Class Summary

Introduction to Construction Dispute Resolution

Feniosky Peña-MoraGilbert W.Winslow Career Development Associate Professor of Information Technology and Project ManagementMIT Room 1-253, Phone (617)253-7142, Fax (617)253-6324Email:[email protected]

Intelligent Engineering Systems LaboratoryIntelligent Engineering Systems LaboratoryCenter for Construction and Research EducationCenter for Construction and Research Education

Department of Civil and Environmental Department of Civil and Environmental EngineeringEngineeringMassachusetts Institute of Technology Massachusetts Institute of Technology

Class Summary

2Introduction to Construction Dispute Resolution Wrap-up © Peña-Mora, et. al. 2002

The Construction Industry Conflict in the Construction Industry Is Inherent

of the Characteristics of the Industry.

Project Uncertainties and Sub-optimal Contractual Relationships Are a Major Source of Conflict (LNGT Project)

Legal Costs of Dispute Resolution Constitute a Burden for the Industry.

Dispute Avoidance and Resolution Techniques Should Be Implemented to Resolve Conflicts With Time and Cost Savings.


Evolution Of DART

DETERMINATIONBY DESIGN

PROFESSIONAL

BINDING ARBITRATION

LITIGATION

Negotiations

PARTNERING

PREVENTION

NEGOTIATION

STANDING NEUTRAL

NONBINDING

BINDING

LITIGATION

Con

flict

Man

agem

ent P

lan


Evolution Of DART The Traditional Two-step Resolution Ladder

Stems From Ancestral Dispute Resolution Forms.

The Traditional Model Did Not Allow an Efficient Dispute Resolution in Complex Projects.

New Strategies Are Adopted for a Spectrum of Conflicts (Conflict Continuum).

The DRL Is Adopted to Prevent and Resolve Disputes.(Chek Lap Kok Airport)


Stage 1: Prevention

PARTNERING

PREVENTION

NEGOTIATION

STANDING NEUTRAL

NONBINDING

BINDING

LITIGATION

Conf

lict M

anag

emen

t Pla

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Stage 1: Prevention Conflict Prevention : More Effective, Less

Expensive and Less Time Consuming Than Conflict Resolution (Office Building Project And the Illustration of Preventive Measures)

Different Prevention Techniques But Many Common Denominators

Importance of the Recognition of a Potential Threat and the Commitment to Avoid it


Partnering

PARTNERING

PREVENTION

NEGOTIATION

STANDING NEUTRAL

NONBINDING

BINDING

LITIGATION

Conf

lict M

anag

emen

t Pla

n


Partnering Partnering, a Complete System of Operation, not a DRL

Stage Advantages: (Museum Project and Success Keys )

• Less Exposure to Liability Through Open Communication• Early Identification and Resolution of the Problems• Risk Sharing• Increased Productivity• Better Quality Through the Empowerment of Workers• Better Cash Flow and Reduced Costs• Commitment of all participants• Synergy and Objectives Alignment• Win/win Philosophy

Problems Associated with Partnering• Demand on Everyone Committed to the Partnering Process• Difficulty with Taking the Risk of Trusting Others• Tendency to Believe in the Win/lose Approach


Stage 2: Negotiation

PARTNERING

PREVENTION

NEGOTIATION

STANDING NEUTRAL

NONBINDING

BINDING

LITIGATION

Conf

lict M

anag

emen

t Pla

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Stage 2: Negotiation Negotiation as the First Stage after the Occurrence of a

Dispute Participants with High Degree of Control Over the

Possible Outcomes Possible Involvement of a Third Party Facilitator Interests Based rather than Positions Based Negotiations Attempt to Reach a Non-zero Sum solution with a Win-

win Outcome (Highway Interchange Project) Different Negotiation Styles: Avoiding, Competing,

Accommodating, Compromising, Collaborating Three Techniques in the Negotiation Process : Step,

Structured and Facilitated Negotiations


Stage 3: Standing Neutral

PARTNERING

PREVENTION

NEGOTIATION

STANDING NEUTRAL

NONBINDING

BINDING

LITIGATION


Stage 3: Standing Neutral Common Denominators of Techniques Used in the

Standing Neutral Stage(Ex:State-of-the-art Land Level Transfer Facility in the Northeastern United States)• Third Party Involvement

• Unbiased Decisions

• Knowledgeable Expert

• Cost,Time and Resources Savings

Variations • Number of Agents Involved

• Relationship of the Agents with the Project

• Stage of Involvement


Stage 4: Non-Binding Dispute Resolution

PARTNERING

PREVENTION

NEGOTIATION

STANDING NEUTRAL

NONBINDING

BINDING

LITIGATION

Conf

lict M

anag

emen

t Pla

n


Stage 4:Non-Binding Dispute Resolution Ex: Condo Project

Mediation ConciliationAdvisory

ArbitrationFact-Based Mediation Minitrial

Jury Trial and Rent-a-Judge

Flexibility:decreases along the continuum, less chances for win-win solutions

Formality:increases as the techniques required more predefined steps

Third Party Role: moves from a facilitator of communications to a judge or jury with only advisory opinion

Costs:expenses should be expected to increase as the procedures become more complex

Peña-Mora,et.al,1997


Stage 5: Binding Dispute Resolution

PARTNERING

PREVENTION

NEGOTIATION

STANDING NEUTRAL

NONBINDING

BINDING

LITIGATION

Conf

lict M

anag

emen

t Pla

n


Stage 5: Binding Dispute Resolution Ex: Reservoir Project Common Characteristics Between Arbitration and Litigation

• High Costs• Time Consumption• Strains in the Relationship Among Parties• Increased Formality• Decrease in Control by the Parties and in Flexibility of Outcome• Adversarial Stance • Win/Lose Outcome

Valuable Trait• Reliance on Knowledgeable Third Party Neutral

Other Binding Procedures as Modification of Arbitration• Mediation-Arbitration and Shadow Mediation : Increasing Mediation

During Binding Procedures• Adjudicator and Baseball Arbitration: Rapid Closure of Dispute, Less

Communication , win/lose outcome


Stage 6: Court Alternatives and Litigation

PARTNERING

PREVENTION

NEGOTIATION

STANDING NEUTRAL

NONBINDING

BINDING

LITIGATION

Conf

lict M

anag

emen

t Pla

n


Stage 6: Court Alternatives and Litigation Litigation, the Final Stage in the DRL

Importance of Solid Discovery of the Situation and Effective Presentation (Ex: Hospital Heating Plant Project)

Procedures to Overcome the Challenges of Litigation by “Forced” Communication

• Court Appointed Experts

• Judge Pro-Tem

• Trial by Reference


Conflict Management Plan

PARTNERING

PREVENTION

NEGOTIATION

STANDING NEUTRAL

NONBINDING

BINDING

LITIGATION

Conf

lict M

anag

emen

t Pla

n


Conflict Management Plan Conflict Management Plan (Ex: Brock’s and

Kelly’s Plans)• Vital Step in Construction Projects• Often Overlooked• Conceived in the Planning Phase and Reviewed

Throughout Project Life Cycle• Identifying Conflicts and Analyzing Their Impacts• Prioritizing Conflicts• Application of Dispute Avoidance Techniques• Design of a Resolution Procedure• Allocation of Risks Between Participants


Case Study: Tren Urbano Partnering and the Success of Innovative

Delivery Methods in a Global Market Importance of Partnering in Multi-Cultural,

Multi-Phase Projects Partnering Embodied in Initial Meetings,

Quality Summit, Follow-Up Meetings Conclusions and Recommendations

• Contract Language Regarding Conflict Resolution Is Not the Source of Problems

• Inter-phase Conflicts Require Additional efforts

Documents

Class Summary