Building Design and Construction Handbook - Merritt - Ventech!

CONSTRUCTION PROJECT MANAGEMENT 17.41
A contractor would be well advised not to enter into agreement for construction
without a changed-conditions clause.
17.14.4 Alternative Dispute Resolution
Alternative dispute resolution is the term applied to methods of resolving disputes
other than litigation. The American Arbitration Association. a nonprofit organization
and pioneer in alternative dispute resolution, has established and is a financial
supporter of the National Construction Industry Disputes Resolution Committee.
This group comprises representatives of all the major organizations concerned with
construction.
Assistance in Negotiation. When a dispute between owner and contractor arises
on a construction project, the foremost method of resolving it is by immediate
negotiation. One optional procedure for facilitating negotiation is to appoint before
the start of a project a Dispute Resolution Board (DRB). It usually consists of three
qualified persons whose role is to assist the parties in negotiating a settlement of a
controversy or claim. If there cannot be a resolution of the dispute by such negotiation,
then the DRB will issue nonbinding recommendations based on available
information.
Besides negotiation, other methods used for dispute resolution include conciliation,
facilitation fact-finding, minitrials, and most importantly, arbitration and mediation.
Arbitration. Parties to a contract, either at the time of entering into the contract
or when a dispute arises, agree to submit the facts of the dispute to impartial third
parties who will hear a presentation of the claims by both parties and render a
decision.
If the parties have agreed to submit a matter to arbitration, the decision of the
arbitrators is binding on both parties. The decision can be enforced in any court of
law having jurisdiction over the party against whom a claim is made.
Because of the large number of construction arbitration cases filed, the American
Arbitration Association has, in conjunction with representatives from the construction
industry, drafted special construction-industry arbitration rules (‘‘Construction
Industry Dispute Resolution Procedures.’’ American Arbitration Association, 335
Madison Ave. (10th Floor), New York, NY 10017-4605). These rules provide information
for proceeding with construction arbitration.
Parties may agree beforehand to submit disputes to arbitration by inclusion of
the standard arbitration clause in their agreement:
Any controversy or claim arising out of or relating to this contract, or the breach
thereof, shall be settled by arbitration in accordance with the Construction Industry
Arbitration Rules of the American Arbitration Association, and judgment upon the
award rendered by the Arbitrator(s) may be entered in any Court having jurisdiction
thereof.
To the standard arbitration clause, it is sometimes best to add the words ‘‘in the
city of ’’ immediately after ‘‘shall be settled by arbitration,’’ to specify where
the arbitration hearings should be held.