SOLUTIONS LOOKING FORWARD

Looking ahead, owners and contractors should continue to focus on improving and facilitating communication on their construction projects. When asked to choose the most effective claims avoidance technique for North America, survey respondents selected risk management. In addition, our research indicates that the most important factor in the early resolution of construction disputes was the owner and contractor's willingness to compromise. We are also finding that more project participants are actively using digital tools such as PMIS and BIM to aid in the prevention and resolution of disputes.

The construction industry has continued to evolve, and organizations have more opportunities than ever to effectively identify, manage, and mitigate their risk on projects. New risk management strategies, using new technology and techniques, are available to help owners and contractors handle construction risk differently and ultimately aid in avoiding construction disputes altogether.

With larger programs and multiple project delivery methods, it is essential that project participants have a strong understanding of contract obligations and risks and grasp their role in the process. For example, they need to understand that an owner's role in the design process is different on a design-build project than it is on a design-bid-build project, and act accordingly.

As previously mentioned, the center of any claim avoidance measure must be the consideration of the human factors and the fostering of healthy relationships between project stakeholders. Our industry always figures out a way to resolve every technical problem. After all, there are no half-built buildings and bridges. It is always a human factor that is a major component of any construction dispute.

GUEST COMMENTARY

"The high volume of construction activity in Southern California has resulted in significant cost increases throughout the region which presents major challenges for contractors engaged in lengthy, multi-year infrastructure projects. These cost impacts are being experienced by owners in the form of higher bid prices on new projects, but are also having impacts on existing on-going projects. For projects under construction that were priced prior to the current construction market, these pricing pressures are being manifested through an increase in the number of requests for change received from contractors, higher costs for those changes and less willingness to compromise. Within this environment, claims are foreseeable if owners and contractors are not actively seeking to resolve disputes. It is therefore increasingly important that contractors and owners maintain open communication, share risk when possible and be willing to accept compromise in an effort to mitigate conflict.

For owners, compromise and risk sharing may include a recognition that their contract documents are not always as thorough as they may believe them to be, with the acceptance of responsibility where grey areas exist. Owners may also mitigate unforeseeable cost increases by exercising escalation or similar provisions of their contracts. For contractors, compromise may include a willingness to apportion responsibility rather than taking an all-or-nothing position. As the Arcadis' report findings conclude, contractors and owners are best served when formal disputes are avoided by the parties acting in good faith by maintaining open communication with a willingness to compromise in the best interest of the project. When disputes do arise, project participants should be driven to address all or portions that are resolvable as early as possible. As is often said, unlike fine wine, disputes do not get better or less expensive with age."

GARY H. BAKER, PE
Project Executive - Los Angeles Metro (US)