LAW: The Contractor's Side

By: Cordell Parvin

The Joint Committee's policy statement on continuous quality improvement in the construction process stressed the importance of partnering for avoidance of project delays and construction claims, equitable risk allocation and dispute avoidance, and the use of alternate dispute resolution (ADR) techniques. These are all points I strongly believe in. However, as I have pointed out in previous columns, these measures are not being used as effectively as possible.

Partnering: Over the last several months, several contractors and owners have complained to me that partnering has not worked on their projects. The complaints seem to have three points in common. First, many say partnering works extremely well until there is a problem involving time or money. When there are no changes, delays or other problems on a construction project, partnering is not needed. When those issues do arise, partnering should handle them effectively.

A second complaint I hear is that, while owner and contractor upper-level management believe in partnering and feel it is working, subordinate and project-level staff undermine the partnering process. Owner representatives may believe that partnering is a giveaway, while contractor personnel may believe partnering is a process in which owners get changes for nothing.

The third complaint I hear concerns the imbalance in authority. Inevitably, the contractor's organization pushes decisions to as low a level as possible to keep the job going, while the owner's organization may be forced-by law or politics-to push decisions to a far higher level.

The net result of the three problems is a great deal of frustration on the part of people who sincerely want partnering to work. In a future column, I will offer suggestions on how each of these three problems can be addressed.

Avoidance of project delays: In my columns, I have repeatedly stressed the importance of improved project planning and scheduling. It seems that, in many cases, transportation-construction schedules are prepared solely to meet a contract requirement. Often, the required schedule is either so simplistic that it contains little useful information, or so complex that the individuals building and monitoring the job don't understand it. Scheduling should be the end result of good planning and not done merely to meet a contract requirement. Schedules should be sufficiently detailed to be useful, and the output should be useful to field personnel-even if the method and the information generated from them is complex.

Avoidance of construction claims/disputes: I have combined these two topics because construction claims frequently lead to construction disputes. In my December 1994 column, I addressed the importance of improved designs in avoiding claims. I suggested that partnering cannot correct a bad set of plans. I have recently handled three claims in three different states that arose on projects designed in the 1970s and built in the 1990s. I believe the owners in each of these cases did not want to spend the money up front to make sure the designs were accurate and up-to-date. In each of these instances, the project was designed in the field while the contractor was eaten alive by inefficiency and equipment costs. "Constructability" and "biddability" reviews could have alleviated a great deal of the grief and increased costs.

Equitable risk allocation: Unfair risk allocation leads to an increased likelihood of litigation and, ultimately, decreased competition and higher prices. Most family-owned contractors cannot afford to bear all the risks of site conditions or delays beyond their control. Several years ago, a private owner's in-house lawyer told me that the last thing his company wanted was for its contractors to lose money on a project: The company knew the project would suffer the consequences. Obviously, the private sector can be more selective in choosing contractors, and has greater flexibility in dealing with problems that arise, than the public sector. Yet I see little benefit to the public in forcing contractors to play Russian roulette on site conditions and delays.

Alternate dispute resolution: I am a strong advocate of ADR techniques, including dispute review boards, mediation, standing neutrals and minitrials. I have written columns on ADR and taught workshops on each of these techniques. Two areas can be improved. First, the parties need to select the technique best-suited for resolving their dispute. To do so, they must understand each technique. Second, the parties need to work on their presentation and negotiation skills. Resolving disputes is not like a Realtor selling a dream house to a young couple: Finding win-win solutions to construction disputes is far more difficult.

The AASHTO-AGC-ARTBA Joint Committee has put forth a great policy statement, but, as they say in politics, "The devil is in the details." The same is true in addressing each of the issues the Joint Committee raised.

Parvin is a senior executive in the law firm of Parvin, Wilson & Barnett, P.C., serving the construction industry throughout the U.S. in construction claims, litigation, ADR, corporate planning, dispute avoidance, environmental and labor matters. You may write to him in care of the editor.