A Program Management Approach: Dispute Avoidance (Part 2)

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“Partnering” as a Facilitator of the Protocol’s Success

In the late 1980's the United States Army Corps of Engineers (1) engaged in a very serious effort to reduce claims and disputes on its billions of dollars of projects around the world. Recognizing that claims and disputes are disruptive to projects, result in expensive dispute procedures and can lead to unanticipated project expense, the Corps sought to develop a process that would significantly reduce the chance for problems to escalate into claims and disputes.?This effort resulted in the creation of a new process labelled by the Corps as "Partnering."?The successful achievement of "dispute-free" projects that benefitted from proper Partnering has been a staggering 85+ percent. (2)

Underlying Principle of Partnering.?The underlying principle of Partnering is that construction people would prefer to work in a collaborative environment rather than a contentious one and that in the collaborative environment, problems can be solved because knowledgeable and experienced representatives of all stakeholders can find solutions. As stated by the Corps:?“Over the years relationship had become adversarial to the detriment of what should be the focus of everyone’s efforts – a successful project.?It therefore makes good business sense to effect a change from an adversarial / litigious to cooperative and disputes avoidance mode of operation.”?

Despite its name, Partnering is not about establishing a legal partnership between the stakeholders. Each party continues to occupy its position on the project with all the concomitant responsibilities, risks and liabilities as determined by the contract. It is about creating a collaborative relationship among the people who are engaged by all the key project participants and the establishment of a common dedication to the best interests of the project.?

Results of Successful Partnering.?By creating a relationship of familiarity and respect for one's counterparts on the project, Partnering expects that posturing and threatening will yield to more reasonable conduct and replacing harsh emails, threatening letters and self-serving declaration with consensus building. The result of successful Partnering is proved to be the achievement of a more successful project through shared visions, common goals, open communication and dispute avoidance and resolution without formal adversarial proceedings.?

The process of Partnering should follow the successful format established by the Corps. Central to the process, however, is the selection of a neutral facilitator to lead the effort. Trained and experienced facilitators understand the process and can translate that understanding into successful results. Several organizations available to private parties have developed specialized Partnering expertise and can provide professional trained facilitators. These include the CPR Institute for Conflict Prevention & Resolution and the American Arbitration Association from the?United States, and the Partnering Initiative from the United Kingdom (which offers guidance as well as training).?

The essential elements of the Partnering Process are as follows:

·???????Inasmuch as Partnering does not modify contractual rights and obligations, the most opportune time to convene Partnering is immediately after the award of the relevant main contracts.

·???????Top management of all stakeholders must embrace and endorse the Partnering process.

·???????All key stakeholders (Employer, main contractor(s), design professionals, perhaps key trade contractors) must be represented in the process.

·???????Representatives should be those who will actually be engaged in the project.?The level and authority of those who attend should be agreed upon by the parties and all parties should contribute representatives to each agreed level.

·???????The working session is usually called a "Workshop". The Workshop should take place over two days preferably at an off-site location. All participants must be committed to participating for full two days without interruption.

·???????The responsibility for the costs of the Session should be agreed in advance by the parties however sharing the costs is preferred.

·???????The Workshop will begin with the Facilitator stating the goals and the agenda.

·???????The first phase will be the "familiarization phase" in which each level of project participants (e.g. all project manager level attendees) introduce themselves to their counterparts on a personal and professional level, sharing facts about their history, their family, their interests outside construction and of course their history leading up to their involvement in the project. During this phase each identifies their respective role and responsibilities on the project.?This phase often leads to an appreciation of each participant's counterpart that otherwise might never occur, thus creating commonalities on a personal level as well as an appreciation for the challenges faced by their counterpart that might explain "a rough day" that could then be forgiven rather than perceived as a confrontation requiring a tough response. Leaving the Workshop knowing the personality and interests of the counterpart is key to the process.

·???????The second phase is when the participants identify critical issues by expressing to one another their hopes, their fears and their expectations of what they anticipate the concerns they will have to deal with during the project. In this process it has been the case that the participants actually come to understand that they share many goals. But it has also been the case that each participant, by expressing its concerns about what might not go well during the project, opens the door to discussion with their counterparts on how to avoid such a result by the development of an "action plan" should the problem arise. This discussion can even lead to the use of hypothetical problem solving as a sort of drill in how the participants will solve those problems should they actually arise during the project. It in is this discussion where the problem resolution ladder (referred to above) is established and the various rungs of responsibility are determined, names for each rung are identified, time frames for resolution at each rung are determined and the commitment to this process is expressed by all participants. (It should be noted that some of the stakeholder contracts may require formal action within stated time periods that are at odds with the protocol agreed upon during Partnering. This situation presents several options. One option is to formally amend the contracts to provide for the agreed upon process without anyone waiving their contractual rights, to be followed by the contractual dispute resolution clause in the event the problem resolution ladder does not work. The other option is to require strict adherence to the contract, but for the participants to acknowledge that the party doing so is not violating the principles of partnering and to allow the problem resolution ladder to take place while the formalities pursuant to the contract occur.)

·???????The participants agree to the principle of dispute avoidance and identify Alternative Dispute Resolution (ADR) methods that they will employ to carry out this agreement. ADR will be addressed later in this chapter.

·???????The participants agree to periodic partnering meetings, to reinforce the understandings and goals they have set, and to evaluate how they are doing in achieving those goals. A periodic "tune up" with the facilitator is highly recommended (perhaps twice a year) so that adjustments can be made based upon actual experiences of the partnering team without losing the essential commitment to the best interests of the project and thus the participants. Such a "tune up" is helpful when a key member of the project team is replaced so that new person is brought into the "family".

·???????The last major phase is when the participants discuss the creation of a project "Charter" in which they pledge that they will act in accordance with the agreed upon principles of mutual respect, commitment to resolution of problems in a businesslike manner at the project level or executive level and the best interests of the project. When agreed upon the principles are written in a document and all the participants sign the document personally. Typically, this document is enlarged and reproduced and placed prominently in the offices of every stakeholder. Some projects actually create a project partnering logo and place it on all their hardhats as well.

·???????Finally, it is common on projects benefitting from Partnering to celebrate success with team lunches and other such events to further reinforce the benefits that have been achieved through Partnering.

History of Partnering.?The history of Partnering is not without challenges. As the success of Partnering gained notoriety in the United States, many Employers (government and private) as well as many contractors actively sought to utilize Partnering to benefit their projects and followed the Corps model. However, over time some began to blanch at paying for Partnering and started to create their own versions of the process—usually cutting the program to one day, having it held on site and then without a facilitator.?Some even went so far as to hold a project team dinner and called it "partnering". Needless to say, this deviation from the model resulted in failures, but those failures were attributed to a failure of "Partnering" which led to less use of the process. When done properly Partnering remains a viable process likely of success for the benefit of all the stakeholders.?

Partnering on Super Tall Projects.?The super tall building is a wonderful candidate for Partnering.?The super tall building that has diverse international participants will benefit even more as, in addition to the customary issues that Partnering addresses, creating an appreciation for the cultural, language and experiential differences among the project team can only benefit the project.

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The Problem-Solving Protocol

One of the results of Partnering often is the creation of what can best be described as a "Problem Solving Tree" or "Problem Solving Ladder" in which individuals from each of the relevant stakeholders at appropriate level of project engagement are designated by name and charged with the responsibility to address problems that require solutions before they escalate into claims and disputes. The graphic, below, depicts such a "Tree" or "Ladder":

In addition to identifying which named representatives of the stakeholders are obligated to make the effort to resolve a project problem, this chart is also time-loaded with deadlines such that, for example, if the first rung of the ladder is not able to reach a resolution within, say, 10 days, the issue is automatically shifted to the next rung,?continuing up the ladder until the matter is resolved or it is determined that the only way to resolve the matter is to resort to a third party for a determination.?The discipline imposed by this process does result in problem solving, and usually at a lower level if not at the lowest level, as highest levels of authority expect and demand that problem solving be accomplished short of their level. When problem solving is not accomplished at lower levels it is usual that the question is asked: "why?" and sometimes the answer is the need for replacement of particular individuals who fail to act reasonably.?

This manner of ADR should be included in project contracts to assure that participation has a contractual foundation and benefits from the imprimatur of the contract, however the absence of a contractual provision should not limit the ability of the stakeholders to adopt this approach.(3)

Stay tuned for part 3, where we going to share about Dispute Review Boards (Standing or On-Demand), United Kingdom Adjudication of Construction Industry Disputes, and Early Neutral Evaluation (ENE).

(1) The United States Army Corps of Engineers, in addition to its role during military operations, is responsible for major civil projects in the United States such as damns, dredging projects and domestic military facilities.

(2) The CPR Institute for Conflict Prevention & Resolution reports that U.S. Army Corps of Engineers (“the Corps”) experienced an 85% reduction in construction claims and litigation by using partnering to prevent escalation of disputes through better communication and problem solving, and by using ADR to resolve disputes that could not be otherwise resolved. The Corps in [the U.S. State of] Oregon found an 80%-100% reduction in cost growth over project life due to partnering, and a 67% reduction in paper work. Improved safety, as well as a reduction in delay, litigation and claims, were also found.

(3) If adoption of this process is contrary to the contractual provisions it is necessary that the contract provision be followed precisely rather than adoption of this process or that a modification to the contract be executed harmonizing the contract and this process.??