A Case of Technical Issues Between a Manufacturer and an Engineer-Constructor

A case developed between a manufacturer of specialty chemicals and the engineering-construction contractor it had hired. The manufacturer had decided to build a facility to manufacture synthetic caffeine based on a process it had purchased and hired an engineer (subsequently the engineer-constructor) to design and build the facility. The manufacturer had not manufactured caffeine before nor had it ever undertaken a project of this size and scope. When the contract was signed to design the process and engineer the facility, the manufacturer's CEO insisted on an unrealistic schedule: approximately six months. After much discussion the engineer said it would design, construct and start up the facility in a more realistic but ambitious schedule pending timely approval of documents.

In the later stages of the design-construction fast track project, the manufacturer stopped paying the monthly invoices and the engineer-constructor sued for its outstanding engineering fees of approximately 1.9 million dollars. It did not however stop the work. The manufacturer counter-sued for 37 million dollars stating that the schedule had not been met and that in some 100 instances the engineer-constructor had failed to design or build the facility correctly.

We were hired by the lawyer representing the engineer-constructor to review the claims of adequate design or construction. Other experts were hired to review schedule claims, cost claims and start up issues.

During the time we took on the case, the plant was completed and started up and production was proceeding on a limited basis. China had started to manufacture synthetic caffeine and was bringing product into the country at a lower price.

We reviewed completely the process purchased by the manufacturer and piloted in his laboratory, the design and construction documents for the facility generated by the engineer-constructor including the Process Flow Diagrams (PFDs), The Piping and Instrumentation Diagrams (P&IDs), The Process Calculations, The Equipment Specifications, The Equipment Layout Drawings, The Piping Drawings, The Instrumentation and Controls Specifications, the correspondence between manufacturer and engineer-constructor and the Meeting Notes. In addition we reviewed completely the legal documents filed by each side, all the technical claims and the depositions given and taken by all parties concerned. We also reviewed applicable federal and local regulations for the production of this product.

We visited the facility and interviewed plant and operating personnel. After our investigation was complete we filed a complete report on all the technical claims. We were then deposed by the lawyer representing the manufacturer (one of the most sought after firms dealing with industrial claims). This lawyer was in addition a graduate chemical engineer and understood completely the information we had filed. At times during the deposition, this lawyer acknowledged the accuracy of this expert's conclusions. However, this expert was strongly questioned on all points.

Within a month after this expert's deposition, the case was settled out of court to the complete satisfaction of expert's clients and the case never went to trial.

To see the resume of the expert associated with this case study, see the link below.