project sponsor’s contracting documents provided for mediation through a dispute resolution panel, the outcome of which may generally be admissible in state court litigation. The project sponsor representative’s experience was that dispute resolution panels were most valuable for the significant experience that their panelists had in the industry, which could lead to insights regarding negotiated solutions. However, for intractable disputes, one interviewee believed the judicial process was a better means of resolution because judges were less prone to “splitting the baby” as often seemed to be the case in arbitration decisions. The interviewee also sought to dispel the conventional assumption that trial juries were more favorable to contractors.
Being able to separately monitor and evaluate construction claims through independent inspection is important. Without independent evaluation, public entities must rely on the inspections of the contractors making the claims, which 0unsurprisingly may favor the contractor. This happened during construction of the HBLR Line in New Jersey. Ensuring that the public entity has at least a minimal level of inspection staff to independently evaluate new claims, even for projects where a private entity takes on more of the risk and responsibility, such as a DBOM, is therefore advisable according to one interviewee.
Claims from construction contractors are a significant risk in mega projects and project sponsors must similarly provide for a clear, quick process to resolve open claims in each construction contract. There are many activities project sponsors can undertake early and often in the project to protect against claims. For example, project sponsors should properly staff schedulers and inspectors and keep good records of all receipts provided, hours worked, and tasks undertaken. A good legal team to review the initial contract, negotiate change orders, and advise how to avoid potential claims is very useful as well.
Another means of claims avoidance or mitigation is to ensure that contracting documents include clear terms regarding timely notification of claims. In one mega project’s state, there is good case law supporting construction contracting terms requiring timely notice of claims.295 According to one interviewer, the project sponsor in that state has drafted their general provisions to require timely (e.g., 7 days) notice of claims encountered by a contractor which, if not timely raised, are forfeited. Such terms prevent a contractor from waiting until completion to seek claims.
V. CONCLUSION
Perhaps unsurprisingly, many of the unusual or important legal issues that arise while delivering transit mega projects derive from their size and the unique features of mass transportation infrastructure. Like rocks creating eddies in a stream, these two defining factors induce a cascade of resulting considerations that can complicate what might otherwise constitute fairly routine or standard infrastructure development processes and models. This can be seen, for instance, in the intergovernmental and contractual relationships between project sponsor(s), federal transit funders, and other stakeholders, as the number of these participants necessarily increases. In other areas, such as financing and risk allocation, these two factors interact to require the development of new and innovative models and solutions, as is the case when public project sponsors must navigate state restrictions on public debt or special restrictions placed on federal transit funding. By their very nature, transit mega projects are iterative and extend over a longer period of time. The ongoing processes are not repetitive so much as an inherent sequence of operations to change and refine the project, and they are both necessary and desirable as circumstances inevitably evolve. Recognizing this process and understanding the permutations of legal issues resulting from the unique circumstances of transit mega projects is key to ensuring the success of some of the most important infrastructure projects in the country.
This digest has sought to help transit attorneys identify and analyze legal issues that have resulted from, or are related to, the implementation of mega projects for rail transit projects. To do so, we have focused on a specific set of strategic themes informed by common mega project traits, developed and explained with the assistance of case studies researched through desktop legal research, and interviews with relevant attorneys and officials. The ultimate objective of this exercise was to produce a digest that lawyers representing parties developing transit mega projects can consult for insight, issue framing, and problem-solving strategies. It is the authors’ hope that the experience of the past may help inform projects of the future to assist building more robust and efficient processes for transit mega projects, in an effort to serve the public and address challenges of the future.
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295See Mike M. Johnson, Inc. v. County of Spokane, 78 P.3d 161 (Wash. 2003).
