Daily Journal of Commerce
Design & Construction – July 20, 1994
By Steven Pinnell and Jeff Davidson

Taking the informal and formal steps to recognize potential problems in advance of a crisis will serve you well in avoiding disputes altogether. Avoiding contract disputes is one of the fastest ways to improve your bottom line and build a great reputation in a competitive industry.

Developing formal dispute avoidance and collaborative problem-solving techniques is a strong adjunct to the partnering process. These procedures will also provide additional benefits beyond reducing and resolving disputes, helping you strengthen the sense of teamwork within your organization.

ACTION TO CONSIDER: As with partnering, on each project all parties (owners, designers, general contractors, subcontractors, and suppliers) should develop formal procedures for dispute avoidance.

Here, are just a few good examples:

  • Agreeing that efforts to resolve immediate, critical problems at minimal overall costs will not be used as evidence of responsibility.
  • Immediate response to any identified problems. This will reassure all parties that the partnering philosophy is working.
  • A conscious effort by each party to honestly evaluate their position and the position of the other party.
  • Cooperative, joint review of the initial project schedule and monthly project updates to jointly identify potential problems and solutions. Scheduling specialists help in this effort as they can identify potential problems and solutions that the generalists on a project team might miss. The specialist can be either an employee of one of the parties or a neutral expert.
  • Innovative analysis of problems using techniques such as brainstorming, value engineering, and functional analysis. This needs to be a collaborative effort involving all members of a project team. In addition to bringing a wider array of talent and experience to bear on a problem, this also builds a sense of teamwork.
  • Open discussions of problems at weekly progress meetings, with the focus on finding solutions, not assigning blame.
  • A commitment by all parties to give timely, unexaggerated notice of potential extra costs, and a reasoned response to these notices.
  • Retaining a neutral expert, with all parties sharing the associated costs.
  • Empowering field personnel to settle disputes at the jobsite. (For some organizations, this will be hard, but it is essential in allowing partnering to succeed).
  • An escalation process that transfers unresolved disputes promptly to the next level of management. Jobsite personnel don’t like to admit that they can’t resolve a problem and this step will encourage both prompt jobsite resolution and a collaborative effort by the jobsite parties.) It is also important to communicate this process to top management.
  • Inaction is never an option. Keep the resolution process active by collectively asking: “What next?”

The cost for any of these formal steps is minimal. Any involvement by outside experts will be limited, and all parties will share the costs.

In many cases the results (for example, value engineering) and the benefits are immediate, measurable and greatly exceed the costs.