C onflicts , C laims & D ispute F ramework A Study of DRB Process & Cost Savings From An Owner’s Perspective

1. Conflicts, Claims&DisputeFramework A Study of DRB Process & Cost Savings From An Owner’s Perspective 10th Annual DRBF Meeting & Conference - Orlando CD 2 October 7, 2006 Carol Menassa PhD Candidate in Construction Management, Dept. of Civil & Environmental Eng. Masters of Science in Financial Engineering Student, College of Business University of Illinois At Urbana Champaign E-mail:menassa2@uiuc.edu Feniosky Peña-Mora Professor of Construction Management & Information Technology Dept. of Civil & Environmental Eng. University of Illinois at Urbana Champaign E-mail: feniosky@uiuc.edu

2. Outline • Background • Research Objectives • Research Methodology • Preliminary Model • Acknowledgements

3. Distribution Per Country 53 Projects – 5 % $35.58 Billion 40 % $54.17 Billion 60 % 1184 Projects – 95 % Construction Volume ($ Billion) Number of Projects US US Other Countries Other Countries Total Construction Volume (1975-2005): $89.74 Billion Total Number of Projects (1975-2005): 1237

4. Distribution by States Total Number of States with DRB: 32 Most projects are Federal, State or City Funded

5. Construction Value of Projects - US Total Number of Projects in the US: 1184 845 200 25 44 22 22 26 71.4 % 16.9 % 2.1 % 3.7 % 1.9 % 2 % 2.2 % No. of Projects Construction Value ($ Million)

6. Number of US Projects with DRB per Year

7. Number of Projects per Type Building – 151 Projects (13 %) Highway – 876 Projects (74 %) Tunnel – 157 Projects (11 %)

8. Distribution by Construction Type - USA

9. Number of Disputes Heard & Settled

10. Disputes Heard per Construction Value

11. Disputes Settled per Construction Value

12. Disputes Heard per Project Type

13. Other Benefits of DRB Process • 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

14. Outline • Background • Research Objectives • Research Methodology • Preliminary Model • Acknowledgements

15. 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

16. Outline • Background • Research Objectives • Research Methodology • Preliminary Model • Acknowledgements

17. 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

18. Research Methodology 9 ACCOMMODATION Disagreements are smoothed over so that harmony is maintained - one party gives into another. PROBLEM-SOLVING (Collaboration) A process used to assess several points of view and alternatives. Solutions involve meeting the minimum. 8 7 6 COMPROMISE Compromise, bargaining, & middle-ground positions are accepted. “Divide the pie,” win-win is not possible. Win lose would cause negative repercussions. 5 Concern for satisfying other parties 4 AVOIDANCE DENIAL Neutrality is maintained at all costs. Withdrawal from the situation relieves the necessity for dealing with conflict. COMPETITION Win-lose power struggles are fought out, decided by the powerful, or through arbitration 3 2 1 0 1 2 3 4 5 6 7 8 9 Concern for results/conflict The Conflict Grid Final Positions of Owner & Contractor Initial Position of Contractor Initial Position of Owner

19. 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

20. Outline • Background • Research Objectives • Research Methodology • Preliminary Model • Acknowledgements

21. Preliminary Model Construction Process Contractual Arrangement Construction Experts Legal Experts Perceived Fairness Concern for Satisfying other Parties Project Participants Personality Conflict Styles Conflict Score Concern for Results per Conflict Demand for DRB Process Level of Conflict Effectiveness of DRB • Experience / Training • Knowledge / Education • Standing in the Construction Industry / Reputation • Knowledge of Law • Knowledge of Claims • Ability to render fair & Impartial Decisions/Degree of bias • Choice in the selection of the panel members • Right to reject panel members • Right to tell one’s own story about the conflict • Neutral Party’s attention to procedural issues • Fairness: Consistency/Suppression of bias/Accuracy/Ethical Behavior

22. Outline • Background • Research Objectives • Research Methodology • Preliminary Model • Acknowledgements

23. 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.