978-1138693913 Chapter 16

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Chapter 16

Claims and Disputes

Review Questions:

1. What are three potential causes of claims on a construction project?

2. What is mediation and how is it conducted?

3. What are the differences between mediation and litigation? What are the similarities?

4. What is arbitration and how is it conducted?

5. What is a dispute resolution board (DRB)? When are its members selected?

6. Why do dispute resolution board members make periodic visits to the construction

project site?

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7. What would be the advantages and disadvantages of a single third-party neutral to a)

DRBs or b) mediation?

8. Why do courts typically find in favor of previous DRB recommendations?

9. What is the discovery process that is used in litigation?

10. Why is litigation generally the most expensive of the methods of dispute resolution

discussed in this chapter?

1. Assume a contractor has a contract to construct an elementary school. Assume the

ConsensusDocs® 500 contract applies here also. The project manager believes the

contractor is owed additional time and money because of an owner-caused delay. What

procedure should the project manager use in submitting the claim?

2. How can the partnering techniques discussed in Chapter 5 be used to resolve issues

between the contractor and the owner?

3. Assume you are the project manager for Northwest Construction Company on the

NanoEngineering Building and have a dispute with the owner. You and the owner have

decided to use mediation to attempt to resolve the dispute. What experience and abilities

are you looking for when you select the mediator?

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has mediation experience, understands negotiated GMP contracts, and has a reputation

for being fair and unbiased.

4. As project manager for Northwest Construction Company for the NanoEngineering

Building, you are required to nominate a member for the dispute resolution board. What

criteria would you use to select a nominee?

5. As project manager for Northwest Construction Company for the NanoEngineering

Building, you have been asked to prepare an agenda for the quarterly site meeting of the

dispute resolution board. What agenda would you propose?

6. Assume you are the project manager for a construction company with an average

annual volume of $500 million, spend 1% on home office overhead, and routinely

realize 2% in pre-tax pure profits. Your own project is scheduled to last two years

and has a contract value of $100 million, 5% of which are for jobsite general

conditions. Mid way during construction your client has delayed your project for one

year at no fault of your own. Prepare two claims:

a. Jobsite overhead costs. Can you recover 100% or what would you do with your

people and equipment during this one year shut-down?

b. Utilize the Eichleay Formula to prepare a claim for impacts to home office

overhead and fee.