Disputes/Claims 2009 Overview

1. Disputes/Claims 2009 Overview Division of Construction Management

2. 2009 Claims Summary • Approximately 50 disputes were reported to Central Office in 2009 • 25 escalated to Step 3 • Remainder resolved at District Level (Step 2) • Additionally, an unknown number were resolved at Project Level or prior to a formal Step 2 Hearing 2010 Conaway Conference

3. 2009 Claims Summary • 25 Step 3 Claims (PN109) • 17 decided by the Director’s Claims Board • 1 was arbitrated • 2 were mediated • 5 were dropped or settled prior to hearing 8 DCB Hearings conducted (Some hearings considered multiple claims) 2010 Conaway Conference

4. 2009 Claims Summary • Of the 17 claims decided by the DCB • 4 awarded 100% of claimed amount • 7 awarded 0% of claimed amount • 6 awarded from 1% to 97% of claimed amount 2010 Conaway Conference

5. 2009 Claims Summary • Of the 17 claims decided by the DCB Total Demanded: $ 12,580,738.49 Total Awarded: $ 1,996,864.25 Average: 16% of demand was awarded 2010 Conaway Conference

6. 2009 Claims Summary 1 claim was arbitrated Demand: $68,778.36 Award: $0 2010 Conaway Conference

7. 2009 Claims Summary 2 claims were Mediated • 1 was settled • 1 did not settle • ODOT executed change order for amount it believed it owed • Case filed in Court of Claims Total demanded: $ 1,689,367.54 Total paid: $ 497,388.49 Average 29 % of Demand was Paid 2010 Conaway Conference

8. 2009 Claims Summary Currently 8 active Dispute Review Boards (PN108) • 4 Claims were heard by Dispute Review Boards • DRBs rarely decide on damages but rather provide guidance to the parties for resolution and cost negotiation 2010 Conaway Conference

9. 2009 Claims Summary • Of the 4 claims considered by DRBs • 2 with recommendations to deny the claim • 2 with recommendations of sufficient entitlement to resolve and negotiate 2010 Conaway Conference

10. 2009 Claims Summary • Decisions will be within the “four corners of the contract” • Decisions will be based on “what does the contract say?” (plain reading) • Decisions will be based on the reading of the Contract as a whole 2010 Conaway Conference

11. 2009 Claims Summary Lessons Learned: • ODOT is responsible for interest on tardy payments • ODOT personnel must proactively pursue final quantity agreement with Contractor • Change orders must be processed timely for what is known to be owed (even if quantities are not completely agreed upon) • DOCUMENT DOCUMENT DOCUMENT! 2010 Conaway Conference

12. 2009 Claims Summary Lessons Learned: • Contractor is responsible for Borrow material. • If sampling and testing is required, contractor is responsible for requesting samples as material changes • Material must be able to serve the purpose intended and must be acceptable when incorporated into the work • Contractor is responsible for material failure even if reason for failure is not identified 2010 Conaway Conference

13. 2009 Claims Summary Lessons Learned: • DCB will not find entitlement when notice of dispute has not been given • ODOT personnel – BEWARE of “constructive notice” – even if nothing in writing in 2 days – “knew or should have known” is a consideration– be PROACTIVE -ASK-DOCUMENT-MITIGATE COSTS!! 2010 Conaway Conference

14. 2009 Claims Summary Lessons Learned: • ODOT has discretion (“may”) accept defective Work based on engineering judgment BUT if the DCE “determines the Work is not in reasonably close conformity with Contract Documents” the Contractor must “remove, replace or otherwise correct the Work at no expense to the Department.” (C&MS 105.03) 2010 Conaway Conference

15. 2009 Claims Summary Lessons Learned: • Contractor must continue with all Work including disputed work. ODOT must continue to pay for Work. 2010 Conaway Conference

16. 2008 and 2009 Claim Comparison 2008 2009 25 Claims to Step 3 5 dropped or settled 17 DCB Decisions 1 Arbitration 2 Mediations • 23 Claims to Step 3 • 7 dropped or settled • 14 DCB Decisions • 2 Arbitrations 2010 Conaway Conference

17. 2008 and 2009 Claim Comparison 2008 2009 17 DCB Decisions: 4 paid 100% demand 7 paid 0% demand 6 paid range from 1% to 97% 14 DCB Decisions: 1 paid 100% demand 7 paid 0 % demand 6 paid range from 6% to 44% 2010 Conaway Conference

18. 2008 and 2009 Claim Comparison 2008 2009 Total Demanded: $14,663,041.87 Total Awarded: $ 2,628,127.10 18% • Total Demanded: $ 8,430,308.73 • Total Awarded: $ 2,228,903.21 26% 2010 Conaway Conference

19. Claim Processing Time 2008 2009 Ave. # Days Between NOI and Decision Issued 198 days Ave. # Days Between Hearing and Decision Issued 49 days • Ave. # Days Between NOI and Decision Issued 314 days • Ave. # Days Between Hearing and Decision Issued 107 days 2010 Conaway Conference

20. Questions? 2010 Conaway Conference