Conflicts, Claims & Dispute

FrameworkA Study of DRB Process & Cost Savings From An Owner’s Perspective

10th Annual DRBF Meeting & Conference - Orlando

Carol MenassaCarol Menassa

October 7, 2006

Feniosky PeFeniosky Peñña-Moraa-Mora

PhD Candidate in Construction Management, PhD Candidate in Construction Management, Dept. of Civil & Environmental Eng.Dept. of Civil & Environmental Eng.

Masters of Science in Financial EngineeringMasters of Science in Financial Engineering Student, College of BusinessStudent, College of Business

University of Illinois At Urbana ChampaignUniversity of Illinois At Urbana ChampaignE-mail:menassa2@uiuc.eduE-mail:menassa2@uiuc.edu

Professor ofProfessor ofConstruction Management &Construction Management &

Information TechnologyInformation TechnologyDept. of Civil & Environmental Eng.Dept. of Civil & Environmental Eng.

University of Illinois at Urbana ChampaignUniversity of Illinois at Urbana ChampaignE-mail: feniosky@uiuc.eduE-mail: feniosky@uiuc.edu

C

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flicts,

onflicts, C

laims an

d laim

s and D

isputes

isputes F

ramew

orkram

ework

for successful completion of A

EC Projects

for successful completion of A

EC Projects

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flicts,

onflicts, C

laims an

d laim

s and D

isputes

isputes F

ramew

orkram

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for successful completion of A

EC Projects

for successful completion of A

EC Projects

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Outline

Background

Research Objectives

Research Methodology

Preliminary Model

Acknowledgements

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onflicts, C

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s and D

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isputes F

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ework

for successful completion of A

EC Projects

for successful completion of A

EC Projects

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flicts,

onflicts, C

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d laim

s and D

isputes

isputes F

ramew

orkram

ework

for successful completion of A

EC Projects

for successful completion of A

EC Projects

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Distribution Per Country

1184 Projects – 95 %

53 Projects – 5 %

Total Construction Volume (1975-2005): $89.74 Billion

US

Other Countries

Construction Volume ($ Billion)

Total Number of Projects (1975-2005): 1237

US

Other Countries

Number of Projects

$54.17 Billion 60 %

$35.58 Billion40 %

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for successful completion of A

EC Projects

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flicts,

onflicts, C

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isputes F

ramew

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for successful completion of A

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for successful completion of A

EC Projects

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Distribution by States

Total Number of States with DRB: 32

Most projects are Federal, State or City Funded

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for successful completion of A

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Construction Value of Projects - US

Construction Value ($ Million)

No.

of

Pro

jects

845 200 25 44 22 22 26

Total Number of Projects in the US: 1184

71.4 % 16.9 % 2.1 % 3.7 % 1.9 % 2 %

2.2 %

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Number of US Projects with DRB per Year

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for successful completion of A

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onflicts, C

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for successful completion of A

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Number of Projects per Type

Building – 151 Projects (13 %)Highway – 876 Projects (74 %)Tunnel – 157 Projects (11 %)

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for successful completion of A

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for successful completion of A

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Distribution by Construction Type - USA

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for successful completion of A

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onflicts, C

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isputes F

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for successful completion of A

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Number of Disputes Heard & Settled

Heard 608 37342

150 66 35 1 1275

Settled 595 370 41

128 62 34 1 1231

% 97.8 99.197

85.393.4

97.1

100 96.55

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onflicts, C

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for successful completion of A

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Disputes Heard per Construction Value

608

373

42

150

6635

10

100

200

300

400

500

600

700

800

900

$1 - $35 $36 - $80 $81 - $100 $100 - $150 $151 - $200 $201 - $280 $281 - $1670

Construction Value ($ Million)

Tot

al N

um

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of P

roje

cts

0

100

200

300

400

500

600

700

Total N

um

ber of D

ispute

s

Heard

Number of Projects

Total Number of Disputes Heard

Average Number of Disputes Heard per Project

0.72 1.86 1.75 3.57 3.14 1.60 0.04

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for successful completion of A

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for successful completion of A

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Disputes Settled per Construction Value

Rate of Settlement

98 % 99 % 97.5 % 85.3 % 94 % 97 % 100 %

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for successful completion of A

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onflicts, C

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for successful completion of A

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Disputes Heard per Project Type

Project Type Disputes Heard

Average / Project

Disputes Settled

Rate

Building (151)

191 1.26 170 89 %

Highway (876)

841 0.91 826 98 %

Tunnel (157)

260 1.65 247 95 %

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isputes F

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for successful completion of A

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Other Benefits of DRB Process

Contractor

PeriodNo. of

ProjectsTotal

AmountDisputes

HeardDisputes Settled

11996-2003

26 $ 492 M 21 21

21996-2004

18 $ 495 M 14 14

32000-2002

12 $ 523 M 20 20

41989-2003

12 $ 486 M 20 20

51997-2001

9 $ 115 M 4 4

61996-2003

8 $468 M 9 9

71990-2001

8 $ 293 M 11 11

81998-2004

8 $ 110 M 5 5

91995-2004

7 $ 322 M 19 19

101998-1999

7 $ 232 M 13 13

111990-1996

6 $ 128 M 33 33

Repeat Business for Contractors working on CALTRAN projects • Table shows breakdown by total number of projects per contractor• Table shows only contractors with more than 5 projects

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for successful completion of A

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Outline

Background

Research Objectives

Research Methodology

Preliminary Model

Acknowledgements

Con

flicts,

onflicts, C

laims an

d laim

s and D

isputes

isputes F

ramew

orkram

ework

for successful completion of A

EC Projects

for successful completion of A

EC Projects

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flicts,

onflicts, C

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d laim

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isputes F

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for successful completion of A

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Research Objectives

Develop a model to allow project owners to predict the outcome of the DRB process prior to initiation of project construction

Such a model will equip owners with better confidence to apply DRB in their construction project

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isputes F

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for successful completion of A

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Outline

Background

Research Objectives

Research Methodology

Preliminary Model

Acknowledgements

Con

flicts,

onflicts, C

laims an

d laim

s and D

isputes

isputes F

ramew

orkram

ework

for successful completion of A

EC Projects

for successful completion of A

EC Projects

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flicts,

onflicts, C

laims an

d laim

s and D

isputes

isputes F

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for successful completion of A

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for successful completion of A

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Research Methodology

Identify a personality conflict style of DRB participants (Ex: Thomas Killman Conflict Mode Instrument)

Competitive Style Avoiding Style Compromising Style Collaborating Style Accommodating Style

Collect data from DRBF database on DRB process How it works? Where it works? What is the outcome?

Classify styles of handling conflict into 2 basic dimensions:

Concern for results per conflict Concern for satisfying other party’s interest

Measure the effectiveness of the DRB process in handling the conflict by looking at how the initial positions of the participants changes in the Conflict Grid

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for successful completion of A

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COMPETITION

Win-lose power struggles are fought out, decided by the powerful, or through arbitration

PROBLEM-SOLVING

(Collaboration)

A process used to assess several points of view and alternatives. Solutions involve meeting the minimum.

ACCOMMODATION

Disagreements are smoothed over so that harmony is maintained - one party gives into another.

COMPROMISE

Compromise, bargaining, & middle-ground positions are accepted. “Divide the pie,” win-win is not possible. Win lose would cause negative repercussions.AVOIDANCE

DENIAL

Neutrality is maintained at all costs. Withdrawal from the situation relieves the necessity for dealing with conflict.

0 1 2 3 4 5 6 7 8 9

Concern for results/conflict

Con

cern

for

sat

isfy

ing

othe

r pa

rtie

s

2

1

3

4

5

6

7

8

9

Research Methodology

The Conflict Grid

Initial Position

of Owner

Final Positions

of Owner & Contractor

Initial Position of Contractor

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for successful completion of A

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Data Collection

Prepare a survey as follows:• Collect data on the conflict positions of the

participants prior to DRB involvement

• How did the DRB involvement change these positions into common ground interests

• Level of satisfaction from the DRB process to both parties

• To measure effectiveness of the DRB, look at the following issues for each conflict: Conflict resolved Conflict escalated Relationship between participants: maintained/deteriorated Inaction Further disagreement – Other issues emerged Conflict reduction

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for successful completion of A

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isputes F

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for successful completion of A

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for successful completion of A

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Outline

Background

Research Objectives

Research Methodology

Preliminary Model

Acknowledgements

Con

flicts,

onflicts, C

laims an

d laim

s and D

isputes

isputes F

ramew

orkram

ework

for successful completion of A

EC Projects

for successful completion of A

EC Projects

Con

flicts,

onflicts, C

laims an

d laim

s and D

isputes

isputes F

ramew

orkram

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for successful completion of A

EC Projects

for successful completion of A

EC Projects

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Preliminary Model

Level of Conflict

Demand for DRB Process

Effectiveness of DRB

Concern for Satisfying other

Parties

Concern for Results per

Conflict

Project Participants Personality

Conflict Styles

Conflict Score

Construction Process

Contractual Arrangemen

tConstruction Experts

Legal Experts

Experience / TrainingKnowledge / EducationStanding in the Construction Industry / ReputationKnowledge of LawKnowledge of ClaimsAbility to render fair & Impartial Decisions/Degree of bias

Perceived Fairness

Choice in the selection of the panel membersRight to reject panel membersRight to tell one’s own story about the conflictNeutral Party’s attention to procedural issuesFairness: Consistency/Suppression of bias/Accuracy/Ethical Behavior

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isputes F

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for successful completion of A

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for successful completion of A

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flicts,

onflicts, C

laims an

d laim

s and D

isputes

isputes F

ramew

orkram

ework

for successful completion of A

EC Projects

for successful completion of A

EC Projects

CD22CD22CD22

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Outline

Background

Research Objectives

Research Methodology

Preliminary Model

Acknowledgements

Con

flicts,

onflicts, C

laims an

d laim

s and D

isputes

isputes F

ramew

orkram

ework

for successful completion of A

EC Projects

for successful completion of A

EC Projects

Con

flicts,

onflicts, C

laims an

d laim

s and D

isputes

isputes F

ramew

orkram

ework

for successful completion of A

EC Projects

for successful completion of A

EC Projects

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Acknowledgments

The presented work is based on data received from DRBF. The presenters gratefully acknowledge the help of Mr. Lawrence Delmore in providing the required data for this research.

Any opinions, findings, conclusions, and recommendations expressed in this presentation are those of the presenters and do not necessarily reflect the views of the DRBF.