Full opinion text
OPINION SNYDER, District Judge. This contract action between E. C. Ernst, Inc. (hereinafter “Ernst”), an electrical subcontractor, and Koppers Company, Inc. (hereinafter “Koppers”), the general contractor, arises out of a sophisticated multimillion dollar construction project (hereinafter “the Project”) at the Aliquippa Works of the Jones & Laughlin Steel Corporation (hereinafter “J&L”). The matter was heard non-jury and requires interpretation and application of the Purchase Order (hereinafter “P.O.”) awarded by Koppers to Ernst for the electrical work at the J&L coke oven battery A-5 being constructed to provide a unique method for preheating and delivering coal to furnaces for the production of steel. Many difficulties were encountered, ranging from the necessity of not interfering with J&L’s plant operations, to the removal of price controls which delayed procurement of supplies, and involving numerous change orders during the entire construction period. At the same time, consideration had to be given by Koppers to the successes and failures being experienced at a “model” project being built almost simultaneously at Inland Steel, and being incorporated at Aliquippa. As might be expected, each party blames the other for delays, for engineering failures, for lack of participation in necessary scheduling and coordination, and for inadequate personnel and supervision, particularly in light of the importance of prompt completion of the work. Ernst, having been paid the major portion of its contract, now claims $2,325,705 in Count I of its Complaint for additional expenses by reason of the voluminous changes in the scope of the work; $1,484,000 in Count II for extra labor resulting from the many drawing revisions; $9,581.64 in Count III for certain additional work performed at Koppers’ direction; plus $60,430 admittedly retained by Koppers. Koppers counterclaims for $1,730,886 for support personnel it provided to complete the job on time, premium time paid to Ernst to prevent delays in the completion date (which it claims were due to Ernst’s inefficiency), premium time paid for early check-out which had been delayed by Ernst, and an inefficiency charge for its employees who worked premium time. I. FINDINGS OF FACT COUNT I 1. Ernst is a District of Columbia corporation with its principal place of business located in Washington, D.C., and is qualified to do business in Pennsylvania. Ernst is engaged in industrial and commercial electrical construction work throughout the United States, with branch offices here involved in Pittsburgh and Ambridge, Pennsylvania. 2. Koppers is a Delaware corporation with its principal place of business in Pittsburgh, Pennsylvania, and is engaged, inter alia, in the business of concept and design engineering, and in general contracting services for heavy industrial organizations, such as the basic steel industry. 3. The amount in controversy here exceeds sums in excess of $10,000, exclusive of interest and costs. 4. In June of 1973, Koppers entered into an agreement with J&L to design, engineer, and construct on a “turn-key” basis an A-5 coke oven battery and related facilities at Aliquippa, Pennsylvania, to produce coke for use in the steel making process at a cost of $46,587,650, to be functional by June 17, 1975. 5. At the time of the J&L-Koppers Agreement, Koppers was constructing a coke oven battery of similar concept for Inland Steel in Indiana, and Koppers’ specifications for the Project developed in April and May of 1973 were based on Koppers’ own expertise, J&L input, the know-how developed from handling problems as they arose at the Inland site, and from experience gained from an experimental plant operating at Ironton, Ohio. The Inland design, and thus the J&L design, was unique in its method of preheating coal and charging the furnaces. It was Koppers’ intention to utilize the Inland engineering as much as possible, and, indeed, much of the process engineering at the Project was taken from Inland. The J&L-Koppers Agreement, dated June 12, 1973, stated that Koppers would duplicate the work done by it at the Inland site. However, all parties contemplated changes for adaptation to the Project. 6. The coke battery at the Project differed from the conventional facilities by incorporating novel techniques. The ovens are similar to conventional facilities. The principal differences are the method of charging the ovens with coal and the preheating of the coal prior to charging. The process involved a structure known as a preheat facility. Crushed coal is taken from barges, on a conveyor and fed into coal storage bins located in the preheat structure. From there it is processed through a pulverizer which reduces the coal to dust size particles. The pulverized coal is then heated by blowing heated air through it to raise the temperature to approximately 500° F. The preheated coal is then fed into charging bins. In conjunction with the heating process, recovery techniques and equipment are used to remove coal dust from the heated air which is then recycled. This coal dust is added to the charging bins. The bins are then pressurized using steam, and the preheated coal is blown by steam through a pipe known as the charging pipe into the ovens. No leveling is required because of the fluid nature of the preheated coal. The remainder of the coking process is similar to the conventional method, with the exception that an advantage is realized from the preheated coal in that coking time is reduced. 7. Inland became operational in August of 1974, but changes continued to be made through August of 1975 in order to overcome experienced difficulties, all of which, to some extent, were reflected in changes at the Project. 8. The Project was not completed on the scheduled date of June 17, 1975, and the charge date of the battery occurred on January 1, 1976. 9. After entering into the Agreement with J&L, Koppers immediately undertook the initial steps for demolition of existing facilities and relocation of utility lines. Concurrently, Koppers’ engineers commenced the design and engineering for the Project, while its Procurement Department began ordering equipment and materials as they were identified by the Engineering Department. This technique is known in the construction industry as the “fast track” method, its purpose being to reduce the time between conception and operation. Both Ernst and Koppers were familiar with, and had previously used, the fast track method. 10. Koppers’ Engineering Department developed plans and specifications for the work to be subcontracted, including the installation of the electrical materials. On January 11, 1974, an electrical bid package containing specifications, drawings, equipment lists, arrangement and single line drawings, flow diagrams, instructions to bidders, and other materials was issued to prospective bidders. 11. Koppers separated the electrical work into various work areas, such as wet coal handling, preheat, and the like. When the initial package was issued, drawings and other information were not yet available for all work areas, and the bidders were asked to submit quotes on each of the areas as completed. A. The Purchase Order 12. On April 25, 1974, Ernst made a bid on the electrical work of $3,356,800. The resultant subcontract was based on a Purchase Order issued by Koppers to Ernst on June 4, 1974, Purchase Order No. 2463-2-002. 13. A variety of reasons, which will be described later in greater detail, contributed to an increase in the cost of the Project and an extension of Ernst’s performance date beyond the targeted charge date of June 17, 1975. Essentially, it was changes dictated by the experience at the Inland site, requests from J&L, and coordination and engineering failures on Koppers’ part that eventually increased the estimated man hours by more than 100%. 14. The price of materials and fabrication rose dramatically during the construction period, when nationally fixed price controls were lifted, increasing the final costs. 15. As a result of the lifting of price controls, delays were encountered in obtaining materials, primarily structural steel, and many suppliers and fabricators were unable or unwilling to meet delivery dates and prices which had been agreed upon earlier. We find, however, that the lifting of Federal price controls did not create an unforeseeable major difficulty which would excuse Koppers’ late performance in the procurement of machinery and equipment. B. Trade Interferences 16. In order to qualify for an investment tax credit, J&L demanded that the facility be operative by January 1, 1976. To meet this deadline, Koppers and its subcontractors were required to complete a project which had been expanded 70% in scope, in a time framework expanded only 27%; a “crash program” was created to complete the job. 17. The Engineering Department of Koppers was 15.7 weeks late in developing final drawings, causing further time constraints. 18. As a result of the crash program, 654.000 hours of direct labor were added by the Koppers’ forces, originally projected at 928.000 (including 110,000 man hours anticipated for electrical work); this work was performed by over 450 men of various trades. More than two-thirds of this was committed in the last six months of the Project; half of Ernst’s work was performed in the last six months. 19. This crash program resulted in delays to Ernst caused by trade interferences, both from other trades, the so-called "stacking of trades”, and from being forced to work in a “stop and go” fashion on work beyond the scope of the P.O. C. The Critical Path Method 20. The initial bid package included a current computer printout of the electrical activities, so that the electrical contract bidders could plan their volume, distribution, and peaks. This is known as the Critical Path Method (hereinafter “CPM”); it divides a project into separate work activities which, when shown in diagram form (“networks”), direct the sequence of job progression and reflect the interrelationship and dependency among the activities. This arrangement is referred to as the “network logic”. Each activity is assigned a duration, from which expected and required starting and completion dates are calculated for each activity in relationship to all activity durations and network logics, in order to meet the charge date. As the work progresses, the CPM is updated and revised through computer adjustment, normally on a monthly basis. 21. Koppers developed the CPM schedule for the Project to coordinate the engineering, procurement, construction and final checkout phases. There were more than 100 CPM network logic diagrams on the Project, containing approximately 10,-000 activities, some 340 of which were electrical. 22. As has been noted, the target date for charging the Project’s battery ovens was initially June 17, 1975, and the CPM was adjusted forward and backward from that date, “the forward and backward pass”. 23. As part of the electrical bid package, as noted above, Ernst received the then current CPM drawings and computer printouts listing the electrical activities; on May 30, 1974, the CPM showed the Project to be approximately six weeks behind schedule. 24. In August of 1974, Ernst submitted man power schedules which included the estimated man power requirements based on Ernst’s analysis of the current CPM schedule. 25. The P.O. provided as to the CPM: “Seller agrees to follow the plan as currently shown and to perform the work in the allotted time designated as activity duration. Seller agrees to suggest revisions to the network plan that in his judgment would be mutually beneficial; time being of the essence.” 26. The original CPM schedules provided for major construction activity to commence in the early fall of 1974, and Ernst, being a “follow on” contractor who must of necessity follow other contractors, was dependent upon the availability of work areas. On August 22, 1974, Koppers’ CPM analysis showed that of 339 “total activities” for the electrical contractor, 332 were not available. As of October 17, 1974, 329 activities could not start, on November 14, 1974, 317 could not start, and by January 9, 1975, 282 activities could not be started, far less than the original CPM schedule contemplated. 27. The P.O. required that a qualified person be assigned by Ernst to work with the CPM because special training and knowledge are required to properly maintain and utilize the CPM as a planning and scheduling tool. 28. Ernst did not fully participate in the CPM, particularly toward the end when it became apparent that Koppers was no longer using the CPM as a control method. But, in any event, Koppers had resident engineers whose direct function was updating the CPM, and Ernst’s failure to do so had no effect in causing delays in the performance of its contract. Koppers’ engineers were at all times familiar with the exact progress of the electrical subcontract and were, in fact, updating that progress on the networks. 29. After September 18, 1975, the CPM was replaced, as requested by J&L, with a more detailed construction and operating check-out schedule in bar chart form. Ernst was provided with copies of these bar charts, to which no input from Ernst was required. 30. We find no evidence on the record that Ernst failed to perform adequate forward planning and scheduling with regard to work availability in sequence, material procurement, and man power requirements. D. The Seasonal and Premium Time Claim 31. Ernst was required to work well into the winter of 1975 because of the massive changes in the scope of the work not contemplated by the P.O.; this second winter was not anticipated. 32. As a result of changes in the scope of the work beyond the P.O., and because of the overriding desire of Koppers and J&L to complete the Project, Ernst was required to put in premium time work. E. The Supervision Problem 33. Ernst’s top field supervisor on the Project was Howard Miller, who was also in charge of Ernst’s work for other contractors in other areas at the Aliquippa Works. 34. While Howard Miller was absent from the Project job site during the summer of 1975, due to the terminal illness of his wife, there is no proof that Miller’s absence caused inefficiency or failure to perform by Ernst. 35. As soon as Koppers complained about the situation (Miller’s absence), Ernst’s Ambridge Branch Manager, Wallace McCracken, was sent to supervise the Project, and he immediately brought about substantial gains in the use of personnel. No provable delay to the Project resulted from lack of supervision by Ernst. F. Supporting Personnel 36. Under the supplemental instructions to bidders, Koppers indicated they would not supply any supporting personnel (electrical engineers, materials supervisors, construction or electrical superintendents, etc.) “to the field installation”. It was the bidder’s responsibility to provide whatever type of personnel required to complete the contract. Koppers did furnish supporting personnel who primarily interpreted Koppers’ engineering drawings and the many change orders issued in light of the Inland experiences. It is the wages paid to these persons which forms the basis of Koppers’ counterclaim against Ernst, and is part of their defense as to Ernst’s performance. 37. Throughout, Ernst manned the Project with sufficient personnel, although the Project was greatly accelerated in order to meet the January 1, 1976 final deadline. 38. The wages paid to these men have nothing to do with the construction of the electrical facilities, but, to the contrary, were required through no fault of Ernst’s failure to perform. G. Ernst Delays and Failure to Complain 39. The CPM analysis letters showed electrical activities prominently on the top critical path, and the general comments to those letters indicated that Ernst had undermanned the job; we find, however, that this matter was taken up at job conferences and Ernst, in fact, procured additional manpower without delay to remedy the situation. 40. Koppers’ CPM expert, David Lee, contended that Ernst failed to perform activities as they became available. We find, however, that Lee failed to review a history of the constraints on a particular activity, and that this was a necessary part of a CPM review. We find that Ernst performed the work as expected by the CPM schedules. We further find that the causes of delay were late engineering, extended durations, additions in design, and procurement problems. 41. Koppers contends that Ernst caused its own delays for a variety of other reasons: that they were working on another unrelated job for J&L at the Project site; in some instances the electrical work was incorrect; that they obstructed the single access road at one point; that they delayed in procuring certain equipment which they were responsible for ordering. However, we find the Defendant has not proved with any certainty that the effect of these actually delayed the project; the Plaintiff has proved the contrary. 42. Koppers emphasizes that the minutes of meetings do not show complaints by Ernst as to the problems of delay and interference to Ernst by other trades. We find that the problems were discussed and worked out. 43. In the minutes of the meeting of August 22, 1974, the following appears: “For efficiency, E. C. Ernst will work in areas that are open and materials on hand.” This was a recognition of the problem of delays and inefficiencies. 44. - In the minutes of the meeting of January 16, 1975, the following appears: “The purpose of the meeting was to review any outstanding problem that was preventing E. C. Ernst from completing his work as scheduled.” Ernst stated it was “concerned of material shortages (example — insulators)”, and needed Koppers’ engineers “to assist Ernst in the exact location of instruments and controls which are not located on Koppers drawings, Ernst was unable to keep the work area warm.” Problems were thus being raised by Ernst. 45. The effectiveness of the job site meetings is shown by a letter of T. B. Myers of Koppers to James K. Shannon of Ernst, which stated: “We intend to continue to expedite this project . . . and the details of the common coordination problems should be worked out in the scheduled field meetings.” 46. In the minutes of the meeting of January 30, 1975, this appears: “Mr. Adams [of Koppers] stated that Koppers was not getting the Quench Track as originally promised and the delays in obtaining same daily was seriously interfering with progress.” Also, “E. C. Ernst stated they were concerned about steam from the Quench Cars forming ice on the Shed Steel causing hazardous working conditions.” Also, E. C. Ernst demanded the check-out list as soon as possible to make certain they were “installing equipment, etc. in the sequence required”. E. C. Ernst “stated they were encountering many delays due to both structural and mechanical interferences.” H. The 30 Day Clause 47. The P.O. contains a provision that claims for extra work, where such work was not the result of “deviations” between J&L and Koppers, would be submitted to Koppers within 30 days of Ernst’s receipt of the request for extra work. 48. Shannon wrote Koppers’ Beale on May 30, 1975 and asked Koppers to waive the clause. Beale did not respond to that letter. Beale’s testimony was contradictory as to whether he spoke with Shannon about the May request. On July 2,1975, Shannon again wrote to Beale stating that since there had been no response to his first letter, Ernst assumed that Koppers deemed the clause waived. Again, there was no written response, although Beale circulated the letter among several of Koppers’ Departments. 49. Koppers’ Moran claims to have told Shannon, prior to the May 30th letter, that the clause would not be waived. No memorandum was made of this alleged conversation, despite the practice of both Moran and Beale to record even the most trivial of telephone conversations. Beale, who testified of being told of the alleged conversation, did nothing to remind Shannon of it upon receipt of Shannon’s letters. 50. When Beale received the drawing revision claim, he promptly advised Moran, who told him to circulate it and the supporting price sheets to the various Koppers’ Departments. Neither man told Ernst that the clause precluded consideration of the claim. If Jones, Moran and Beale — and Koppers — considered the clause a bar to any part of the claim, such views were not communicated to Ernst. 51. The Ernst claim was the subject of extensive negotiations between Ernst and Koppers. At no time after the presentation of the claim, during the negotiations or prior to this suit, did Koppers assert that the claim or any portion of it could not be advanced by reason of the so-called “30 day clause”. Koppers did not even discuss the clause internally after July of 1975. 52. We find that the conduct of Koppers in failing to insist on the 30 day notice provision in light of their “approved for construction” orders to proceed and their failure to reply to Shannon’s letters, prevents Koppers from now using this clause as a bar to Ernst’s actions. I. Damages 53. Hoppers alleges that they inquired whether the $1,484,000 claim for drawing revisions constituted Ernst’s entire claim on the Project, and Ernst did not indicate that it had any other claims. Hoppers avers it was completely surprised by the additional claims which were made. We find that Hoppers was not surprised by the claims because Hoppers’ personnel stated they realized the extent of the many claims Ernst could make. We find that Ernst is not estopped from asserting these additional claims. 54. In its Count I damage calculations, Ernst has employed what is known as the “total cost” method. Aside from the fact that the $2,325,705 claimed seems to have nothing to do with Ernst’s “total cost,” we find the approach itself is invalid. Ernst fails to prove specific amounts of delay and damages allegedly attributable to specific acts or failures by Hoppers. 55. The figure of 82,980 hours, which Ernst uses as its original estimate of hours to complete the work, has no basis in fact. The figure is an average, calculated in 1977 by Ernst’s claims expert, R. P. Anthony, of three different man power estimates prepared by Ernst in or about August of 1974. 56. Ernst’s hypothetical allocation of unpaid journeyman hours, on the basis of the number of drawing revisions received per year, is invalid. Not all drawing revisions required work by Ernst, and not all revisions caused an equal amount of work. This artificial method of allocation is not a proper substitute for specific proof. 57. Ernst’s calculation of its Count I damage is based, as noted above, on the total cost approach. This calculation includes approximately 10,000 hours expended by Ernst on the temporary light and power contract, which was not part of the P.O., not in suit here, and paid in full under the temporary contract. 58. This finding makes the Ernst calculation of the Count I claim invalid as there is no method of calculating any figure for the remaining Count I claim. 59. While premium time inefficiency is recoverable, Ernst has failed to prove any amount of damages attributable to such inefficiency. 60. While labor escalation is recoverable, Ernst has failed to prove any amount of damages attributable to escalation of cost. COUNT II A. Drawing Revisions 61. In 1973, when the Hoppers bid was accepted by J&L, both parties contemplated duplicating, with very little re-engineering, the coke battery of unique design being constructed by Hoppers for Inland Steel Company. Even the CPM method of scheduling for the J&L Project was based upon scheduling done for the Inland job. The 23½ month estimate was agreed to because Hoppers thought much of the Inland engineering could be followed, and the Agreement between J&L and Hoppers stated that Hoppers’ work would duplicate that being done at Inland; when bids were received from electrical subcontractors, they were reviewed by Hoppers in light of its Inland experience. 62. When the Inland plant attempted to “push coke” in August 1974 (several months after the effective date of the subcontract between Ernst and Hoppers for the J&L coke oven), serious and extensive problems were experienced: motors burned out, dust conditions caused explosions and fires, and mechanical difficulties plagued the plant’s operations. In addition, there was a time overrun of nearly one year on the Inland job. Because of the Inland problems, Hoppers formed a committee to analyze the difficulties, and the work of this committee resulted in engineering revisions at the J&L Project, which continued throughout the performance of Ernst’s work, almost until the completion of the Project in January 1976. 63. In addition to changes demanded by J&L, the ongoing changes at Inland resulted in numerous drawing revisions throughout the Project. Ernst received 289 drawings in its original bid package and received over 1300 additional drawings by way of revisions, 20% arriving after the originally scheduled completion date for Ernst’s work. Many drawings were revisions of revisions, and some were revised as many as seven times. These revisions were exceptional and excessive in number; the extra work performed pursuant to them has not been paid for. 64. The drawing revisions affected Ernst’s ability to perform its work in a normal and efficient manner, and some of the revisions were issued by Koppers after Ernst had completed the work shown, requiring Ernst to rip out and replace work already done. This had a detrimental effect on other work in progress on the Project. 65. While the drawings as issued were not and were never intended to be complete, it is clear that the additions and revisions contemplated by the parties did not include the massive changes brought about in the scope of the work by Koppers. 66. The instructions to bidders stated that the drawings would be issued for construction as engineering progressed and could be revised. But the revisions made here are found not to have been within the original scope of the work, and thus not covered by the instructions to bidders. 67. No request for quotation was made to Ernst for the revisions, nor was any written authorization given to proceed with specific work; rather, plans were marked “approved for construction”. 68. Because of the frequency of drawing revisions, the time involved in comparing bid drawings with revisions and in pricing extra materials that such revisions might require, and the paramount desire of Koppers and J&L, communicated daily to Ernst, to complete the Project, Ernst generally proceeded with the work required rather than making drawing price proposals to Koppers. We find Koppers acquiesced in this procedure knowing that revision claims would be made. 69. James Johns, Claims Manager for Ernst, examined the drawings as they came in; after construction began most revised drawings were stamped “approved for construction”. These were distinguishable from bid drawings, which were stamped “for bidding purposes”. Late in May, 1975, Johns and four other Ernst estimators began comparing the latest drawing revisions with the original bid drawings, and lists were made showing the materials which had been added to or deleted from the bid drawings. Where there was no comparable bid drawing with which to make comparison, lists were compiled showing the new materials required. 70. These lists or pricing sheets were turned over to a single Ernst estimator, Shadier, who reviewed the sheets to eliminate duplications, and then priced the materials using either recent invoices Ernst had paid for such materials or the catalogues of trade suppliers. Credit was given to Koppers by Ernst for materials deleted at the same price as similar materials were added, except in the case of wire and cable where nominal or no credit was given for deletions, since such material could not be returned by Ernst to the supplier. A similar credit policy was used for other equipment which had been purchased by Ernst and which could neither be returned nor readily used elsewhere. We find this accounting procedure to have been proper under all the circumstances. If material was supplied by Koppers, no price was noted by Ernst on its pricing sheets either as a charge or credit, and the prices charged by Ernst for materials it provided were the fair market prices then in effect for such material. 71. Shadier then computed the hours of journeyman electrician labor necessary to install such material based on Ernst’s experience and the estimator’s judgment of the Project conditions and difficulties (such as the height and location of the work site). 72. The hours of additional labor were priced by using the journeyman electrician rate then charged by Ernst, $20.77 per hour, and adding thereto a $5.60 factor representing the cost to Ernst, not otherwise re-fleeted in the journeyman labor rate, of comparing revisions with the bid prices and pricing the additions and deletions. There were 36,049 journeyman hours devoted to additional work pursuant to the drawing revisions. Conversely, the hours for labor associated with deleted work were credited to Koppers at $15.80 per hour, the journeyman rate less Ernst’s overhead and profit. 73. The Ernst pricing sheets involved some 144 drawings and were submitted to Koppers, along with a claim for $1,544,307, on December 9, 1975. An adjustment was made on December 12, 1975, correcting additions and deletions, for a total of $1,515,-222, which was again adjusted the same date to deduct a field authorization in the amount of $20,369, leaving the total net increase as claimed for drawing revisions at $1,494,853. This was further adjusted to $1,484,000. We find all of these items to be properly chargeable as “extras”. 74. Following the December 1975 letters, and at Koppers’ request, Ernst delivered its pricing sheets in support of its $1.4 million bill for work on revised drawings. These pricing sheets were duplicated by Koppers and disbursed among the various departments responsible for the A-5 job, with the request that each department comment upon the details. 75. The Engineering Department made several analyses of the Ernst claim and accepted many parts of the claim entirely. The appraisal by the head of Koppers’ Engineering Department, Kunkel, was characterized by Robert Moran as solid and competent, although Moran noted one Koppers engineer, Huitema, vacillated concerning his “No” position. 76. The Estimating Department assigned the task to Vaneski, whose first review yielded $825,570 in Ernst’s favor. This review took a year and a half and did not begin to change significantly until the spring of 1978 when the review became “step 1”, “step 2” being a reduced version prepared with the assistance of counsel. As part of his initial review, Vaneski credited Ernst with 75% of the value of certain work for which he could find no Ernst pricing sheets. The important point with respect to the various Koppers’ analyses, and we so find, is that the method of pricing used by Shadier was found not objectionable. 77. Negotiations proceeded in 1976, but Ernst ceased participating when it appeared Koppers would not honor a substantial portion of the claim. 78. Koppers valued the claim internally at $500,000; this is the amount they submitted to J&L as the Ernst claim. None of the money from the J&L settlement has been given to Ernst, nor any of the $60,430 retained by Koppers. 79. The Plaintiff’s calculation of revision claims failed to deduct $500 as required by Paragraph 6 of the P.O., which states: “A drawing revision that constitutes an addition or deletion due to changes in motors which cause an increase or decrease in conduit and wire size, addition or deletion of lighting, addition of drives, starters, etc. not shown in the Bid drawings or not contained in the intent of specifications furnished. A claim for the above will be reviewed on the strict basis that the initial cost (Labor and/or materials) of 500.00 is to the account of the seller.” 80. Applying the $500 provision to each of the claims made by Ernst in the December 12,1975 claim results in a total deductible amount of $62,080. 81. Recovery in this lawsuit by Ernst of more than the approximately $1.2 million loss certified by its accountants would not constitute a windfall for Ernst. Mr. Soreff, Ernst’s former accountant, testified that Ernst carried $1,894,933.50 on its books as a receivable, which represented Ernst’s actual loss on the A-5 Project plus a $600,000 (approximately 33⅓%) profit. 82. Whatever the accounting practices of Ernst may have been, it goes only to the weight to be given Ernst’s claims for inefficiencies. The figure of $1,894,933.50 was in fact reduced to $1,294,933 by the elimination of the $600,000 profit figure, to represent the cost receivable. 83. There is no basis in Ernst’s accounting practices for refusing to allow the Count II claim in full. 84. Thus, we find the Plaintiff on Count Two to be entitled to $1,421,920 ($1,484,000 less $62,080 under the $500 deductible), with interest from December 12, 1975-$1,732,-794.60. COUNT III 85. During the course of the Project, Ernst performed work pursuant to field authorizations and directives issued by Koppers. Field authorizations were issued to accomplish work not shown, or to correct work shown on construction drawings which involved field interferences. Ernst performed the work and thereafter calculated the journeyman hours and materials required to perform such work. The calculation was set forth and priced on an Ernst “work order” form which was submitted to Koppers as a bill. The labor was priced at the journeyman rate then in effect, and six such orders are the subject of Count Three, for an aggregate of $9,581.64, which amount has not been paid. 86. We find that the work with respect to such orders was performed by Ernst at Koppers’ request, and the price fixed by Ernst for such work was reasonably and correctly computed. Plaintiff is entitled to recover for these work orders in the amount of $9,581.64, with interest from October 15, 1975-$11,775.66. THE COUNTERCLAIM 87. Koppers had a large field force to assist in the Project, and the services of these forces were considered part of the original J&L contract. They were later billed to J&L under deviations which followed J&L authorizations or extra work orders, and, in some instances, they were attempted to be billed or back charged to Ernst. These form the basis of the Defendant’s counterclaim and there is no contractual basis for charging these amounts to Ernst. We find there is no proof for this aspect or the other aspects of the counterclaim. SUMMARY 88. We find the contract retention of $60,430 by Koppers to have been unjustified and award this sum to Ernst, together with interest thereon at 6% per annum from December 12, 1975 (the date of demand for payment) — $73,691.48. 89. We award to Ernst on its Count II claim, the sum of $1,421,920, with interest at 6% per annum from December 12,1975—$1,732,794.60. 90. We award to Ernst on its Count III claim, the sum of $9,581.64, with interest at 6% per annum from October 15,1975 — $11,-775.66. 91. All other claims made by Ernst are denied, as well as the counterclaims of Koppers. II. DISCUSSION A. COUNT I 1. The Delays and Their Impact Count I of the Complaint seeks damages arising from delays imposed upon Ernst during the course of its work as electrical subcontractor to Koppers on the construction of an A-5 coke oven battery and related facilities for J&L. The record in this case is replete with evidence of Koppers’ numerous changes in the drawings, to the point where a demand was made for a cut-off date so that the Project could finally be completed. Many interferences resulted to the work of subcontractors, both from revisions and changes in the scope of the work. Koppers had substantial difficulties in procurement of supplies and equipment which caused costly delay to Ernst. As a general proposition, the law imposes liability upon a general contractor for additional costs for delays caused by him. Thus, in Johnson v. Fenestra, Incorporated (Erection Division), 305 F.2d 179, 181 (3rd Cir. 1962), it is stated: “Because the contract was to be performed in Pennsylvania and had most of its other contacts with that state, Pennsylvania contract law determines whether the prime contractor’s conduct in connection with the agreed supplying of materials constituted a compensable breach. It is a familiar rule of contract law, adopted and applied by the courts of Pennsylvania, that a party breaches a bilateral contract when he does improperly or fails to do something which he has expressly or impliedly undertaken to do to facilitate the performance of the other party. Just Mfg. Co. v. Falck, 1946, 354 Pa. 421, 47 A.2d 659; Bodman v. Nathaniel Fisher & Co., 1920, 268 Pa. 535, 112 A. 99; see Sheehan v. Pittsburgh, 1905, 213 Pa. 133, 62 A. 642. Actually, this rule is but an application of the more general principle that a contract is to be enforced so as to give effect to the reasonable expectations created by the parties in entering into the bargain. See In re Kellett Aircraft Corp., 3d Cir. 1951, 191 F.2d 231; Restatement of Contracts § 315; 5 Williston, Contracts, rev. ed. 1937, § 1293A. Within this framework, the question here is whether the furnishing of defective panels and the ensuing delay in supplying serviceable panels constituted a breach of contractual obligation. The contract expressly required the prime contractor to supply the panels which the subcontractor had agreed to install. The contract also required that performance begin within 7 days after its execution. On July 14th, promptly after the arrival of the panels which later proved defective, the subcontractor put an adequate crew to work upon the installation. In addition, the court below expressly found that in the contract negotiation ‘the understanding was that the installation had to be completed before cold weather, so that * * * workers could pursue other construction tasks inside with the benefit of heat’. However, the court regarded this understanding as unimportant because the enclosure of the structure was something upon which the prime contractor insisted in the interest of its remaining work. But regardless of the reason for reaching an agreement on this point, we think the conclusion is inescapable that the bargain as made necessarily implied and gave the subcontractor assurance that the prime contractor would perform his obligation to supply panels at times and in quantities consistent with the understanding of the parties as to the prompt beginning and early completion of this installation. To rule otherwise would be to defeat the reasonable expectations created by the conduct of the parties.” But we cannot stop here, for the Johnson court went on to say: “Fenestra urges that Carroll Elec. Co. v. Irwin & Leighton, 1923, 80 Pa.Super. 428, supports its claim that damages caused by such delay as we have here is not compensable. But in the Carroll case the Superior Court relied upon the fact that the contract included an express provision for extension of time on account of delays experienced by the subcontractor by reason of conduct of the contractor or any other subcontractor. The contract also stipulated that it contained the entire agreement of the parties. The court reasoned that in such an integrated contract the express provision for a particular remedy in the event of the delay must be construed as affording the sole remedy for such an occurrence. Of course, parties may validly contract that an extension of time shall be the only remedy for circumstances or contract causing delay. Henry Shenk Co. v. Erie County, 1935, 319 Pa. 100, 178 A. 662. The bargain in the Carroll case was construed as being such a contract. It is equally clear that Fenestra is not aided by cases that treat delay as compensable because the occurrences which caused the delay were themselves within the contemplation of the parties at the time they entered their contract. Acchione v. Commonwealth, 1943, 347 Pa. 562, 32 A.2d 764; Frederick Snare Corp. v. Philadelphia, 1937, 325 Pa. 460, 190 A. 889. None of these cases are in derogation of the general rule stated in the Shenk case that ‘where the execution of * * [a construction] contract is dependent upon something essential, which has to be performed by the * * * [other party], the default of * * * [that party] for an unreasonable time, resulting in damages to the contractor, may render the * * * [other party] liable for such damages’. 319 Pa. at 105, 178 A. at 664. This rule applies here.” Id. at 182. See Precision Steel Decking & Erection Co. v. American Steel Building Co., 347 F.Supp. 431 (E.D.Pa.1972), remanded 487 F.2d 1395 (3rd Cir. 1973). Since Koppers was responsible for numerous delays, it is patently unreasonable to deny payment for the impact of such delays unless Carroll Electric Co. v. Irwin & Leighton, supra, applies. The rules were applied in Lichter v. Mellon-Stuart Co., 305 F.2d 216, 218 (3rd Cir. 1962), as follows: “Certainly a contract may validly provide that a contractor shall be entitled to no relief except an extension of the time of performance if circumstances beyond his control shall delay his performance, even though such delay does in fact increase his costs. We have today so ruled in Johnson v. Fenestra, Inc., 3 Cir., 305 F.2d 179, relying upon Henry Shenk Co. v. Erie County, 1935, 319 Pa. 100, 178 A. 662. Such a clause might preclude damages here if it were the subcontractor’s essential complaint that his performance had been made more costly because he was required to postpone his operations.” However, in Peter Kiewit Sons' Co. v. Summitt Construction Co., 422 F.2d 242 (8th Cir. 1969), the Eighth Circuit explained that Lichter was limited to those situations where there was no change in the scope of the work and refused to apply a no damage provision where there was a substantial change in the scope of the contract. We must now look to the conduct of the parties and the terms of the Koppers-Ernst subcontract to discern the reasonable expectations of the parties. 2. Trade Interferences The P.O. provided (Special Conditions, ¶ 7): “It is seller’s direct responsibility to work in conjunction with other trades with relation to the installation of his material and equipment to ensure that no conflict arises necessitating removal of any of his work. Any removal or reinstallation required will be for the account of the sub-contractor responsible." The claim of Ernst results, substantially, from inefficiencies caused by “stacking of trades”. We find that this concentration of work within a short period produced many inefficiencies, including the necessity of removing some of the electrical work. The provision quoted does not apply to stacking, but relates only to removal costs arising from conflict of work, and we construe this limitation to apply only within the general scope of the work called for by the contract. Since we find the scope of the work to be vastly expanded, and that this expansion within a compressed period was responsible for the removal, the P.O. does not limit Ernst’s claim in this respect. Ernst has also claimed that delay was partially caused by “stop and go” work, whereby they were forced to work on an area, leave it unfinished, and return to it later. The instructions to bidders provided: “Bidder is required to proceed with installation and later come back to same area to make the additions without increase in contract price.” An ordinary stop and go claim would be barred by these instructions, but again, this limitation only applies to the scope of the work contemplated by the contract. It does not bar Ernst’s claim for stop and go delays outside the scope of the work. 3. The PERT/CPM Networks The P.O. provided (PERT/CPM Requirement Section): “Seller acknowledges that Koppers is planning and scheduling this work by the PERT/CPM Method. Seller is cognizant of this PERT/CPM requirement to provide qualified personnel to maintain correct networks for his portion of the work and to report progress monthly/bi-monthly, by submitting a ‘marked-up’ copy of the electrical construction network. Seller agrees to follow the plan as currently shown and to perform the work in the allotted time designated as activity duration. Seller agrees to suggest revisions to the network plan that in his judgment would be mutually beneficial; time being of the essence.” Koppers cites Ernst’s admission that it failed in large measure to have input to the CPM by reporting monthly, or at any time, or by submitting a “marked-up” copy of the networks. We note that Benjamin Wilkinson, Koppers’ resident engineer in charge of scheduling the work of subcontractors and the use of the CPM, credibly testified as follows (Tr. pp. 2330-1): “Q All right. Now, would you explain, if you would please for the record and for Judge Snyder, what the CPM or C.P.M. PERT system is that was used on the J & L A-5 coke oven battery job? A Well, the C.P.M. network is a management tool. It is a guide on how to build your job. Basically what you do to make a C.P.M. network is you start off by finding out from the contract specs exactly what is in the contract, what you have to install, with that combination, with the experience from past jobs and you physically sit down and build the job on paper the way you are going to build it out in the field. Q Does the term activities have any meaning with respect to C.P.M.? An activity is a certain piece of work in that network. For example, if you are going to put in a foundation, a group of activities would be first you have to excavate the hole. The second activity would be to install the form work. The third activity would be to install the rebar. These are all work— A Q When you say rebar, what does that mean? A Reinforcing bar for the concrete. Then you would pour the concrete. Every one of those, we refer to them as activities. Q Now, you say that you have to put those activities or something like that on paper? How is that done? A By physically sitting down and putting them in a graphic form with a — with a graphic type system of just a straight line with the title of that activity, whatever it is, excavating the foundation, on the top line, tying that in with another line following it with the next activity.” Mr. Wilkinson further testified (Tr. pp. 2440-1): “Q You said something about periodic updates of the CPM. Would you state whether the CPM is a static thing or an ongoing thing? A When we are in the field and we are physically working on the job, the J & L network, we updated every three weeks. What I mean by ‘update’ is that the network, it is just a guide, it is just a management tool to help us build that job. It is flexible, it can be changed. When I update it, all the activities that I have started to work on I put an actual date on that activity. I put if we complete an activity on such and such a date, I complete that activity. Duration changes, and if it is taking us longer to do a job than I originally anticipated, I extend that duration to show it is going to take a little while longer. I change the logic sometimes if something pops up to where it is a piece of material a manufacturer originally said was going to take ten weeks and it is now going to take him 20 weeks to fabricate and we get into a negative critical path that is really running bad and I can’t get that piece of equipment there any sooner, I then go back and I take a look at my logic. Maybe I can go ahead and work on the work I said would follow that. I might have to break that tie and put it downstream of the activities a little. When all that information is put down on the paper, I again send it into our planning and scheduling experts. Engineering and procurement does the same thing with theirs every three weeks, so we get all the current information, they assemble it, run through the computer and we get a new printout. Q And where does the information come from that goes into the computer? A It comes from three sections. Construction updates their network to what is happening. The engineering people do the same. The procurement people update theirs to where they are at with ordering machines and equipment and so forth, and all that information is then assembled in the scheduling and planning section of our company, and then they tie it altogether.” We know that the Engineering Department took 36 weeks to develop the final drawings, originally estimated to take 21 weeks (Tr. p. 2536), and was thus 15.7 weeks late from the original planning. We also know that Wilkinson was on the job to make whatever changes were necessary to the computer run-offs. Thus, no delay was in any way caused on the Project by reason of Ernst’s non-cooperation with the CPM Program. This is particularly true in light of the substantial engineering field forces (20 to 30) that Koppers maintained (Tr. p. 2579) and a total of over 450 men at the site (covering trades, such as laborers, carpenters, millwrights, boilermakers, and pipefitters). When 70% of the work was compressed within 27% of the construction time (Tr. p. 739), by reason of Koppers’ failure properly to plan, coordinate, and procure for the Project, delay damage to Ernst was foreseeable and inevitable. 4. The Seasonal Claim Ernst claims extra expense for work required to be done in the second winter by delays caused by Koppers. As to this, the P.O. provided (General, ¶ 8): “Work performed during a season of the year not originally anticipated, unless specifically mentioned herein, does not constitute a basis for additional charges.” Again, had the work under the contract brought about seasonable extra costs, the P.O. would control. Where, however, the delays, as here, carried over into the second winter through changes in the scope of the work, this provision has no application. The claim by Ernst for inefficiencies caused by the second seasonal delay is not controlled by that provision. 5. The Premium Time Claim Ernst makes claim for inefficiencies caused by premium time work. The P.O. provided (Seller Agrees to Comply With, ¶ 8): “Price is based on an eight (8) hour day, five (5) day week, Monday through Friday, inclusive. The following will apply to field overtime, both on the base contract work and any temporary or extra work assigned: Increases to cover field overtime authorized by Koppers’ authorized representative shall be limited to actual premium time paid to hourly or building trade union type of employees plus associated taxes; insurance and welfare benefits which the seller is legally required to pay, but excluding overhead and profit. Seller’s invoices for overtime costs shall be rendered separately each month and shall indicate the straight time wage rate and the premium hours paid by crafts for each payroll period. Seller shall furnish Koppers’ field offices daily with force reports for the period for which premium time has been authorized. The daily force reports must indicate the employees’ names and badge numbers, crafts and hours worked.” Here again, inefficiencies caused with the scope of the contracted work would be limited to premium time less overhead and profit, and would prevent further claims for inefficiencies. Ernst’s claim, however, is for inefficiencies beyond the scope of the contract and is not barred by this clause. 6. The Firm Price to July 31, 1975 Ernst claims delay damages and Koppers says only field costs may be in order. The P.O. provided (Sheet 1-W): “PRICE — BASED ON QUOTATIONS DATED $3,356,800.00 FEBRUARY 11, 1974, APRIL 10, 25 & LOT 26, 1974 Price is Firm through July 81, 1975. If job duration exceeds July 31,1975 through no fault of seller, negotiations for additional field costs may be in order. Price does not include check-out or standby time. In the event of authorized additional and/or extra work, the following composite rate will apply per journeyman hour. This rate includes all supervision, fringes, insurance, overhead, profit, etc., and is Firm until December 31,1974 19.30/HR” There is no direct statement, nor do we believe any implication can be drawn from this language, that no damages will be paid for extra costs for extension of the contract time. In fact, prior to the P.O., and omitted therefrom as an agreed item, was Ernst’s estimate that the field costs alone would be in the amount of $80,000 per month (as shown by an invoice prepared by Ernst of $400,000, but which was never sent to Koppers). Ernst’s work was not completed by July 31, 1975 and no successful negotiations were completed. Furthermore, the instructions to bidders provided (¶ 1.6): “For any extra electrical work that Koppers Company may propose, the successful bidder shall furnish to Koppers Company an estimate of the cost (material, labor, insurance cost, plus percent for overhead and profit) of such work. The electrical contractor shall proceed only after receiving a written order from Koppers Company establishing the agreed price and describing the work to be done.” Under these circumstances, we find that delay damages may be claimed on those items in excess of the scope of the work contemplated, where Koppers ordered work done without estimate or written order but which was necessary to complete added work. B. KOPPERS’ DEFENSES 1. Ernst’s Delays Caused Its Own Inefficiencies Koppers contends that Ernst did not start its work promptly as it became available and that this delay was the cause of the flurry of work in the last six months of the Project. Koppers has reviewed at some length the Sovjak analysis letters of the PERT/CPM updates. The letter of the May 30, 1974 update indicated the Project was already late prior to the Ernst P.O. The letter for the October 17, 1974 update set forth in part, “Electrical activities are showing up prominently on the top negative paths, viz. -13.9, -12.5, -11.1, etc. The subcontractor should review his activity duration times, as well as the logic, to see that these are correct, to the best of his knowledge”. Similar letters for the updates of November 14, 1974, December 12, 1974, January 9, 1975, and March 6, 1975 were issued. The letter for the update of April 3, 1975 indicated, “The Electrical Work along with several ‘key’ material deliveries, is now the critical area.” In the letter on the May 29, 1975 update, under the heading “General Comments”, for the first time there is the statement: “It appears, if the networks were and are correct and we must assume they are since we have received no changes from the sub, that the job has been undermanned from as early as Nov. 74.” While this matter of manning had been taken up preliminarily at a job conference on August 22, 1974 to coordinate the activities, it was at the job conference of January 16, 1975 that Ernst was requested to procure additional journeymen, and did so. Except for the testimony of A. E. Jones, retired Koppers’ Vice President, that Ernst had been told of Koppers’ dissatisfaction with their performance, no substantial undermanning has been proven. While Benjamin Wilkinson, Koppers’ Assistant Resident Superintendent, testified that he believed, “Ernst created the problem themselves by not doing them months ahead of time when the areas were open to them”, he did not testify that Ernst did not perform the work as scheduled in the CPM, and this is important. We have thus found that the weight of the evidence on the issue of Ernst’s fault must rest with the finding that Ernst was not at fault. The testimony offered by Koppers’ expert, David Lee, compared the CPM update of May 30,1974 with the update of September 18, 1975, the last CPM run. According to Lee, Ernst delayed Koppers activity through Ernst’s failure to commence activities when they were available. The Court asked how the witness could say what constituted the period of delay without knowing the duration requirements from each CPM update, and without knowing the history of the constraints on that particular activity throughout the updates. The witness gave no real explanation, except to say that in his opinion it was not necessary. On the contrary, Ernst’s expert, William C. Wagner, reviewed the Lee analysis of Ernst’s electrical work and of the various restraints involved, noting that the original restraints and durations as assigned by Koppers were, in many cases, changed by Koppers at Ernst’s suggestion. Thus, any comparison of the May 30, 1974 CPM run and the update of September 18, 1975 was not valid for this purpose. In 95% of the cases examined by Wagner, the updates had been changed (Tr. p. 3670). For example, where Mr. Lee had indicated that a certain activity was available on December 30, 1974, in fact, it was not released until February 5, 1975 (Tr. p. 3672A). Even so, Ernst began work on that activity on January 29, 1975, a week ahead of what could have been expected, even though Koppers’ expert tried to make it appear as if Ernst was responsible for delay. The same can be said about the duration of that activity, originally listed as one week; Koppers had agreed to extend it to nine weeks, and it was carried out within the scheduled time (Tr. p. 3675). From Wagner’s analysis, Ernst had done all that could have been expected under the situation as shown by the CPM schedules. We find the Wagner testimony to carry more weight than the testimony of Koppers’ expert, who had not reviewed the CPM updates. Mr. Wagner went further to say that review of the CPM updates was required to determine whether or not Ernst was responsible for any delay in Koppers’ work, and he found after such review that Ernst was not responsible. In his overall analysis, the original CPM showed 50% of all electrical work should have been able to start by the middle of December 1974, when, in fact, 50% of the activities were not available to start until after the original Project completion date of June 17, 1975 (Tr. p. 3585). Thus, there was almost a five month slippage period from the diagrams that Ernst first bid on versus what was available to start under the Lee analysis. Lee’s opinion, given credence by the Court, was that Koppers’ Engineering, Design, and Procurement Departments were responsible for the delay. Thus, the credible evidence convinces us that Ernst was not responsible for the delays but, rather, that the late engineering, the extended durations and additions in design, and then the slippage in Koppers’ procurement of materials, were the significant causes of the late completion in the Project (Tr. 3701). 2. The Thirty Day Clause Koppers also defends on the basis of a provision in the P.O. which states (Seller Agrees to Comply With, ¶ 6): “It is the responsibility of the seller to register a claim for additional monies within thirty (30) days of receipt of revised drawing. Any request received at a later date will not be honored. Seller cannot proceed with any work for which he will claim an extra without the written authorization of Koppers Company, Inc. Not included in this category are those changes which are created by deviation to Contract between Jones & Laughlin Steel Corporation and Koppers Co., Inc. In those instances, seller will be requested to furnish a quotation.” Koppers undoubtedly can conceptualize, engineer, and construct a complex industrial component for a giant steel mill, such as the preheat unit for the coke oven battery A-5 at J&L’s Aliquippa Works. They met artificial charge dates set by their customer and worked in areas constrained by ongoing production all around them. They accomplished this while they were coordinating design engineering with field construction, increasing the difficulty of the task.