Fast Tracking Construction Arbitrations
| Publication year | 2011 |
| Pages | 69 |
2011, August, Pg. 69. Fast Tracking Construction Arbitrations
August 2011
Vol. 40, No. 8 [Page 69]
Dispute Resolution
Dispute Resolution articles are sponsoredby the CBA Dispute Resolution Section. They describe recent developments in the evolving field of dispute resolution, with a particular focus on issues affecting Colorado attorneys and dispute resolution providers.
Coordinating Editors
Lucia M. Lamprey, Denver-llamprey08@law.du.edu; O. Russel Murray, Englewood, of ADR Source-(303) 893-1667, orm@adrsource.com
About the Author
AllenL. Overcash is associated with the firm of Woods and Aitken LLP in Denver and Lincoln, Nebraska-aovercash@woodsaitken.com. He specializes in construction law as an arbitrator and mediator. He is a fellow of the American College of Construction Lawyers and College of Commercial Arbitrators and teaches construction law at the University of Nebraska.
Construction arbitration is perceived as creating extraordinary cost and requiring a tremendous amount of time to resolve disputes. These challenges are remarkably similar to those that the construction industry faced in the past. The construction industry answered these challengesby "fast tracking" its procedures. Fast tracking arbitration procedures may make arbitration a more effective and efficient option for the industry.
Arbitration long has been favored as a convenient, efficient method of resolving commercial disputes in Colorado.(fn1) In contrast to litigation in court, the goals of arbitration and other dispute resolution (DR) processes include reducing the cost and increasing the speed of resolving the dispute.(fn2) Increasingly, however, the arbitration of complex construction cases has been criticized for failing to meet these goals. There is a growing perception that arbitration proceedings save neither money nor time, and in this respect are becoming quite similar to litigation.(fn3)
Arbitration, like litigation, generally involves a number of distinct functions: filing the case, learning about the merits of the case, preparing the case for hearing, and holding the hearing. Lawyers and lawyer-arbitrators frequently administer these functions in separate steps. Arbitration is approachedby lawyers in much the same manner that the construction industry historically approached "design-bid-build," in careful sequential stages.
Not unlike legal pleadings in general, arbitration filings indicate very little about the case. The filing function is brief and usually consists of a cursory demand with little or no explanation of the basis of the claims. Learning about the case starts much later, through discovery and prehearing motions, and often is difficult to predict and control. The preparation stage commonly starts a short time before the hearing. If prehearing briefs are required during this stage, this may be the first time the arbitrators learn anything significant about the case.by this time, the hearing normally has been set and will proceed, sometimes taking longer than estimated. The arbitrators learn what they can from the evidence presented at the hearing and the associated filings, and then they prepare their decision.
The hearing times often are set before the arbitrators and some of the parties know much about the case. The learning stage may involve a number of disputes over motion or discovery matters that are heard and decided before much of the case is known to the arbitrators. At the hearing, the arbitrators must rely on counsel for the organization and focus of the evidence, which may not fit their own analysis of the final decision. Elements of causation and delay may get lost in the process.
Without knowing the case early in the process, it is difficult for the arbitrators to effectively control the progress of the case to ensure its efficient and effective conclusion. The result can be a high level of cost and delay, which is frustrating to all parties and the arbitrators.
Changing Traditional Construction
The design-bid-build system of construction served the industry well for many years. Following the recognition of designers as a distinct profession, the practice essentially was to complete the design of a construction project and then build it according to that design. Design and construction were separate functions performed in different stages, with one following the completion of the other. The system offered certainty-contractors could reasonably estimate their costs based on a complete set of documents that defined the project. The sequence and timing of this system helped avoid construction errors and changes.
The design-bid-build system, however, took time as contractors waited for the completed design. For a number of reasons, the time involved became commercially unfeasible. Rising prices due to inflation plagued the construction industry and eventually increased the cost of building.(fn4) The uncertainty of events that might affect a long-term project also necessitated a change.(fn5) Competitive pressures dictated earlier project completion. Rapid and easy communication created demands for earlier availability of goods and services.
As a result of the pressure to speed completion, approximately fifty years ago the construction industry responded to the demands for earlier completions at reduced costs and tweaked the system to answer these challenges. Under the new "fast track" method, construction was to begin even before the design was complete. Thus, foundations were going into the ground before the upper areas of the building they were to support were fully designed.(fn6)
Fast tracking unquestionably introduced some inefficiencies into the construction process. Early designs for foundations or utility runs needed to be conservative to support whatever the project might ultimately need. Designing on the fly caused more changes and extra work during construction. Nevertheless, the economic value of...
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