"Dispute Management Programs Partnering, Claims Management and Dispute Resolution" by Steven Pinnell, P.E for Project Management Institute 25th Annual Seminar/Symposium October1994

The Problem

Construction disputes are costly, disruptive, and too frequently lead to litigation. This can threaten the profitability of construction contractors and the fiscal integrity of project owners, both public and private.

For contractors, inadequate or delayed compensation for disputed extra work, delays, acceleration and impact can result in significant bottom line losses. In some cases, it can result in business failure. Owners, too, are subject to unexpected and uncontrolled additional project costs that wreak havoc with budgets, require additional financing, and threaten the profitability of privately financed projects. Architects and engineers are also affected by the additional efforts to resolve disputes or to defend themselves against charges of errors and omissions.

Furthermore, disputes over the responsibility (entitlement) for additional costs and the amount (damages) can disrupt working relationships between the owner, designer and the contractor. The result often is further delay, strained relationships and unnecessary costs. In the United States, and to a lesser degree in other countries, the costs of litigating or arbitrating disputes can be enormous.

The Solution - A Dispute Management Program

A Dispute Management Program (DMP), tailored to the specific needs of each contractor and owner, can prevent the majority of disputes and contain the impact of those that do occur. The DMP consists of a reasoned approach to construction disputes integrated with the following concepts into one consistent program:

• Better Project Management
• Dispute Avoidance Through Partnering
• Effective Claims Management Procedures
• Alternative Dispute Resolution (ADR)
• Firm But Fair Legal Strategy and Tactics

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.