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In the toolbox of ADR techniques, there is one dispute avoidance and resolution mechanism that has proved to be effective time and time again in eliminating or resolving construction disputes--the dispute review board.
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The Construction Industry Institute (CII) has concluded that “the
U.S. construction industry is ill,” and has complained that “litigation
related to design and construction continues to increase.”
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Arbitration or litigation? Coke or Pepsi? Regular or decaf?
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The construction industry is complex and so are most building
construction projects.
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Many owners turn to the design-build delivery system because they
want to avoid disputes.
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Our cautionary tale comes from a federal court in Wisconsin.
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Effective October 1, 2009, the American Arbitration Association (“AAA”) amended its Construction Industry Arbitration Rules and Mediation Procedures (“CIAR”), including Rules L-1 through L-6 that apply to large, complex cases (“LCCs”).
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In our private lives most of us would not use an internist to perform open-heart surgery, engage a general law practitioner to represent us in a complex tax matter, or retain an architect to perform engineering calculations.
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Virtually all arbitrated construction claims are based in contract. Damages in contract actions are compensatory and calculated arithmetically.
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"The importance of identifying and resolving all the closure issues is even more critical in construction mediation because of the many parties that are typically involved, the multiplicity of contractual obligations,
and the technical complexity of the issues."
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The key question everyone asks about arbitration is whether it is cheaper than litigation.
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The construction industry has always had a special need for effective mechanisms to resolve disputes promptly.
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Construction arbitration is in trouble … again. I say “again” because 12 years ago arbitration faced a similar crisis of confidence in the construction industry.
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The survey was distributed to the members of the American Bar Association Forum on the Construction Industry, the largest organization of construction attorneys in the United States.
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God’s creation of the world in seven days is the oldest construction project and a miracle of efficiency.
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Evolving business practices continue to place pressure on lawyers and dispute management professionals to seek more efficient and economical methods of avoiding and resolving disputes.
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Numerous dispute avoidance, prevention and resolution methods
exist that can save time, money and relationships.
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The construction industry is prone to disputes due to such factors as misallocation of risk, ambiguous contract documents, thin profit margins and an ever-changing job site.
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This chapter offers a proven technique for mediating a type of complex construction dispute, often involving home owners, that has surged in recent years.
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On Nov. 5, 2007, the American Institute of Architects (AIA) issued its 2007 version of Standard Form A201, which contains the AIA’s General Conditions of the Contract for Construction.
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There are many forms of alternative dispute resolution that have
developed over the years.
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Vladimir Lenin, leader of the Russian Revolution, said: “Trust is good, but control is better.”
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Construction arbitration promises an expeditious and efficient method of dispute resolution.
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At several recent construction mediation conferences, Mr. Bates and Mr. Holt facilitated a program entitled “What You Can’t Not Know.”
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Two of the most important subjects for construction professionals are dispute prevention and resolution, the reason being that construction disputes tend to plague most projects.
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Nearly all construction cases, whether in the litigation or arbitration forum, will be mediated.
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Mediators serve a number of functions.
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The “waiver of consequential damages” provision became a part of
the American Institute of Architects revised standard form construction
documents in 1997, and has been retained, largely unchanged, in the
AIA’s 2007 documents.
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One of the most fertile grounds for challenging arbitration awards in court has been the failure of arbitrators to conscientiously disclose relationships with individuals or companies involved in cases to which they were assigned.
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Normally the large, complex case deals with a construction project that has turned into a disaster and may even jeopardize the livelihood of one or more of the parties.
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Too often conflicts between owners and contractors escalate into litigation, or contractors absorb cost overruns to avoid protracted disputes and damaged business relations while owners pay too much for
extra work.
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Inadequate plans and specifications, schedule delays, payment delays, cost overruns, a variety of unforeseen conditions, weather problems, defaults by suppliers or subcontractors, changed government
requirements—these are only a few of the potentially troubling problems that can arise on a project.
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The authors of standard form construction agreements (e.g., the
American Institute of Architects and the Associated General Contractors
of America) recognized the well-documented and widely acknowledged
benefits of mediation when they added a mediation clause to their
dispute resolution provisions.
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In recent years, the arbitration process has been under increased scrutiny in both the local and national press.
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Until the 1970s, the construction industry tended to settle disputes
the old-fashioned way—in court.
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The site visit is a vital tool in construction arbitration but it is not
used enough.
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"The litigated case wends its way slowly through the court system, once the complaint is filed."
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Any meaningful discussion of advocacy in the mediation process
should begin with a recognition of the fundamental tension that exists
between the two concepts.
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For as long as I can remember, the American Arbitration Association has trumpeted arbitration as a sensible method of resolving construction disputes.
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The amount of money spent on resolving disputes can make the
difference between a profitable project and a losing one.
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Project team members, who participate in the partnering workshop, subscribe to the partnering charter and believe in the value of its appropriate application to their performance on the job, are not partners or members of a partnership.
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Classic mediation of construction disputes centers on the role of lawyers who serve as mediators and advocates.
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This chapter addresses claims arising out of termination of a contractor or its abandonment of a project, where a replacement contractor is hired to complete the work.
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There are three common forms of award in arbitration.
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The construction industry has been dramatically and negatively affected by numerous changes to the laws and regulations controlling it over the past three decades.
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There are two general approaches to using experts in mediation: separate retention and joint, shared retention.
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Construction parties who seek out the informality of mediation often
overlook the importance of appropriate procedures to the success of
mediation.
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Containing claims and their costs looms ever larger in the minds of
those concerned with profitability and repeat business.
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Some years ago when partnering burst upon the construction scene, it was heralded as a miracle cure for dispute-plagued construction projects.
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Know the facts and issues in your case and how to arbitrate.
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To mediate or not is a question parties to major construction disputes
should ask themselves whenever a dispute arises.
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Contractors and lawyers in the United States have been at the
vanguard of the alternative dispute resolution (ADR) movement.
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