The Case of the 60-Million-Dollar Bolt.

Once upon a time, on an international project (but I can’t disclose its location), I was involved in a dispute regarding a $ 60,000,000 claim by a contractor, which stated that it had been delayed due to unforeseen circumstances. The circumstances surrounding the commissioning of a Combined Heat and Power (CHP) system powered by a petroleum processing facility.  

The contractor stated that they could not commence the works due to the subcontractor’s delay in the project. The subcontractor stated that they were not to blame for the delay, and the owner of the CHP stated that they would apply liquidated damages against the contractor. The upstream petrochemical facility owner was also going to levy damages against the CHP plant owner because they could not commission the downstream waste gases that were intended to power the CHP.  

This was a fascinating case as each party blamed the other for the delay in commissioning the combined heat and power plant. These combined heat and power plants are jet engines which take in fuel and then spin excessively in the turbine area to produce heat and electricity for the end users. They are precision-designed pieces of equipment where any disruption, such as metallic objects, can cause damage and also lead to malfunction in the CHP equipment. In essence, they are the last piece of the jigsaw when it comes to commissioning and handing over a CHP plant.  

In this case, the engineers inspected the combined heat and power plant after it had shut down, a process that took approximately 3 days due to the spinning of the turbines and the system’s overall shutdown. Once they completed this inspection, they then investigated the system using a borescope. They investigated the plant by inserting the borescope into the internal workings of the combined heat and power system to find shredding of the internal system caused by a six-inch bolt.  

This 6-inch bolt was then removed from the system using a magnet and subsequently taken off for further analysis by the main contractor, the subcontractor, and the supplier to determine who was responsible. The system’s manufacturer stated that they were not culpable, as it was an imperial-size bolt, and they only used metric bolts. They also undertook an extensive analysis of the bolt under the microscope and compared it to other bolts used in manufacturing the systems. They highlighted in their reports that the damage caused to the internal workings of the combined heat and power plant was due to the bolt. Later, through a series of blaming and a lack of good faith, the parties tried to blame one another and seemed to miss the critical aspect of handing over the equipment.  

The bolt was such a point of concern and amusement that everybody seemed to have missed the reason why the claim arose, what the repercussions were, and how the contractor was supposed to overcome this.

This point proves in construction that anything can happen, and once anything happens, such as a bolt which shreds the internal workings of a combined heat and power system, everything can come to a halt. In some cases, this was a ‘black swan’ event; however, such events are relatively common on construction projects.  

If you have any projects involving Black Swan events, such as the $60,000,000 bolt, please get in touch with us. We will be more than happy to discuss the details of your claims and how we can provide construction dispute solutions. 

Legal Disclaimer

The information provided on this blog is for general informational purposes only. All content is provided in good faith; however, we make no representation or warranty of any kind, express or implied, regarding the accuracy, adequacy, validity, reliability, availability, or completeness of any information on the site.

Under no circumstance shall we have any liability to you for any loss or damage of any kind incurred as a result of the use of the site or reliance on any information provided on the site. Your use of the site and your reliance on any information on the site is solely at your own risk.

This blog may contain links to other websites or content belonging to or originating from third parties. Such external links are not investigated, monitored, or checked for accuracy, adequacy, validity, reliability, availability, or completeness by us.

The views and opinions expressed on this blog are those of the authors and do not necessarily reflect the official policy or position of any other agency, organization, employer, or company.

We reserve the right to change or update this disclaimer at any time without notice.