LAW: The Contractor's Side

Partnering: 'Devil's in the details'

Cordell Parvin / December 28, 2000

In August, while meeting for its annual executive session, the AASHTO-AGC-ARTBA
Joint Committee signed policy statements addressing work-zone safety and
the traveling public, long-term transportation needs funding and continuous
quality improvement in the construction process.

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

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.

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