Pinnell/Busch: Project Management Consultants for the Design & Construction Industry

The Problem

   Construction disputes are costly, disruptive, and too frequently lead to litigation. This can threaten the profitability of contractors and the fiscal integrity of project owners, both public and private.
Furthermore, disputes over responsibility and the amount of additional costs can disrupt relationships between the owner, designer and contractor. The result is lower productivity, further delay, strained relationships and unnecessary costs.

The Solution

   The solution is a philosophy and comprehensive set of techniques for managing disputes that we developed at Pinnell/Busch. It is called the Dispute Management Program (DMP).
The DMP is not a new body of knowledge, nor are the individual elements of a DMP that much different from what some organizations already practice. What is unique is how a DMP marries the relatively new (but old-fashioned) concept of partnering with modern techniques for dispute avoidance and resolution, all within an integrated philosophy and set of procedures.
A DMP, tailored to the specific needs of each contractor and owner, can prevent most disputes and limit the impact of those that do occur. The DMP consists of a reasoned approach to construction disputes that integrates the following concepts into one consistent program:

• Better project management
  
• Improved interpersonal skills
  
• Partnering & collaborative problem solving
  
• Effective claims management
  
• Alternative Dispute Resolution (ADR)
  
• Firm but fair legal strategy and tactics

   The DMP includes a spectrum of alternative techniques, progressing from pro-active to re-active. It starts with a collaborative or partnering philosophy, transitions to a cooperative approach, and then to an adversarial relationship if disputes cannot be resolved.

• Project Management Policies & Procedures that ensure projects are better managed, minimizing errors and other sources of conflict.
  
• Training in People Skills for all members, of the design and construction team, so that interpersonal dynamics are more productive, with less tension and conflict.
  
• Partnering to promote a more successful project environment, where all parties work together to resolve disputes and avoid claims.
  
• Dispute Avoidance & Collaborative Problem-Solving to reduce costs, increase quality, and improve the process.
  
• Win/Win Negotiation Techniques to foster prompt, fair resolution of conflicts.
  
• Claims Management Procedures designed to support dispute resolution without adversely affecting partnering attitudes. This includes thorough documentation with prompt notice of problems, without posturing or blame.
  
• Alternative Dispute Resolution (ADR) to resolve or adjudicate disputes not resolved by the project team in order to avoid the delay, cost and negative impact of litigation.
  
• Firm But Fair Legal Strategies, emphasizing winning without legal gamesmanship that delays or increases the cost of resolution.

Better Project Management

One of the most important techniques for avoiding disputes is better project management by all parties:

• The owner's planning, decision-making, and oversight-so that projects are not delayed until the last minute nor started with ambiguous objectives or incomplete criteria, but are managed effectively and efficiently.
  
• The designer's pre-design to ensure the project scope, cost and budget are clearly defined; design management to eliminate errors, ambiguities and incomplete documents; and contract administration to facilitate rather than hinder construction.
• The contractor's jobsite management so that the work is carefully planned, diligently pursued, correctly constructed and safely managed.

Partnering

   We have found that the most important element in the success of a DMP is the concept and process of partnering. Partnering requires a change in the "culture" of the project team. All parties- owner, designer, contractor, subcontractors, suppliers, and affected members of the public- join together in an informal partnership to ensure a more successful project for all. It isn't easy to change attitudes, but formal procedures with considerable, continuing efforts make it work.
Partnering should not be considered an extra cost, but an investment in a successful project. Fees for a one-day workshop vary from $1,800 to $7,000, depending upon the preparation required and the facilitator. Follow-up costs can vary from zero to a few thousand dollars.
The benefits of partnering are immense. One contractor found productivity gains of 16%. A federal agency experienced better cost control, reduced paperwork, and no litigation.

Dispute Avoidance & Collaborative Problem-Solving

   We have found that dispute avoidance and a collaborative approach to problem-solving are crucial to the success of partnering. It includes prompt response to identified problems, cooperative joint schedule review, open discussion of problems, agreement to resolve critical issues before worrying about responsibility, and a collaborative approach to solving problems. It requires empowering field personnel to settle issues at the jobsite and an escalation process that transfers unresolved disputes up to the next level of management when not settled promptly in the field. Inaction is not an option.

Claims Management

   Claims management must be compatible with partnering, which requires a change in outlook from current practice. It starts with a different approach to risk management. The owner and designer must forego the onerous contract clauses that appear in some contracts. It continues with training on contract rights and obligations, how to maintain records, and the need to give prompt notice. Thorough recordkeeping is required.
   Next to partnering, good claims management procedures are the best investment an owner or contractor can make. Inadequate documentation is the main hindrance to recovery of fair compensation by contractors. Over the past 20 years, we have seen millions of dollars of legitimate claims abandoned and several contractors go out of business for this reason alone. Owners, too, have suffered from lack of documentation.

Neutral Experts

   The use of Neutral Experts is new in the U.S., but has been used elsewhere for years. Neutral Experts are retained jointly by both the contractor and owner to determine the facts and develop a recommended solution. The parties need not accept the findings and recommendations, but almost always do so - which discourages arbitration or litigation. The advantages of using a Neutral Expert over in-house staff or separate claims consultants include:

• A higher level of confidence in the results.
  
• Fewer exaggerated claims and unfounded counter claims
  
• Reduced costs by having only one expert.
  
• More accurate data due to the expert having access to both parties' records.
  
• Compatibility with partnering.

   The use of Neutral Experts is similar to the use of Dispute Review Boards, but can be applied to smaller projects due to the substantially reduced costs. The Neutral Expert is also more pro-active and can help mediate disputes.

Benefits

   The substantial reduction in disputes, claims and litigation from a DMP offers probably the greatest opportunity for productivity improvements in the industry- far greater than the potential benefits from the "relatively"well-funded research on robotics, new materials, and other hardware/ systems development. Of even greater potential is the synergy of a collaborative approach to problem-solving and innovation.