MKB identified the boiler shutdow as impacting the project. "As the heating system needs to b- in operation to perform drywall work, this severely impacted FINDINGS OF FACT AND CONCLUSIONS OF LAW - 29 LPSEA 1: \DG I \DS I\K ODIAK\ 10343DS1.PLD 0 r' s our LANE POWELL SPEARS LUBERSKY LLP Law Offices 550 W 7th Ave. Suite 1650 Anchorage, AK 99501 -3568 - 07)277 -9511 schedule for that activity. We finally placed the boiler bac in operation . . . because we had to proceed." Sundstrom lette of May 11, 1994. We find this statement to be less than credi.le. Mr. Sundstrom was not on site to observe this allegedly se ere schedule impact. Further, the statement contradicts the schedule published by MKB and the testimony of site superintendents Pa ker and Clark. We dismiss this portion of the May 11 lette as unsubstantiated. Finally, the Assembly finds that the extended boiler shutdown delay analysis presented by Mr. Gorr to be unpersuasive. Mr. Gorr's analysis concluded that the boiler shutdown delayed GWB taping for 35 days. This analysis ignores the MKB schedule s art dates of April 28 for installation of GWB and May 5 for tap" ng. These dates fall 24 and 31 days, respectively, after the star of the delay shown on Mr. Gorr's As -Built Summary Schedule. (MKB xh. 10.) In conclusion, the Assembly finds that the boiler shutdow did not impact the installation and finish of GWB. 3. Door Frames. MKB transmitted the hollow metal door frame submittal dire tly to GDM on February 1, 1994. It is undisputed that this submi tal was approved on April 28 and returned to MKB on May 3, 1994. It is also undisputed that this 91 day turnaround failed to comply ith the implied contract requirement that KIB return submittal within thirty days of receipt: FINDINGS OF FACT AND CONCLUSIONS OF LAW - 30 LPSEA t:\DGI \DSI\ICODIAK \I0343DSl.PLD LANE POW ELL SPEARS LUBERSKY LLP Law O 550 W. 7th Ave. Suite 1650 Anchorage, AK 99501 -3568 )7)277 -9511 As specified in the individual sections, forward submittal to Contracting Officer at least 30 days before need for approval. Contract, § 01300, ¶ 1.04.A.1. However, the effect of K B's extended submittal processing on project construction is disp ted by KIB and MKB. MKB asserts that the extra time taken by KIB to process the hollow steel floor frame transmittal resulted in late deliver of the door frames, causing a project schedule delay of 40 days. KIB acknowledges that the door frames were delivered late, but ass =rts that the late delivery of door frames did not affect pro ect construction. As indicated in the testimony and evidence presented by Messrs. Heather, Brunell, and Gorr, determination of whether the late door delivery affected construction is dependent, in t rn, upon whether installation of the door frames affected the crit cal path of the project. Mr. Heather's analysis concludes that the critical path of the project ran through the new lobby area for the duration of the project. Mr. Gorr and Mr. Brunell, howe er, conclude that the critical path ran through the new lobby are in the early stages of the project, but moved to Corridor 125 in J ly. This shift in critical path is attributable to the change in project focus implemented by KIB on July 20, 1994. A project meeting was held on July 20, 1994, attendee :by representatives of MKB, KIB, and others. It was apparent at hat time that the entire project would not be completed by August 10, 1994. Consequently, it was decided that Corridor 102 (the majo ity FINDINGS OF FACT AND CONCLUSIONS OF LAW - 31 LPSEA 1: \DCI\DSIUC ODIAK \10343DSI.PLD LANE POWELL SPEARS LUBERSKY LLP Law Offices 550 W. 7th Ave. Suite 1650 Anchorage, AK 99501 -3568 907)277 -9511 of the classrooms and the principal's office) would be completed by August 15, Corridor 125 (except the gymnasium, storage room, and lobby) would be completed by August 22, and the balance of the project would be completed as soon as possible thereafter. (MKB Letter 21, dated July 26, 1994.) "The school will therefore be fully available for students on the August 30 scheduled dat- for start of the school year." (Id.) Thus, the project was essent ally divided into two sub - projects, with the critical path shifting from the new lobby area to Corridor 125. (Gorr Testimony; Br'nell testimony; KIB Exh. 21.) The Assembly finds that, as a resu t of the July 20 agreement between KIB and MKB, the critical path o the project moved from the New Lobby to Corridor 125. There were approximately 53 new door frames affected b the extended submittal processing. Approximately 36 of these door frames were installed in Corridors 125 and 102. The door frames were critical for completion of Corrido• :125 by August 22. The lack of door frames delayed finish work in Corridor 125 and caused inefficiencies throughout each int =rior area of the project. Door bucks were used in place of the door When to the The the frames to allow construction to progress as far as practical. the door frames arrived on site, MKB's crews were force backtrack into areas where they had already worked to instal frames, causing inefficiencies and stacking of trades. Assembly finds that the door frame submittal delay did impac project. FINDINGS OF FACT AND CONCLUSIONS OF LAW - 32 LPSEA J:\DGI \DSIUCODIAK \10343DSI.PLD LANE POWELL SPEARS LUBERSKY LLP Law Offices 550 W. 7th Ave. Suite 1650 Anchorage, AK 99501 -3568 )7)277 -9511 The extent of the impact caused by the late door frames is less clear. FINDINGS OF FACT AND CONCLUSIONS OF LAW - 33 LPSEA 1: \DGI \DSL'K ODIAK \I0343DSI.PLD First, the MKB schedule of February 1994 indic -tes that many of the door frames were scheduled for installation o or before March 30 and April 6, with framing and sheathing of inte for walls. Adding the 14 days of float apparently built into completion of these areas by August 29. (MKB Exh. 10.) The activities, without identifying particular areas effected. compensable. (KIB Exh. 15, 16.) t ese scheduled activities, the majority of the door frames ere scheduled for installation by April 25. However, the doors ere not scheduled for shipment from Seattle until April 14, 1994. (MKB Exh. 23.) Thus, the schedule as presented by MKB was unreali -tic from the start. It appears from the As -Built schedules and from the testi ony of Mr. Parker that MKB was ready to install steel door frame- in the Corridor 125 area at the time Parker arrived on site, May 18, 1994. The door frames arrived on site on or about July 8, (Parker Testimony; As -Built Schedules), at least 40 days after the frames were required for installation. Late installation of the door frames affected a number of subsequent activities inclu• ;ing GWB installation and finish, painting, and final mechanical and electrical work. (Testimony of Parker.) The Gorr analysis shows a 40 day delay in the areas scheduled for completion by August 15 and August 22, and shows acuual 994 orr analysis also shows a 40 day delay in the mechanical /electr cal oth Heather and Brunell dismiss the door frame delay as on- LANE PoWELL SPEARS LUBERSKY LLP Law Offices 550 W 7th Ave. Suite 1650 Anchorage, AK 99501 - 3568 07)277 -9511 The majority of the door frames effected by the late submi tal processing were installed in the Corridor 125 Area, which was essentially completed by August 29, 1994. No credible evidence was presented to support a conclusion that the door frame delay substantially affected completion of the New Lobby area. ( ote that the "sliding glass door" was also late due to submi tal delays, but its installation is best characterized as a punch ist item.) Accordingly, the Assembly finds that the record does not support a conclusion that the late door frames delayed the new lobby area beyond August 29. The original Contract Substantial Completion Date was August 10, 1994. Beneficial occupancy of the classroom areas occurre• on August 29, 1994. (Gorr As -Built Summary Schedule.) When the effects of the door frame delay and resulting acceleration are analyzed in conjunction with these dates, it reasonable to conci ude that the late delivery of hollow metal door frames caused a prof ect delay of 19 days. The balance of the 40 day delay was mitig=ted through acceleration. Accordingly, the Assembly finds that the project substantial completion was delayed by 19 days as a re -ult of the late delivery of hollow steel door frames. 4. Lobby Steel /Parapet Steel /Exterior Framing. These issues were considered in Change Proposal A, supra, where we held that the project schedule was delayed by 8 days as a result of the New Lobby steel design error. FINDINGS OF FACT AND CONCLUSIONS OF LAW - 34 LPSEA J: \DGI\OSI\KODIAK\10343DSI.PLD LANE POWELL SPEARS LUBERSKY LLP Law Offices 550 W. 7th Ave. Suite 1650 Anchorage, AK 99501 - 3568 07)277-9511 5. Foundation at Electrical Room and New Foundation Wa is. During construction, it was discovered that the outside all of existing Electrical Room 163 was not supported by an adeq ate foundation. A design change was issued for installation of a foundation under the existing structure. Also, it appears th -t a new foundation wall was added as a design change sometime earl in the project. The As -Built Summary Schedule produced by Mr. to:rr attributes delay of three days to each of these design changes. However, aside from Mr. Gorr's analysis and the claim itself, the record is silent on these alleged delays. The delays are not addressed in the briefs presented by either side, nor supporteo:by the exhibits presented at the hearing. It is not clear whether KIB was notified of these alleged delays at the time the design cha ges were issued. Although a contractor need not prove damages with mathemat cal precision, it may only recover those damages which it proves ith reasonable certainty. Fairbanks North Star Borough v. Ka dik Constr., Inc., 795 P.2d 793, 798 (Alaska 1990), reh'g grantee on unrelated issue, 823 P.2d 632 (Alaska 1991). The Assembly f"nds that MKB has not met its burden of proving that it incurred d lay as a result of the design changes adding (1) foundation at Electrical Room 163 and (2) other unidentified foundation wail The evidence presented does not support MKB's claim. 6. Interior Demolition. This issue was considered in Change Proposal N, supra, where the Assembly found that the project schedule was not impacted by IB. FINDINGS OF FACT AND CONCLUSIONS OF LAW - 35 LPSEA 1: \DGI \DSI\ICODIAK\10343DS1.PLD LANE POWELL SPEARS LUBERSKY LLP Law Offices 550 W 7th Ave. Suite 1650 Anchorage. AK 99501 -3568 )07)277- -9511 7. Delay Summary. In summary, the Assembly finds that project delays attributable to KIB, which affected the project substan ial completion date, are 19 days for the delay in processing the ho i low steel door frame submittal and 8 days for the delay in providing a solution to the lobby roof structural steel design er'or. Therefore, the Assembly finds that the project substan ial completion date, as provided under the Contract, is Septembe 6, 1994. B. Acceleration Acceleration is the application of additional manpower to the work effort, either through the use of overtime, additional manpower, or both. Acceleration may be undertaken to mitigate the effects of a delay, disruption, or suspension to the •rk. Constructive acceleration may be alleged when an owner refuses to grant reasonable time extensions which are allegedly due the contractor. Within Change Proposal Q, MKB asserts that it inc rred acceleration costs in the following categories: (1) Mat =rial expediting costs; (2) Labor overtime premiums; (3) Added 2nd Cleanup; and (4) Labor inefficiencies. MKB further asserts th -t it incurred extended project overhead and extended home office overhead. Each category is addressed separately below. MKB carries the burden of proof that it incurred the •osts claimed. Coluccio, 826 P.2d 316. As presented in Sectio R, FINDINGS OF FACT AND CONCLUSIONS OF LAW - 36 LPSEA J:1DGI\DSI000DIAK \10343DSI.PLD LANE POWELL SPEARS LUBERSKY LLP Law Offices 550 W. 7th Ave. Suite 1650 Anchorage, AK 99501 -3568 )07)277 -9511 infra, Alaska has rejected the total cost method and the modi ied total cost method for calculating damages. 1. Material expediting costs (freight costs). MKB asserts that it incurred extra shipping costs resul ing from late submittal processing. Specifically, MKB claims hat delays in submittal processing by KIB caused a number of critical items to be shipped separate from the bulk shipment originally anticipated by MKB. The particular items so affected are not identified in the record, but clearly exclude steel frames addressed in Change Proposal L. The record presents no credible evidence in support of M ='s assertion that KIB is responsible for any additional shipping casts incurred by MKB. The particular items for which the shipping casts were incurred are not identified, no invoices were presented, and no specifics regarding causation were presented. Absent causation, there are no damages. Coluccio , 826 P.2d 316 Kandik, 795 P.2d 93. The Assembly finds that MKB failed to demonstrate that any additional expediting costs it may have incurred were cause. by KIB's late processing of submittals. 2. Labor overtime premiums. MKB appears to have attributed all of its overtime costs incurred on the project to KIB. This attribution, however, assumes that all critical project delays are attributable to KIB. discussed in the delays section, supra, that assumptio erroneous. FINDINGS OF FACT AND CONCLUSIONS OF LAW - 37 LPSEA 1: \DG1 \DSI\KODWC \10343DSI.PLD As i s LANE POWELL SPEARS LUBERSKY LLP Law Offices 550 W 7th Ave. Suite 1650 Anchorage, AK 99501 -3568 07)277 -9511 As previously discussed, the project was substantially be ind schedule by April because of the delay in masonry work on the New Lobby addition. Further, the S -curve submitted by MKB for 'une indicates that MKB is substantially behind its proje ted expenditures. Moreover, the project critical path ran through the New Lobby until July 20, when the project focus was chanted. Consequently, the delay in closing the lobby addition, attributable mostly to the delay in masonry work, prevented a significant am•unt of interior work to be completed in May, June and early J ly. Although the lobby steel tie -in caused 8 days of delay, overtim- is not reasonably causally connected to this activity but, instea•, is more appropriately addressed as inefficiency, infra. The Asse •ly therefore finds it unreasonable to attribute overtime premium to KIB for the period preceding July 8, when the hollow metal •oor frames arrived on site. Further, the Assembly finds it unreasonable to attribute overtime spent on exterior fi ish activities to KIB, especially in light of the masonry delay. (MKB Exh. 2A.) Further, the Assembly finds it unreasonable to attri ute overtime premiums to KIB for the period after the new Contract substantial completion date of September 6, 1994. The scop- of work remaining after September 6 is not significantly detailed in the record, but appears to focus on areas other than classroom interior work. Finally, the Assembly finds that the delay i the Lobby Area is clearly more attributable to the masonry delay r -ther than the hollow metal door frame delay. FINDINGS OF FACT AND CONCLUSIONS OF LAW - 38 LPSEA J:\DG I \DS'\K ODIAK\ 10343DS I. PLO LANE POWELL SPEARS LUBERSKY LLP Law Offices 550 W. 7th Ave. Suite 1650 Anchorage, AK 99501 -3568 07)277 -9511 In conclusion, the Assembly finds that MKB is entitled to the overtime claimed for interior finish activities from July 8, 994 through September 6, 1994. As presented on MKB Exh. 24, it app-ars that overtime hours spent on interior activities for the perio• o July 8 through September 6 amount to 635 man hours. Accordin ly, the Assembly finds that MKB is entitled to $13,710 in over ime premiums. 3. Added 2nd Cleanup. KIB asserts that MKB's "second clean -up" does not inv ive additional costs beyond that required under the Contract. See Contract, § 00724.A, Progress Cleaning. However, given the 27 •ays of delay attributable to KIB, coupled with the change in crit.cal path resulting from the meeting of July 20, 1994, and the ope ing of the school, it is reasonable to assume that a second clea -u would have been required, regardless of either MKB or KIB's del =ys. The costs associated with this clean -up were not disputed by IB. The need for the second clean -up is attributable to both part es; hence, half of the cost is awarded to MKB, $5,216. 4. Labor Inefficiencies. MKB asserts that its labor efficiency was reduced b 30 percent because the project delays caused stacking of trades and congestion in the work area. MKB references specific case law allowing the use of a percentage factor for damage calculations attributable to inefficiencies. See Urban Plumbing & Heati.ng Co.,Inc., ASBCA 9831, 71 -2 BCA 8980; Continental Consoli•at:ed Corp., ASBCA 10662, 67 -1 BCA 6127. KIB challenges neither the fact FINDINGS OF FACT AND CONCLUSIONS OF LAW - 39 LPSEA J: \DG1 \DSI\KODIAK \10343DS1.PLD LANE POWELL SPEARS LUBERSKY LLP Law Offices 550 W 7th Ave. Suite 1650 Anchorage, AK 99501 -3568 1 07)277 -9511 FINDINGS OF FACT AND CONCLUSIONS OF LAW - 40 LPSEA 1:\DGI\DSI KODIAK \I0343DSt.PLD Post -it' Fax Note 7671 To 04 D1� CoJDept. Date_ (/ Ipages • 510 -S From 4 / 4 LE 7' Co. that the costs claimed by MKB were actually incurred nor the reasonableness of the 30% inefficiency factor. Rather, KIB challenges whether the delay from which the inefficiency costs result are attributable to KIB. Pursuant to the discussion presented in the Labor Over ead section, supra, the Assembly finds it unreasonable to attribute labor inefficiencies incurred before July 8 or after September • to KIB, especially in light of the masonry delay. Further, the Assembly finds it unreasonable to attribute labor inefficiencies to overtime hours because there is no credible evidence in the re ord to show that problems of stacking and congestion occurred out -ide of the normal work day. Accordingly, the Assembly finds that MKB is entitled to the labor inefficiencies claimed for the period of July 8, 1994 through September 6, 1994, less overtime hours claimed. Thus, MK:: is entitled to $22,425 for labor inefficiencies. 5. Project Overhead. MKB claims to have incurred project overhead costs over th- 61 delay days that are attributable to KIB. KIB does not challenge the fact that the costs claimed by MKB were actually incurred. Rather, KIB challenges whether the delay from which the costs result are attributable to KIB. Mr. Sundstrom testified that he participated in the proj e. t on a part -time basis through September, and that Mr. Parker wa on site through September. Further, Mr. Sundstrom testified rega ding the need of general overhead items for the duration of the d =lay, LANE POWELL SPEARS LUBERSKY LLP Law Offices 550 W 7th Ave. Suite 1650 Anchorage. AK 99501 -3568 X07)277- -9511 including equipment, telephones, and insurance. And finally, the Contract requirement for periodic clean -up the delay period. The Assembly finds that the evidence presented supports the fact that MKB incurred additional project overhead costs becau-e of the project delay. However, the portion of the costs that MKB attributes to KIB must be reduced. As discussed previously, 27 of the 61 days of delay claimed by MKB are attributable to KIB. Accordingly, the Assembly finds that MKB is entitled to 44 pe cent of the amount claimed for project supervision, project manage ent, per diem, extended general conditions, and periodic cle -nup, $19,500. 6. Home Office Overhead. MKB claims to have incurred extended home office ove head expenses as a result of project delays expenses using the Eichleay formula. The purpose of the Eichleay formula is to arrive a an approximate allocation of overhead costs when actual allocation is not possible. Proof of compensable government delay does n by itself entitle the contractor recovery of extended home office overhead. Montoya Construction Co., Inc., ASBCA No. 34691, 89 -1 BCA ¶ 21,575. In order to recover damages calculated by use o the Eichleay formula, a contractor must demonstrate that it suffered damages as a result of the government delay, making it imprac•ical to undertake the performance of other work. Boublis Electric Inc, FINDINGS OF FACT AND CONCLUSIONS OF LAW - 41 LPSEA J: \DOl \DSPXODIAK \10343DSI.PLD clearly extended and calculates into hese LANE POW ELL SPEARS LUBERSKY LLP Law Offices 550 W 7th Ave. Suite 1650 Anchorage, AK 99501 -3568 1 07)277 -9511 ASBCA No. 34056, 89 -3 BCA ¶ 22,094. Hence, the Eichleay formula is not a method of proof, but merely a means to calculate damage MKB did not present evidence to support a finding that the delay caused by KIB made it impractical for MKB to undertake the performance of other work. Rather, MKB presented evidence to the contrary. Mr. Sundstrom testified that no home office layoff-. or office space abandonment occurred after the Peterson project was completed (See also Sundstrom deposition, p. 51). In the abs:nce of any evidence to support the proper application of the Eich eay formula, the Assembly finds application of the Eichleay for ula inappropriate. Further, the Assembly finds that the home office over ead costs presented by MKB are not only unsupported, but unsupporta•l Although a contractor need not prove damages with mathematical precision, it may only recover those damages which it proves ith reasonable certainty. Kandik, 795 P.2d 793, 798. The Asse •ly finds that MKB is not entitled to the extended home office over ead as claimed in Change Proposal Q. R. Change Proposal R - Subcontractor Damages (MKB Claim: $126,490; KIB Paid and /or Conceded: $0 Amount Contested: $126,490; Award: $22,657) In Change Proposal R, MKS puts forth subcontractor claims for G idi Electric, Allen & Peterson, Custom Painting and Drywall, and Blondin and Sons. The contractor carries the burden of proof that it inc rred the costs claimed. Municipalitv of Anchorage v. Frank Col ccio Construction Co., 826 P.2d 316 (Alaska 1992). Althou•h a FINDINGS OF FACT AND CONCLUSIONS OF LAW - 42 LPSEA J:\DGl\DSI\KODIAK \10343DS1.PLD LANE POWELL SPEARS LUBERSKY LLP Law Offices 550 W. 7th Ave. Suite 1650 Anchorage. AK 99501 -3568 )07)277- -9511 contractor need not prove damages with mathematical precision, it may only recover those damages which it proves with reasonable certainty. Fairbanks North Star Borough v. Kandik Constr., Inc., 795 P.2d 793, 798 (Alaska 1990), reh'g granted on unrelated issue, 823 P.2d 632 (Alaska 1991). Alaska Courts have rejected the "total cost method" and the "modified total cost method" of proving damages. These methods entailed looking at all the money that was spent by the Contractor, subtracting all the money paid, "and then taking a deeper look." Coluccio, 826 P.2d at 324. [T] he total cost method of proving damages is universally disfavored. We recently joined this chorus of disapproval. Fairbanks North Star Borough v. Kandik Constr., Inc., 795 P.2d 793, 798 -99 (Alaska 1990), reh'g granted on unrelated issue, 823 P.2d 632 (Alaska 1991). The preferred method of damages calculations is the so- called "actual cost" method, in which each element of extra expense incurred because of [a change] is added up for a total claimed amount. Courts have also allowed a "jury verdict" method, a variant on the actual cost approach which allows the contractor to present evidence of the cost of additional work to the finder of fact, including any actual cost data, accounting records, estimates by law and expert witnesses, and calculations from similar projects. Municipality of Anchorage v. Frank Coluccio Construction Co., 826 P.2d at 324 -25. 1. Guldi Claim. Guldi claims that it incurred costs of $95,004 as a result of project delays and acceleration. This figure is calculated (not considering obvious double -count errors) by simply totaling Guld:i's FINDINGS OF FACT AND CONCLUSIONS OF LAW - 43 LPSEA J: \DG1\DSIVCODIAK \I0343DSI.PLD * * * LANE POWELL SPEARS LUBERSKY LLP Law Offices 550 W. 7th Ave. Suite 1650 Anchorage. AK 99501 -3568 07)277 -9511 contract costs, adding overhead and profit, and then subtrac•ing out payments made to Guldi by MKB. Guldi acknowledged that his calculation as a "modified total cost" method. As testified by Mr. Guldi, this modified total cost approach was the "quick =st, easiest, and most accessible way to determine actual costs." hen asked what it would take to segregate the costs, Mr. G ldi responded: "I guess we just do not know how to do it." The Assembly concurs with the Alaska courts' view hat contract damage awards pursuant to a "total cost" calculation is improper. However, if sufficient evidence is presented in addi ion to the total cost method calculations, an award of damage- is appropriate under the "jury verdict" method. The manpower charts provided by Guldi evidence indicate hat Guldi was affected by the delay and acceleration discussed ab•ve. Accordingly, the Assembly finds that Guldi did incur accelera ion costs attributable to KIB. As testified by Mr. Guldi, much of his subcontract work was affected by the stacking of trade in the classroom areas, and much of this stacking was caused by the d -lay in door frame delivery and owner changes. Sufficient evidence has been presented to conclude that the amount of costs incurre• by Guldi in excess of its total anticipated income are attributab e to the acceleration of interior finish work caused by KIB. The Assembly finds that Guldi is entitled to $19,702 plus $2,955 overhead and profit. FINDINGS OF FACT AND CONCLUSIONS OF LAW - 44 LPSEA 1: \DGI\DSI\KODIAK \Io3t3DSI.PLD LANE POWELL SPEARS LUBERSKY LLP Law Offices 550 W 7th Ave. Suite 1650 Anchorage. AK 99501 -3568 V7)277-9511 2. Allen & Peterson; Custom Painting and Drywall; and Blondin and Sons. MKB sets forth claims for subcontractors Allen & Peterson, Cu -tom Painting and Drywall and Blondin and Sons under Change Proposal R. No testimony was presented at the hearing regarding these cl =ims beyond restating of the claims. A contractor may recover •n.ly those damages which it proves with reasonable certainty. Kan•ik, 795 P.2d 793. Absent sufficient evidence, the Assembly finds hat MKB is not entitled to the subcontractor damages claimed for A len & Peterson, Custom Painting and Drywall and Blondin and Sons u der Change Proposal R. S. Change Proposal S - Preparation of Change Orders (MKB Claim: $300,000; KIB Paid and /or Conceded: $0 Amount Contested: $300,000; Award: $0) Ultimately, the award of attorney's fees is vested in the sound discretion of the trial court and will be interfered wi h on appeal only when that discretion is manifestly abused. Grasle v. Electric Co. v. Clark, 525 P.2d 1081 (Alaska 1974); Munici•ali• of Anchorage v. Baugh Constr. & Eng'g. Co., 722 P.2d 919 (Alaska 1986). "The purpose of awarding attorney's fees under Rule 82 is to afford partial compensation to a prevailing party for the egal expenses necessitated by a court proceeding." [emphasis a•ded] Alaska State Housing v. Ripley Pleas, Inc., 586 P.2d 1244, 1249 (Alaska 1978)(attorney's fees incurred for the arbitration he ring may not be taken into account because Civil Rule 82 only appli =s to `costs of an action', not attorney's fees incurred in the co duct of a prior arbitration). FINDINGS OF FACT AND CONCLUSIONS OF LAW - 45 LPSEA J: \DGI \DSI\KODIAK \10343DS1.PLD LANE POW ELL SPEARS LUBERSKY LLP Law Offices 550 W 7th Ave. Suite 1650 Anchorage. AK 99501 -3568 )7)277-9511 As presented in the Contract, the function of the Kodiak Island Borough Assembly is analogous to that of an arbitration board rather than to a court of law. A. The decision of the Kodiak island Borough Assembly shall be rendered within 120 days of the Notice of Appeal. The decision shall be final and conclusive unless determined by a court of competent jurisdiction to have been fraudulent, or capricious, or arbitrary, or so grossly erroneous as necessary to imply bad faith B. This Disputed article does not preclude considerations of questions of law in connection with decisions provided for in Paragraph A above. Nothing in this contract, however, shall be construed as making final the decisions of the Kodiak Island Borough Assembly or its representative on a question of law. Contract, § 00706, Claims and Disputes. Accordingly, whereas his Assembly Hearing is not a court proceeding, Rule 82 does not a•p:Ly to the matter at hand. In its reply brief, MKB abandons any reference to Rule 82 and cites federal case law wherein awards were made for the cost- of preparing claims. The cases cited, however, refer to cl -ims preparation for presentation to the Contracting Officer, not to the authorities to whom decisions of the Contracting Officer are appealed. See Bill Strong Enterprises, Inc. v. Shannon, 49 :.3d 1541, 1549 (Fed. Cir. 1995). However, the Federal Acquisit ons Regulation analyzed in Bill Strong does provide useful guidanc in determining whether to award the costs of preparing change requ: sts in the matter at hand. According to the FAR, contractor costs can be placed in t ree categories: (1) those incurred in the performance of the contract; (2) those incurred in administering the contract, and (3) t ose FINDINGS OF FACT AND CONCLUSIONS OF LAW - 46 LPSEA 1:\DGI \ DS! \K ODIAK\ I0343DSI.PLD LANE POWELL SPEARS LUBERSKY LLP Law Offices 550 W. 7th Ave. Suite 1650 Anchorage. AK 99501 -3568 X07)277 -9511 incurred in connection with the prosecution of a claim. Id at 1549. Costs falling within the first two categories are gener =lly compensable, while those falling into category three are not. Id. Category 1 clearly does not apply to Change Proposal S. The line between costs incidental to contract administra ion verses claims prosecution is rather indistinct. Bill Strong, 49 F.3d at 1549. Generally, however, costs incurred in presenti g a claim to the Contracting Officer are deemed to be administrative. However, further costs require examination of the objective re -son behind why the costs were incurred. "If a contractor incurre• the cost for the genuine purpose of materially furthering the negotiation process, such cost should normally be a contract administration cost." Id. at 1550. Applying the reasoning in Bill Strong to the matter at arid, it is undisputed that MKB submitted the claims at issue in Oc ober 1994 and April 1995. In its April 1995 claim, MKB included C ange Proposal S, Preparation of Change Orders, and requested $34,500. As testified by Mr. Sundstrom, this dollar amount represented KB's best estimate of costs expended to date in preparing MKB's cl -irns. No documentation was presented in support of this testimony. MKB made an oral presentation to KIB regarding its clai s on April 28, 1995. At the end of that presentation, MKB believed that KIB committed to respond to MKB's claim by May 10, 1995. KI did not respond by that date. MKB filed suit in the United S • ales District Court for the District of Alaska at Anchorage on Augu :t 4, 1995. (KIB Exh. 13.) It appears that the last communic -t:ion FINDINGS OF FACT AND CONCLUSIONS OF LAW - 47 LPSEA t: \OGI\DSIUCODIAKUO343DSI.PLO LANE POwELL SPEARS LUBERSKY LLP Law Offices 550 W. 7th Ave. Suite 1650 Anchorage, AK 99501 -3568 07)277-9511 cancellation of a meeting between Mr. Hobgood and Mr. Sundstr It would be unreasonable to conclude that expenses incurre• in preparation of filing suit and prosecution of that suit were casts for the genuine purpose of materially furthering the negotia ion process. Rather, these costs are clearly those incurre• in connection with the prosecution of a claim. See Bill Strong 49 F.2d at 1550. Thus, any costs incurred after August 5, 1995 are not recoverable by MKB. Further, some of the costs that MKB claims to have incu red prior to filing suit were incurred in connection with the prosecution of this claim. KIB provided MKB with the Contrac ing Officer's decision on Change Proposals A through M on Decembe 7, 1994 (KIB Exh. 8.), therein ending the negotiation process with the Contracting Officer. However, MKB again presented Change Propo -als A through M to KIB in its April 1995 claim. Therefore, i is reasonable to conclude that some, if not all, of the expe ses incurred by MKB before filing suit, were incurred for the purpose of prosecuting a claim. Note that when Change Proposals A thr•u M were first presented in October 1995, no claim for Change 0 der preparation was included. Finally, the record does not provide any support for M c's assertion that it actually incurred $300,000 in costs as cla med under Change Proposal S. The Assembly finds that any costs incurred by MKB after August 4, 1995, as claimed in Change Proposal S, were incurred for the FINDINGS OF FACT AND CONCLUSIONS OF LAW - 48 LPSEA t:\DOI \DSIVCODIAK \103430S1.PLD between KIB and MKB to occur before suit was filed was the LANE POWELL SPEARS LUBERSKY LLP Law Offices 550 W. 7th Ave. Suite 1650 Anchorage. AK 99501 -3568 V7)277-9511 purpose of prosecuting a claim and are not recoverable. Furt er, the assembly finds that the costs incurred by MKB before Augus 4, 1994, as claimed in Change Proposal S, were likely incurred for both administering the contract and prosecuting this c1 =im. However, other than its bare assertion that such costs ere incurred, MKB has provided no evidence to quantify or allow allocation of the pre -suit costs. The Assembly will not appor ion costs absent evidence that the costs were actually incur ed. Therefore, MKB's claim for compensation under Change Proposal S is denied in total. T. Prejudgment Interest Except when the court finds that the parties have ag otherwise, prejudgment interest accrues from the day pro is served on the defendant or the day the defendant rece written notification that an injury has occurred and th claim may be brought against the defendant for that inj whichever is earlier. The written notification must be nature that would lead a prudent person to believe th claim will be made against the person receiving notification. AS 09.30.070. "Prejudgment interest should be denied in onl the most unusual case. Since prejudgment interest is the norm i. our law, the burden of proving that an unusual situation, such =s a resulting double recovery, exists should be on the party opp•sing the award . . . ." Hancock v. Northcutt, 808 P.2d 251, 261 (Alaska 1991) (citation omitted) . KIB concedes interest from Jan. 1, 1995 through June 19, 1996 at 10.5% on items A -M, if awards are made. This concessio is based on KIB receiving notice of claims A -M on October 31, 199 and on MKB's refusal to accept KIB's settlement proposal of June 19, FINDINGS OF FACT AND CONCLUSIONS OF LAW - 49 LPSEA JADGI\DSI000DIAK \10343DSI.PLD eed ess ivies t a ry, f a t a the LANE POWELL SPEARS LUBERSKY LLP Law O 550 W. 7th Ave. Suite 1650 Anchorage, AK 99501 -3568 )07)277-9511 1996. The Assembly finds that KIB's settlement offer was sufficient to toll the accrual of interest after June 19, 199 Regarding Change Proposals N -S, the Assembly finds hat interest should accrue starting on June 1, 1995, two months a ter KIB was notified of the change proposals. Further, interest o all non - conceded items included in A -S should run to the date hat these findings are rendered. Accordingly, prejudgment interest in the amount of $58,947.29, calculated at 10.5% annually, is awarded by the Assembly. Summary Item Amount Due Interest Tot =1 Retainage $155,068.84 $23,865.73" $178,934.57 Contract Balance 32,416.00 4,988.96" 37,404.96 Change Proposal A 30,805.00 4,741.02" 35,546.02 Change Proposal B 882.00 135.74" 1,017.74 Change Proposal C 6,206.00 1,051.95 7,257.95 Change Proposal D 10,985.00 1,848.70 12,833.70 Change Proposal I 0.00 0.00 0.00 Change Proposal J 289.00 44.48" 333.48 Change Proposal K 4,800.00 981.22 5,781.22 Change Proposal L 20,879.00 3,564.68 24,443.68 Change Proposal M 2,400.00 596.52 2,996.52 Change Proposal N 0.00 Change Proposal 0 0.00 Change Proposal P 0.00 Change Proposal Q 60,851.00 12,481.12 Change Proposal R 22,657.00 4,647.17 Change Proposal S 0.00 . FINDINGS OF FACT AND CONCLUSIONS OF LAW - 50 LPSEA I:1DGIIDSI KODIAK110343DSI.PLD $348,238.84 73,332.12 27, 304.17 $58,947.29 $407,186.13 A. Interest from January 1, 1995 through June 19, 1996 (535 days) . B. Interest on $5,183 from January 1, 1995 through June 19, 1996. Interest on $1,023 from January 1, 1995 through May 14, 1997 (864 days). LANE POWELL SPEARS LUBERSKY LLP Law Offices 550 W. 7th Ave. Suite 1650 Anchorage. AK 99501 -3568 97)277 -9511 C. Interest Interest D. Interest Interest E. Interest 1996. Interest F. Interest G. Interest on $1,670 on $9,315 on $2,238 on $2,562 FINDINGS OF FACT AND CONCLUSIONS OF LAW - 51 LPSEA 1:\DGL\DSI\KODWC\10343DS1.PLD from January 1995 through May 14, 199 from January 1995 through June 19, 19 from January 1, 1995 through June 19, 1 from January 1, 1995 through May 14, 1 Stanton • • • 6. 96. 97. on $17,167 from January 1, 1995 through June 19, on $3,712 from January 1, 1995 through May 14, 1997. from January 1, 1995 through May 14, 1997. from June 1, 1995 through May 14, 1997 (713 days). 4/ p B -ck, Hearing Examiner