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OPTIMIZING THE RESOLUTION OF DISPUTES ON CONSTRUCTON PROJECTS

Lynn Larsen CFCC

www.larsenanalytics.com 801-541-9155

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Table of Contents

page #

1.0 Organization and Scope 3

1.1 The Default Option 3

2.0 Alternative Methods to Resolve Disputes 3

2.2 Negotiations - Direct Discussions 3

2.3 Mediation 4

2.4 Arbitration 5

2.5 Dispute Resolution Board (DRB) 7

2.6 Alternative Dispute Resolution (ADR) Methods: A Summary 8

3.0 Typical Claims 8

3.1 Failure to Cooperate 8

3.2 Productivity Issues 9

3.3 Differing Site Conditions 10

3.4 Defective Plans 11

3.5 Delay 13

3.6 Scope Change or Mere Clarification 13

3.7 Damages 14

4.0 Recommended Practice 14

4.1 The Alternatives 14

4.2 The Recommended Practice 14

Appendix 1: Avoidance and Prevention 15

Appendix 2: Expanded Dispute Resolution Board (EDRB) 18

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1.0 INTRODUCTION

This paper summarizes the methods for resolving issues on construction projects. The best method is, of course, avoidance. See Appendix 1. If avoidance were always successful, however, this paper would be moot. This paper discusses the various methods to resolve the disputes that typically arise on projects with a recommendation on the "best" process.

Disputes typically involve determining the facts, applying the controlling standards whether dictated by contract, statute, regulation, industry custom, or code, and then calculating any damages, monetary or time. All must be determined to resolve the dispute.

1.1 The Default Option

Unless the parties otherwise agree, the default process for dispute resolution is litigation in court. That process can take years and become very costly with the outcome often determined by a judge or jury with limited construction experience. After the trial, the losing party has the right to appeal to a higher tribunal for a review of factual sufficiency and a determination that controlling legal precedent was followed. The appeal process does not redo what the trial court did, but determines whether the trial court followed the correct process and properly applied the law. The appeal process, while determining the correctness of the trial court decision, increases the cost and can extend the resolution process for several years.

In an effort to reduce the time and cost of resolving disputes, the construction industry has adopted other, alternative means to resolve disputes. These methods are less time consuming, less costly, and can include knowledgeable experts as the decision makers. These processes are known as Alternative Dispute Resolution (ADR) processes. 2.0 ALTERNATIVE METHODS TO RESOLVE DISPUTES

Alternative Dispute Resolution (ADR) methods include:

1. Negotiations - Direct discussions. 2. Mediation 3. Arbitration 4. Dispute Resolution Board

The controlling contract forms may dictate particular the process(es) to be used.

2.1. Negotiations - Direct discussions.

The first level of dispute resolution is direct discussions between the parties. This may be between site personnel, project management, or company executives. Parties are most satisfied if they control the resolution of a dispute. Therefore, resolution by direct discussions between the parties is a most acceptable process for dispute resolution. The key to success, however, is that the person negotiating must have authority to resolve the dispute or, at least, has ready access to the person with authority.

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Generally, the lower in the management chain that a issue can be resolved the better. The lower level personnel frequently are most knowledgeable about the facts of the dispute, but the higher management personnel have more binding authority.

2.2 Mediation

A third party might foster better communication and assist the disputing parties: an independent unemotional person who manages the dispute resolution process. That third party might be skilled in the technical aspects of the dispute or merely skilled in fostering communications. This process is typically called mediation. The mediator has no power to compel or bind the parties, without the agreement of the parties. See 2.2.3.

The mediator does not disclose confidences of one party to the other unless there is express authorization to do so. Mediation can be a great benefit if the disputing parties are having difficulty even communicating with each other. The skilled Mediator facilitates communications and can overcome misconceptions of the other party or the other party's position. Mediation is a waste if one or both parties do not want to resolve the dispute. 2.2.1 Pure Mediation Pure mediation involves the use of an individual skilled in promoting communications and understanding the motivations and goals of each party but typically without construction expertise. The mediator acts as the communicator of the needs, interests, goals, flexibility of each party to the other. In this process, he makes no assessment of the merits of the positions, but merely facilitates the communication of the positions and seeks to have the parties compromise their positions and reach an agreement. 2.2.2 Evaluative Mediation This process involves the use of a person knowledgeable or skilled in area of dispute. That person evaluates and counsels each party on the merits of their respective positions and the likelihood of prevailing in litigation or arbitration. This requires the mediator to be knowledgeable in the field of the dispute.

2.2.3 Mediation: Binding

After discussions and after gaining an understanding of the dispute, if the parties fail to come to an agreement through the normal mediation process, the parties might agree to be bound by a determination of the mediator. This requires an express written agreement of the parties.

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2.3 Arbitration. Arbitration is a process where a single person or panel of three persons listen to the evidence and presentation of each party and then issues an Arbitration Award. It is typically binding on the parties with little chance of appeal. The actual arbitration hearing is less formal than court litigation and can be adapted to the desires of the parties. It is private, much faster, simpler, and in most cases much less expensive than court litigation. The parties are generally involved in the selection of the arbitrators. That process allows the selection of an arbitrator knowledgeable in the topic of the arbitration, a distinct difference from court litigation where the judge is not necessarily educated in the subject of the dispute.

An Arbitration Award is more final than a court decision. That can be a blessing or curse. If one does not like the decision of an arbitrator, one can only appeal that decision on very limited grounds challenging arbitrator misconduct. In court litigation, if one does not like the decision of a judge, one can appeal that decision for review by other judges or even a panel of judges, but in almost all cases, none of the judges will be experienced in construction matters.

In some instances American Arbitration Association (AAA)1 arbitration has become akin to court litigation with expensive discovery, legal procedural motions and protracted scheduling. AAA is providing guidance to its arbitrators and instituting procedures to be more efficient in resolving the issues in a cost effective and timely manner.

Another provider, Construction Dispute Resolution Services (CDRS)2, provides services similar to AAA. CDRS has skilled people available in all 50 states and many foreign countries who are available to assist in the resolution of disputes on an almost immediate basis.

An independent survey by the Harris poll people found that most feel arbitration is faster, simpler, and cheaper than traditional litigation.

1 See AAA website, www.adr.org.

2 See CDRS website, www.constructiondisputes-cdrs.com.

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2.4 Dispute Resolution Board (DRB) 3 4 The Dispute Resolution Board (DRB) process provides an independent non-binding recommended resolution of a disagreement from skilled construction savvy individuals in "real time." Those individuals are preselected by the parties to the contract and are available to advise the resolution of a dispute at the time it arises. The DRB process avoids the expensive lengthy discovery process that is customary in litigation and in arbitration. Attorneys are not necessary.

A DRB is traditionally comprised of three construction-knowledgeable individuals who have been mutually selected by the project owner and the general contractor. A DRB usually meets on a regular basis; every month, two months, quarterly, as the parties determine and specified in the DRB Agreement. The DRB will review the progress of the project and will try to anticipate any possible future disputes or will handle any disputes that have developed.

The DRB members might be selected after a dispute arises. This allows selection of people with particular knowledge in the topic in dispute. This might be financial, subsurface, tunneling, retrofitting, or whatever.

Typically, DRBs issue “Recommendations” specifying how the DRB feels the issue should be resolved. Each party to the dispute has an opportunity to present their case to the DRB for their consideration. If the parties, thereafter, do not come to an agreement, the dispute will need to be referred to arbitration or to litigation.

On the “Big Dig” multi-billion dollar artery project in Boston5, there were 46 different DRBs each with its own specialty. These DRBs each met on a regular basis to review the progress of the project and to render recommendations or advisory opinions as necessary to prevent or settle a dispute specifically related to the DRB’s area of expertise. The use of the 46 DRBs had fixed costs with some of the DRBs meeting as scheduled without having any important issues to handle. The overall savings to the project far exceeded the fixed costs of the DRB(s). The World Bank typically requires DRBs on all projects that it funds. 2.5 Alternative Dispute Resolution (ADR) Methods: A Summary Parties are free to choose one or more of the above methods of ADR or create their own. If no method is determined, then court litigation is the default method of resolving disputes. The described ADR methods seek to overcome the expense and duration of litigation. ADR methods allow the parties to a dispute to seek a better process to resolve their dispute. ADR allows the decision maker to be one skilled in the field of the dispute, allows the dispute to be resolved privately, and, hopefully, more accurately, at a lesser cost, in a much shorter time.

3 See Dispute Resolution Board Foundation website, www.drb.org.

4 A Project Solomon, A Concept Whose Time Has Come, Lynn B. Larsen, Contract Management, December 1993.

5 Kurt Dettman oversaw the DRBs on the Boston project. www.c-adr.com.

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ADR methods typically allows each party to "tell" its story, even if it is based on second hand information. The arbitrator, mediator, or DRB panel then determines the reliability of that information. Users of ADR, however, give up the right to appeal the decision or recommendation to a higher authority such as an Appeals Court. Use of ADR might weaken a party's right to "legal" defenses or to the enforcement of the rules of evidence utilized by courts, but does strengthen enforcement of industry custom and practice. 3.0 TYPICAL CLAIMS Claims have two components: entitlement and quantum. Is there liability and what is the damage. 3.1 Failure to Cooperate. Every contract includes the implied covenant of Good Faith and Fair Dealings, a duty to cooperate. The courts have put it this way:

Under covenant of good faith and fair dealings, each party impliedly promises that he will not intentionally or purposely do anything which will destroy or injure other party's right to receive fruits of the contract.

If the dispute is over the lack of cooperation by one party and involves industry custom and practice, a knowledgeable construction person is better equipped to address that issue than a judge or lay jury. That knowledgeable construction person could also be an expert witness in a courtroom litigation, or the arbitrator himself/herself, or a DRB member. The arbitration or DRB process would be more timely and more cost efficient process. 3.2 Productivity Issues Several publications discuss lost productivity associated with disruptions. Donald F. McDonald, Jr. and James G. Zack, Jr., AACE's RP No. 25R-03 Estimating Lost Labor Productivity In Construction Claims; Reginald M. Jones and Thomas J. Driscoll, Cumulative Impact Claims, Federal Publications, Inc., Falls Church, VA, 2002. Reginald M. Jones, Claims for the Cumulative Impact of Multiple Change Orders, 31 Pub. Contr. L.J. 1, 2001. Schwartzkopf, William, Calculating Lost Labor Productivity in Construction Claims, John Wiley & Sons, Inc., New York, 1995, and annual updates. AACE's RP No. 25R-03 Estimating Lost Labor Productivity In Construction Claims categorizes the disruptive events as follows: 1. Absenteeism and the missing man syndrome 2. Acceleration (directed or constructive) 3. Adverse or unusually severe weather 4. Availability of skilled labor 5. Changes, ripple impact, cumulative impact of multiple changes and rework 6. Competition for Craft Labor 7. Craft turnover

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8. Crowding of labor or stacking of trades 9. Defective engineering, engineering recycle and/or rework 10. Dilution of supervision 11. Excessive overtime 12. Failure to coordinate trade contractors, subcontractors and/or vendors 13. Fatigue 14. Labor relations and labor management factors 15. Learning Curve 16. Material, tools and equipment shortages 17. Over-manning 18. Poor morale of craft labor 19. Project management factors 20. Out of sequence work 21. Rework and errors 22. Schedule Compression Impacts on Productivity 23. Site or work area access restrictions 24. Site conditions 25. Untimely approvals or responses What forum of resolution is best to determine responsibility and associated damages? A series of experts could assist the courtroom judge or jury.

Alternatively, an arbitrator or DRB panel would be similarly equipped with considerably less time and money consumed. A DRB panel could evaluate the issue is "real time" and not after the fact, avoiding the lengthy and expensive discovery process.

3.3 Differing Site Conditions One of the major risks of a construction project is the subsurface conditions which will be encountered. Consider the following actual dispute that occurred in early June 2010 on a heavy engineering project. The contractor's productivity approached zero.

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In this case, a provision in the specifications prompted the on-site engineer to issue stop orders until additional dewatering was accomplished. The specification required the contractor to dewater so that the ground water was kept 3 feet below the level of the excavation. That was no problem for the first months of excavation. Then in June 2010, the contractor experienced great difficulty in maintaining a low level of ground water. After three months of abortive efforts, the geotechnical design engineer came to the site and determined that his specification was defective. The dewatering specification was relaxed and the work was promptly completed. In the meantime, however, the contractor had spent $1M attempting performance. The project was pushed into bad weather winter months and a major dispute had developed. More money was lost because the project now involved 2 construction seasons. The overrun was now $2M. As a result, the contractor dismissed its project manager for his abortive efforts and "waste" of $1M trying to perform. The contractor retained a claims expert to gather the evidence and develop the claim to be presented to the owner. Each party and the consulting engineer each retained attorneys and prepared to resolve the dispute through litigation. Before trial, the parties participated in a mediation. That prompted a settlement. The owner, a rural water cooperative paid the contractor all the money it could gather from its members, a little more than $1M. In the end, although the parties agreed the contractor "prevailed," it lost $1M plus the cost of attorneys, claim consultants, and experts. The owner and its engineer paid out $1M plus the cost of their attorneys and experts. All lost.

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How could this dispute been more promptly resolved? How could the expenses of performance, of claim preparation, and of dispute resolution been minimized? Who can best determine the causes of the lost critical production, the merits of the case, and resolve it in an efficient and expeditious manner? Had the project utilized a DRB panel, the problem would probably have been resolved within a few weeks of arising, each party would have saved a $1M, and the project manager might have retained his job. 3.4 Defective Plans

The below drawing reflects a lack of coordination between the structural drawings, the mechanical piping, and the sheet metal drawings. This overlay reflects the work that the contractor was required to do, if the drawings, as issued for construction were followed. If followed, the ceilings would have been 4 feet 6 inches high. The lack of coordination created hundreds of conflicts.

The existence of such a dispute could impair production for months and significantly delay completion of a project.

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In this case, the contractor gave notice to the owner and the architect of the conflicts. The architect

denied any responsibility to resolve the issues. The owner told the contractor that it had the

responsibility to resolve any supposed conflicts. The sheet metal subcontractor was the one suffering

the most significant impact.

The superintendent of the sheet metal contractor developed hundreds of drawing revisions and completed the work. After the work was completed, the contractor and the sheet metal subcontractor presented a claim to the owner. The owner denied the claim.

Finally a couple of years later, the matter was presented to a panel of arbitrators, consisting of a retired judge, a retired architect, and a retired contractor. After an arbitration lasting 6 months, 2 weeks of hearing each month, the panel awarded the contractor full compensation for the engineering and additional work. The arbitrators also ordered the owner to reimburse the contractor for cost of the arbitrators. Shortly thereafter the subcontractor went out of business.

The resolution of this dispute required the determination of the existence of each conflict, a determination of who had the duty to resolve the conflict, the resolution of the drawing conflict, the determination of the cost of the changed work including the engineering cost, and a determination of who would bear that cost. Who could best do that and do it timely?

Wisdom would suggest that the parties select a method of dispute resolution that allowed for quick determination of such disputes. Had the project utilized a DRB panel, the problem would probably have been resolved within a few weeks of arising, and each party would have saved millions and the subcontractor would have stayed in business.

3.5 Delay

Any action by the other party to the contract, which causes delay, is actionable. Generally, contracts have express remedies for delay.

Who can best determine entitlement to a time extension or an adjustment to the contract price? A judge? A jury? Most likely, a person with construction knowledge and experience would be preferable.

3.6 Scope Change or Mere Clarification

Extra work and extra cost arises when the Owner directs a change. This may be intentional or unintentional. The design professional might assert that his new directive was a minor change, not affecting price or time; that is, a mere clarification. The contractor would possibly have a different view.

Who is best to evaluate the issues?

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3.7 Damages Damages are always at issue in a construction contract dispute. The intent of the law and any claims disputes process is to put the damaged party in the same position as it would have been absent the impacting event, the disruption. Who is best to determine damages? 4.0 RECOMMENDED PRACTICE 4.1 The Alternatives

A Judge or jury without the knowledge in construction will make a decision, OR, a savvy person with construction knowledge serving as an arbitrator or a DRB member can make the decision.

Under the court process, finality comes after a losing party appeals an adverse ruling or chooses not to appeal.

Under the arbitration process, a knowledgeable person makes a decision, but the losing party has no right to appeal or challenge the merits of the decision unless he shows misconduct by the arbitrator. Under arbitration, discovery is permitted as the arbitrator might determine. Attorneys are typically involved to conduct the discovery and present the case before the arbitrator.

Under the DRB process, a person or panel of knowledgeable persons makes an informed decision in "real time" without the need for discovery. The key people are all still available and each presents his/her understanding of the facts to the DRB panel members.

4.2 The Recommended Practice Skilled savvy construction people are best equipped to satisfactorily resolve the disputes that arise on construction projects. They are more available as arbitrators and DRB members than under any other dispute resolution process. The DRB process seems to provide the most efficient effective procedure for resolving disputes. The existence of a DRB fosters the resolution of disputes by the parties. They know that if they do not resolve their issues, someone else will, and will do so without delay. Under the DRB process, disputes are resolved in "real time" with all key personnel readily available, thus avoiding the expensive time consuming discovery that is customary in other processes. The perceived weakness of the DRB process is that there is an upfront cost to pay for the dispute review board. Users of the DRB attest that the upfront costs are minimal compared to the savings in time and money that result. The Dispute Review Board Foundation published data confirms this conclusion. See www.drb.org.

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Appendix 1

Avoidance and Prevention.

A1. Shared Communication

Quick resolution is enhanced by preparation and communication. Eliminating disputes of fact hastens resolution. Shared documentation lessens factual disputes. Good records can help one prevail in a dispute, but shared communications can best prevent or more quickly resolve a dispute.

The communication might include sharing of meeting minutes, daily reports, and the escrowing of bid and estimating documents. This sharing lessens the need for the extended discovery6 that prolongs and greatly increases the expense of dispute resolution.

The escrowing of bid documents eliminates the "gamesmanship" and creativity that might arise as one party attempts to explain what was anticipated at bid time. Shortly after bid time, the apparent low bidder provides all work sheets, backup, and all other documents relied upon in preparing its bid. The parties jointly confirm that the documents are legible and that the package is complete. The package is escrowed with a neutral third party to preserve its confidentiality and is only opened if a dispute arises. It is returned to the contractor after the project is completed and all claims resolved.

Escrowing of a Geotechnical Baseline Report (GBR) has benefits similar to the escrowing of the bid documents, particularly on heavy engineering projects. The GBR sets forth the designer's interpretations of subsurface conditions and their impact on design and construction. It provides a baseline of subsurface conditions for determining whether actual conditions encountered are "materially different" or not when the contractor submits a Differing Site Conditions claim. The GBR removes the uncertainty of how the designers interpreted the conditions at the time of bidding. Slope stability, dewatering methods, pumping quantity estimates, well spacing, and so forth are typically engineered and provided as part of the GBR.

This preservation of assumptions made at time of contracting and the sharing of information eliminates many factual disputes. This process is enhanced by:

1. Keeping management informed orally and in writing. 2. Informing the other party or parties. Help them understand your problems so

that they can lessen the impact on them. 3. Understanding the assumptions made in the estimate and budget. 4. Understanding the schedule, any constraints, and the current status. 5. Maintaining current, accurate, and detailed cost and budget data 6. Documenting the pre-contract and pre-construction meetings. 7. Discussing expectations with subcontractors. 8. Training of administrative personnel. 9. Documenting design changes.

6 Discovery is the legal process allowing one party to interview under oath (i.e. depose) the other party's witnesses and

relevant documents, and interview third party individuals who might have information relevant to the resolution of the dispute.

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10. Documenting performance 11. Understanding estimate assumptions 12. Educating site personnel of contract terms 13. Writing detailed specifications

A2. Partnering. The construction industry has implemented "Partnering" as a method to improve communications between the parties. Many public projects require partnering. Partnering consists of holding a meeting or series of meetings before construction commences with all parties represented including the owner, the designer, the contractor, and the main subcontractors. Typically a facilitator leads discussions to help the parties to understand the desires and goals of each party, and to work together so that each party can achieve its goals: the owner to get a quality project on time and on budget, the architect to have the contractor construct the project in conformance with the plans and specifications, and the contractor to complete the project efficiently in accordance with its estimate and produce a profit. Partnering effectiveness correlates with the presence and involvement of the real decision makers. Lower echelon people or people without settlement authority, are often afraid that their resolution of a dispute will give up their company position or weaken their position in the resolution of future disagreements. They may not appreciate the benefits of quickly resolving disagreements so that the project can move forward. Partnering opens lines to communication. It helps each party to understand and appreciate the personality and goals of the others. With more open communications, there is less of a tendency to hide problems and more opportunity to discuss and resolve issues together to the mutual benefit of all. The early resolution of problems keeps them from escalating. Even with partnering, the contract is still enforceable. Partnering does not amend the contract nor do good and cordial relations result in contract deletions or waivers of the contract notice provisions. Site personnel must still advise and seek guidance from management and keep detailed notes and records. Partnering does not mean avoiding dealing with the tough issues. It means dealing with them in a cordial solution oriented manner.

A3. Contract Terms Contract terms allocate risks. Dispute avoidance is strengthened if reasonable principles of risk allocation are applied:

1. Risks should be generally borne or assumed by the party best able to control or insure against the particular risk.

2. Each risk has an associated and unavoidable cost which must be assumed somewhere in the process.

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3. A party cannot reasonably be expected to assume risk that is disproportionately greater (when considered in terms of probability and magnitude of potential loss) than that party’s reasonable opportunity to profit from the transaction. Violating this principle will result in significant litigation and disputes when the risk actually occurs and the attempt is made to shift that risk in accordance with the contract.

Disputes are avoided or lessened if the contract documents address anticipated risks in clear unambiguous terms. The provisions should address:

1. Notice provisions. 2. Reliance on pre-contract representations. 3. Claim waivers and releases required with pay applications. 4. Fire, weather, natural calamity, and other force majeure issues 5. Delay and disruption costs. 6. Changes. 7. Dispute resolution processes. 8. Insurance obligations. 9. Indemnity provisions. 10. Assessment of consequential damages 11. Guarantees of performance. 12. Coordination of work or equipment furnished by others. 13. Termination for convenience limitations and conversions. 14. Venue and choice of law provisions. 15. Coordinate of contract drawings. 16. Designation of design responsibility: design or performance specifications 17. Liquidated damages 18. Attorney fees 19. Differing Site Conditions 20. Code compliance 21. Site Access 22. Labor availability

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Appendix 2

Expanded Dispute Resolution Board (EDRB)

Construction Dispute Resolution Services (CDRS)7 has developed an Expanded Dispute Resolution Board (EDRB) process. Under this procedure, the traditional DDB is created by agreement of the parties, but has the additional authority to provide a further process if the parties do not agree to the original recommendation of the DRB. The EDRB provides full Alternative Dispute Resolution (ADR) processes including mediation and binding arbitration, which would insure that all disputes can be handled and settled entirely “In-House.” In addition, an EDRB can provide its services to all parties involved in the construction project including not only the Project Owner and the General Contractor, but all subcontractors, sub-subcontractors, material suppliers, service providers, etc. as specified in the bid submittal documents.

Traditional DRBs usually are very effective in helping to prevent or settle disputes between the Project Owner and the General Contractor; however, any disputes between any other two parties would be outside of the DRB responsibilities and would require those disputes to go on to outside arbitration or litigation. All major parties to the construction project under an EDRB can be required to agree to utilize the three-step dispute resolution process including recommendations and advisory opinions, mediation and if necessary, binding arbitration to settle all disputes.

If a dispute is of a critical nature, the parties may mutually choose to skip the advisory opinion and/or mediation processes and proceed directly to a binding decision by the DRB. Major benefits of an EDRB are its flexibility which allows to parties to select the best process to settle their dispute and the parties to be involved in the DRB process. B1. Construction Settlement Panel (CSP)8 Parties could utilize a Construction Settlement Panel (CSP) comprised of a panel of people with a specialized area of expertise to assist a DRB or an EDRB and to lessen the fixed costs of a DRB or EDRB. On major construction projects it is not unusual to see several DRBs each with its own specialization such as an Electrical DRB, Structural DRB, Underground DRB, Mechanical DRB, HVAC DRB, etc. In an effort to provide the same expertise supplied by the many DRBs, without the fixed costs related to those multiple DRBs, the CSP was developed. The CSP is then available only on request and do not meet on a regular basis as is the case with DRBs. As an example, there may have been an “HVAC – DRB” that met on a regular basis whether or not there were HVAC issues to handle. If those same individuals were on the CSP rather than the DRB, they would be called upon by a General DRB who might need their expertise if an HVAC related dispute was submitted to the General DRB to be handled. The expense of those HVAC CSP Members would only be incurred when there was a dispute to be handled related to HVAC matters rather than as incurred through the regular DRB meetings. CSP Members would serve as a panel of readily-available construction specialists at the request of a

7 See www.constructiondisputes-cdrs.com.

8 See www.constructiondisputes-cdrs.com.

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General DRB. It would not be unusual to see both construction-knowledgeable specialists and construction mediators or arbitrators (ADR Specialists) on a CSP. The flexibility of the EDRB program supported by a CSP allows any number of possible combinations of EDRBs with CSP support. One scenario is to set up one, two, or three General EDRBs depending on the size and complexity of the construction project. If those EDRBs found that they were constantly calling on the same CSP Members, a new EDRB would be established comprised of those CSP Members who were being called upon on a regular basis.

On some projects, it might be appropriate to create a “Financial Oversight EDRB” comprised of a forensic accountant and two other individuals with construction estimating or construction accounting background whose responsibilities would be to analyze all invoices, change orders, claims, addendums, etc. that might be in dispute.

On major projects where the Owner and the General Contractor have worked well together before or on other projects where few if any disputes were encountered or are expected, only a CSP may be set up whose members would be called upon only as requested by the parties. There would be a small administrative charge to set up the CSP but there would be no fixed reoccurring expenses as would be experienced if there were one or more DRBs or EDRBs operating on the construction project. By pre-signing the members to the CSP and having pre-signed other related documents such as Agreements to Mediate or Arbitrate, a member of the CSP could conceivably be on the jobsite the next day to render his/her services in rendering a neutral advisory opinion or recommendation or to serve as a mediator or arbitrator.

Although there are fixed and variable costs related to the implementation of the DRB, EDRB and CSP programs, the direct costs of just one outside arbitration or litigation can be many thousands of dollars and the indirect costs of a project delay or similar occurrence, while waiting for a dispute to be settled, would be impossible to estimate. If there were several major disputes that went on to outside settlement through arbitration or litigation, the project would most likely experience unnecessary delays and additional non-budgeted expenses. The existence of an EDRB program can also give the parties a “peace of mind” as to success of the project relating to the proper handling of construction disputes.

B2. Comprehensive DRB Process

Construction Dispute Resolution Services (CDRS)9 has developed and administers a comprehensive DRB

process diagrammed as follows:

9 See www.constructiondisputes-cdrs.com.

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AACE Int. Certified Forensic Claims Consultant (CFCC) providing Project evaluations, Contract Claims Evaluation and Preparation, Damage Analysis, Expert Testimony, and Dispute Avoidance and Resolution on Public and Private Construction Projects:

• Construction Contracting

• Cost Analysis

• Business Practices

• Damage Determination

• General Conditions

• Surety Issues

• Business Finances

• Delay/Disruption Analysis

• Custom in the Industry

EDUCATION

Juris Doctor in Law with honors, George Washington University, 1975

M.S. in Engineering, University of Washington, 1971

B.A. in Mathematics, magna cum laude, University of Utah, 1969

EXPERIENCE

Highway, heavy engineering and civil work, bridge work, Industrial projects, airports, high rise

buildings, residential, treatment plants, dams, power lines, power plants, shopping centers, tenant

build-outs, pipelines, sports arenas, housing, condominium developments and conversions, casinos,

court houses, prisons, office buildings, hospitals, auto plants, airports, and water and sewer projects.

SERVICES PROVIDED

Project Management Assistance. Claims Avoidance. Entitlement Determinations. Forensic scheduling.

Cost Analysis. Expert testimony on Damages, Delays and Disruptions, Business Practices, Surety Issues,

Fraud allegations, and Contract Interpretations and Procedures. Preparation of claim documents and

expert reports. Expert Testimony. ADR Services

President 2015-2016, Utah Chapter, Association for the Advancement of Cost Engineering, International (AACE, Int.)

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Arbitrator for American Arbitration Association (AAA) and Construction Dispute Resolution Services (CDRS) and DRB panel member

Private Law Practice (1975 to 2000)

Litigated and arbitrated construction contract disputes. Counseled contractors on performance

issues. Prepared contract forms.

Current Member of the Colorado, Utah, and California bars. Past member D.C. and Virginia bars.

Contracting Officer for CIA (1973 to 1974)

Recent Seminar Presentations

3/2016 "Contracts, Claims, and Dispute Resolution" AACE

2015-16 "Contracts, Claims, and Dispute Resolution" US DOT

08-10/14 "Prevent Cost Overruns By Avoiding the Unexpected" Utah DOT and Utah State Department of Facilities Construction and Management.

05/2013 "Construction Scheduling and Productivity Damages," Utah Bar Association

10/2009 "Damages," Utah and Colorado Bar Associations.

10/2009 "Tricks, Traps And Ploys Used in Construction Scheduling: Legal Issues Relevant to Scheduling and Recovery of Delay Damages," US Army Corps of Engineers.

10/2007 "Construction Claim Issues," The Industrial Company.

08/2006 "Legal Issues Relevant To Scheduling and Recovery Of Delay Damages," Lorman.

05/2003 "Construction Contracts, Architect Contracts, Construction Administration, and Related Issues," Utah Municipal Attorneys Association.

02/2003 "Elements Of A Delay And Impact Claim," Lorman.

02/2003 "Loss of Productivity And Acceleration," Lorman.

06/2001 "Construction Claims: Expert Support and Ethics," Lorman.

12/2000 "Construction Contracting For Public Entitles: Claims, Causes, and Damages," Lorman.

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Authored the following published articles:

A Jobsite Solomon: A Concept Whose Time Has Come A Refresher Of General Contract Principles Alternatives To Court Architect/Engineer Liability To Contractors And Others Avoiding Attorneys And Disputes Bankruptcy And Protecting Your Mechanic’s Lien Beware: Big Changes In Utah Mechanic’s Lien Law Bid Problems: Avoid The Mistakes Of Your Competitors Bound By Unsigned Contracts And Unwise Terms Brand Name Or Equal Business Relationships And Loyalty Changes: There Is A Limit Complying With Specs – There Are Limits Contractor Responsibility Despite Owner Control Contractor’s Obligation To Discover Discrepancies Contractual Procedural Requirements Cost Recovery From The Government: Diligence Pays Court Enjoins Union – Only Agreement Damages Recoverable For A Delay Delays, Accelerations, And Damages Delays, Disruption And Acceleration Duty To Cooperate Duty To Inquire Each Party Has The Right To Expect Cooperation Enforcing A Settlement Agreement Evaluating Disruptions And Impacts General Conditions Of The Contract For Construction General Contract Principles Getting Paid On Federal Projects Good Communications Can Prevent Disputes Highlights Of California Construction Law How Much Authority Does Your Attorney Have? Interpreting Your Contract Jobsite Labor Disruptions Liability Of Architects To Contractors Liquidated Damages May Not Be The Limit Obtaining Information On Federal Projects Oral Notice May Not Be Enough Overruns And Their Causes Owner Entitlement To Strict Compliance With Specifications: There Are Limits Piercing The Corporate Veil Preventing Disputes: Revisited Pricing Change Orders Problem Avoidance Problem Detection And Prevention Problem Prevention Problem Solving Through Business Divestiture Read Your Contract – It Might Be Enforced

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Recovering Cost From The Government: Diligence Pays Recovering The Maximum On Your Mechanic’s Lien Releases, Part II: More May Be Waived Then You Expect Relief From Bid Errors Review Your Indemnity Provision Safety, Contracts, And Worker’s Compensation Self-Improvement Analysis: Don’t Let It Be Used Against You Subcontract Payment Provisions Subcontract Relations Ten General Contract Principles: A Reminder And Review Of The Basics The Overzealous Owner Unit Priced Agreements Upward Correction Of Erroneous Bids Utah Legislature Implements ADR: Alternative Dispute Resolution When Is A Release Not A Release? When The Plans And Specifications Have Defects Who Bears The Cost Of Change Order Preparation: The Contractor Or The Owner? Who Bears The Risk Of Defective Specifications? Your Business Organization

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Client Feedback

I have known and worked with Lynn Larsen for the past 20 years…Lynn’s character has always been exemplary. … His work was always excellent and he was thorough and hard working.

- President of a National consulting organization Lynn did a timely, excellent job… He has an extensive background in construction and being an attorney, is experienced in the legal aspects of construction law. I would recommend Lynn as an expert in construction cases with his background as a consultant and an attorney.

- Chairperson of Construction Law Section of State bar Plaintiffs actually abandoned their claims outright shortly after receiving Mr. Larsen’s report analyzing the sources of delays on the road construction project…Plaintiff was represented by well-known local construction counsel…the disparate qualifications and quality of work performed by the competing expert led Plaintiff to lose faith in its claims…Mr. Larsen has exceptional analytical and organizational skills, and I would highly recommend him

- Partner in large national law firm [We] commissioned Mr. Lynn Larsen…to investigate and prepare a claim…Mr. Larsen was able to understand the cost records, schedules and project data to justify recovery of more than $20 million dollars…

--- Mechanical Contractor on Power Plant I highly recommend Lynn. We hired Lynn to assist in our case as an expert. His work is excellent, and we would definitely use his services again."

--Engineering Contractor on Large Civil Project

I personally have never had to work with a company like Larsen Analytics and didn't know what to expect. Mr. Larsen was very pleasant and refreshing addition to our team. He added great advise on document preparing, as-built job schedule creation, and job cost analysis. Mr. Larsen is a honest and reliable individual and is very knowledgeable in law. Mr. Larsen carries a level headed and methodical way of thinking which helped us see things from another point of view. I felt we were very well prepared because of Mr. Larsen's attention to details. I will recommend Larsen Analytics to anyone needing his type of services. --Building Contractor on Residential Construction

Lynn was an invaluable asset as an expert on a complicated construction delay case. I would recommend him to anyone in need of a damage/delay expert in construction litigation concerning delays and damage calculations.

--Counsel on Delay/Disruption case

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