FM Issue: Effectively Resolving Construction Related DisputesTo encourage a successful outcome, teams should ensure that a construction project contractor exercises best practices.By David L. Sutton, P.E.
The construction industry is experiencing an amazing evolution. New and innovative technology is being infused at a rapidly growing rate. Building information modeling (BIM) and integrated building life cycle management are emerging processes. Sustainable development and green building are in their learning curve phases in the industry. New government incentives, new products, new costs, and new expectations bring new uncertainties, new risks, and new people problems. As these technologies evolve and permeate the industry and become the newest standards, the industry faces fresh sources of conflict and disagreement. Facilities management (FM) is both a proponent and a beneficiary of the evolution within the industry. However, as the industry betters itself with new technologies, it also must stay alert to pending conflicts that will spawn from change. The process of taking a project from concept to occupancy involves a diverse multitude of stakeholders—owners, architects, engineers, suppliers, contractors, subcontractors, public agencies, legal representatives, facility managers (fms), financial institutions, and more. All parties involved in a construction project generally share the following interests in their common pursuit of a positive outcome: timely payments, reasonable costs, and on time performance. Conflicts HappenAlthough these stakeholders have a common vested interest in a positive outcome, they have competing expectations in the execution of their respective responsibilities. Therefore, a construction project tends to be an environment consisting of adversarial entities. As a result, there are conflicts, disagreements, and claims in construction. Various studies cite that up to 25% to 30% of all construction projects experience serious disputes or claims. Playwright Oscar Wilde once wrote, “Success is a science; if you have the conditions, you get the result.” Creating the right conditions on a project can establish the environment necessary for success. An effective way to prevent serious disputes—or at least mitigate their impact on project outcome and relationships—is to structure the project so typical dispute sources are minimized. Those sources can stem from conditions of uncertainty associated with the project’s risk allocation, people (experience levels, perspectives, ethics, etc.), or issues associated with the processes undertaken on a project (incomplete scope definition, performance, contract development, etc.). It takes foresight, research, planning, execution, and even good fortune to address and eliminate all sources of potential disputes. However, short of perfection, the owner and the FM group should assemble a project team that implements best practices in construction to establish conditions that foster success—understanding that it is a monumental aspiration. Unfortunately, even the best plans go awry. When Things Fall ApartA construction project is a complex network of people, contracted parties, competing expectations, allocated risks, document files, and numerous physical activities. It is inevitable that conflicts will arise on any given project. And a small conflict can turn into a serious dispute if the conditions for success are impaired by this stumbling block. Once a claim (a request for compensation for actions considered to be outside of the contract terms and conditions) or a dispute germinates, it requires an influx of objectivity and process to move it to resolution. If negotiations fail to produce a resolution, contracts typically stipulate the formal process of adjudicating the matter. Frequently, the disputing parties have invested too much emotion in their respective positions to reach a settlement amicably. Dispute ResolutionUnder these circumstances, the choices become litigation in a court of law or Alternative Dispute Resolution (ADR) outside the courtroom. ADR methods—albeit once considered the alternative to filing a lawsuit—are now frequently implemented throughout the court system. The most common forms of ADR are arbitration or mediation. With heavy caseloads burdening the courts, judges now often mandate mediation as a precedent effort prior to going to trial. Here’s a simple overview of common dispute resolution forums:
It’s Not About WinningOutcomes do not always require absolute winners and losers. Often, either or both parties can declare success, since success can be defined in many different ways. Nonetheless, success depends upon the combined efforts of how a party addressed the dispute—both contemporaneously during the project and subsequently in the dispute resolution forum. A compelling presentation of one position in litigation or ADR is always undermined if positions, documentation, and notification offered during the project are inadequate. Efforts to resolve an issue, whether it is in its infancy or in a
mature stage, are dictated by many conditions. Preparation, honesty,
and consistency are key to resolving a dispute effectively—or perhaps
even avoiding one entirely. Sutton, a registered professional engineer, is executive vice president of Chagrin Falls, OH-based Buric. Write to schwartz@groupc.com or post your comments at FacilityBlog. |
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