Why Did Automated Manufacturing Machinery Fail to Achieve Performance Requirements?

The Challenge

A manufacturer of cargo shipping containers hired a contractor specializing in factory automation machinery to design and build an automated assembly line that would install the container's floors. During testing, the as-designed equipment was unable to meet production speed and quality specifications, which caused the project to fall behind schedule and the shipping container manufacturer to miss important milestones and deadlines.

As a result, the container manufacturer canceled the contract and, ultimately, exited the container business altogether. Shortly thereafter, the container manufacturer and the contractor entered into a dispute to determine whether the failure to meet specifications and schedule were the result of engineering errors on the part of the automation designer or the container manufacturer's failure to supply appropriate and timely materials for testing.

The automation designer asserted that if materials had been provided on time and without defect, they would have completed the project per the contract time schedule. The claims were then submitted to arbitration governed by a one-member tribunal under the London Court of International Arbitration's rules.

Ģ��tv's MULTIDISCIPLINARY Solution &�Բ��;

Outside counsel retained Ģ��tv on behalf of the cargo container manufacturer to review the proposed equipment design for fitness for the automation task, determine the causes of speed and accuracy under-performance, determine whether the manufacturer's claimed losses were reasonable, determine whether the contractor's proposed time and cost extensions were reasonable, and help estimate the fair market value of the equipment after the project was abandoned.

Our Mechanical Engineering practice provided the client with a comprehensive engineering analysis of the equipment, from its design to eventual abandonment by the contractor, including:
Provided boots-on-the-ground support through a mechanical engineer in Ģ��tv's local Hong Kong office, who inspected and documented the machinery left behind at the project site.
Determined the root cause of broken drills and subsequent screw fastening failures was due to excessive movement in the operation of the machinery by the contractor.
Performed a tolerance stack-up analysis to show that fastening failures were not due to out-of-tolerance flooring installations.
Completed finite element analysis (FEA) of the machinery, finding that the equipment design was excessively flexible and susceptible to vibration that caused imprecise drilling and fastening.
Integrated expertise from Ģ��tv's Data Sciences practice to analyze the results of machine performance tests and determine fastening failure rates under various operating scenarios.
Ģ��tv's Construction Consulting practice performed a schedule and delay analysis to understand the reasons for various delays during the project and their impacts. This was used to develop an estimate of the amount of time needed to complete the project, assuming it had continued.
Assessments of the project cost allocation and residual value of the abandoned equipment were also completed. Specific forensic analyses included assessments of:
- The contractor's initial project schedule and its compliance with the terms of the agreement and reasonableness.
- Potential schedule delay related to an alleged late provision of testing materials evidencing the contractor's performance and overall completion of work.
- Other causes of schedule delay, including the contractor's performance.
- Status of the project and a reasonable timeframe for completion, considering prior performance schedule delays.
- Reasonableness of the contactor's incurred costs and estimates to complete the project.

Ģ��tv's Impact

Our multidisciplinary team submitted separate expert and rebuttal reports on the engineering, schedule, and quantum issues, and prepared to provide expert evidence on behalf of the cargo container manufacturer. We also prepped counsel with tutorials on technological issues and participated in a joint expert conference and joint expert statement.

In this case, the parties reached a settlement shortly after the joint expert statement, days before the arbitration was scheduled to begin. Ģ��tv's rigorous engineering and quantum analyses provided our client with the valuable insights needed, helping encourage an early resolution and avoid additional legal costs.

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