Reducing Construction Costs Uses of Best Dispute Resolution Practices by Project Owners: Proceedings Report (2007) / Chapter Skim
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Indirect costs include the inefficiencies, delays, and loss of quality that disputes cause to the construction process itself; the lostopportunity costs of diverting productive employees away from profit-making activities into litigation support; and the costs of fractured relationships between parties who would otherwise profit if they could continue to do business with each other. Paradoxically, or perhaps because of its adversarial climate, the construction industry has also been a leader in developing innovative tools for preventing, controlling, and efficiently resolving disputes.
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In 2004 the NAC teamed with the Federal Facilities Council (FFC) 2 of the National Research Council to sponsor the "Government/Industry Forum on Reducing Construction Costs: Uses of Best Dispute Resolution Practices by Project Owners." The forum was held on September 23, 2004, at the National Academy of Sciences in Washington, D.C.
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The forum speakers identified numerous techniques and approaches for preventing, controlling, and resolving disputes that can be tailored to specific situations. Benefits from the effective use of dispute resolution tools include: early resolution of disputes; transparent procedures; an operating environment of understanding and cooperation; limited posturing by the various parties; fewer issues and claims; and reduced costs (Chapter 5)
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The following best practices for owners were identified: • Establish a cooperative project environment, with leadership from the top; • Set up controls that will minimize the frequency and severity of problems; • Establish real time or jobsite techniques designed to get disputes resolved during construction; • Use benchmarking and feedback to measure results, improve processes and performance, and build an atmosphere of trust with project participants; and • Provide for a "backstop" combination of mediation and, as the final resort, arbitration before expert construction industry arbitrators (Chapters 2 and 3)
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This presentation describes the "bridging" process, an improvement on traditional design/build construction, whereby the owner employs an architect to complete schematic design and articulate the key design and performance requirements for the project, and then employs a design/build contractor to complete the design and perform construction within the owner's requirements. This system obtains for the owner an early and realistic fixed price contract, net overall construction cost savings, "single point" responsibility for design and construction, and a significant reduction in exposure to disputes and claims.
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This presentation describes research by the Center for Construction Industry Studies into trends in construction claims on projects; investigations into the need for research that would benefit the industry in the areas of economics, finance, and dispute resolution; and the center's ongoing research into the relative transactional costs of various forms of dispute resolution. It also explores ways to encourage and implement greater use of dispute resolution best practices.
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