The quest for the right questions in the construction industry

In this article, John Hinchey and Lawrence Schor review the most significant developments in the construction industry ADR use over the last 15 years. During this period the industry has criticized, scrutinized, and revised ADR processes, all the while asking itself, "What's wrong with these processes? What's right?" The authors, however, think that such questions are misleading. "Perhaps the more appropriate questions would have addressed how and under what circumstances any or all of the various ADR processes should be applied to construction disputes, 11 they write. Over the past 15 years in the United States, the number of construction industry disputes referred to alternative dispute resolution (ADR) processes increased dramatically. Because construction industry disputants in America typically looked to their litigation lawyers for advice, the various ADR processes quickly came under the critical eyes of lawyers trained in trial advocacy. Arbitration rules and regimes existing in the 1980s were particularly criticized by American construction litigators as inadequate to deal with the "complex construction case." On the other hand, construction industry executives resisted the construction bar's tendency to "lawyerize" traditional arbitration.

Throughout the 1990s, virtually every American construction industry bar group and organization conducted surveys, established special committees or sponsored programs to consider and criticize various dispute resolution processes for resolving construction industry disputes. No segment of the industry was content with the status quo; valid criticism came from all sides. There was also some conceptual confusion about whether the preventative measures of enlightened contract risk allocation or "partnering" should supplant other forms of ADR, and whether mediation should be an alternative, rather than preliminary, to arbitration. It seemed that everyone was searching for the perfect process or the "Holy Grail" of alternative dispute resolution. Professor Tom Stipanowich encapsulized the search well:

Throughout its history... the construction industry has sought out mechanisms aimed at: (1) avoiding or minimizing relational conflicts; (2) minimizing the temporal and financial costs of conflict resolution; (3) preserving the working relationship of the parties...; and (4) bringing to bear the practical and technical insights of adjudicators and advisors from within the industry.1

In hindsight, the lessons learned over the past decade are that ADR cannot be monolithic in character. One size will never fit all, and there is no single perfect process. Instead, the rack of ADR "tools" should be selectively applied to the needs and requirements of the parties in particufar cases. Perhaps the primary problem lay in the fact that ADR procedures are typically cast into a contract before the parameters of future problems are known. Then, once the parties' interests have diverged, and after disputes have developed, the pre-arranged ADR processes become more a straightjacket than a comfortably fitting custom-- tailored suit.

Over two decades ago, Professor Frank Sander of Harvard promoted his vision of a "multi-door courthouse," in which incoming disputes would be directed to various dispute resolution forums, e.g., court adjudication, arbitration, mediation, negotiation or other processes, on the basis of such criteria as the nature of the dispute, the relationship between disputing parties, the amount in controversy, and concerns regarding the speed and cost of dispute resolution.2 Professor Sander envisioned a dynamic system, premised on a flexible tailoring of the process to the problem. In the intervening years, substantial progress was made toward realizing Sander's vision in the public realm; yet, little was achieved in the realm of private dispute resolution.3

In brief, our thesis is that while efforts should not necessarily cease in searching for the ideal ADR process, perhaps the focus should shift from how to contractually bind the parties, in advance, to specific forms of ADR, to urging the parties to agree to be bound or guided by the informed recommendations of a neutral advisor or a "disputes process board," regarding process design and selection, after, not before, the dispute is known.

Quest for the Right Process

A. Fifteen Years of Experimentation

Throughout its history, and especially during the last 15 years, the American construction industry has proactively and creatively developed and refined means of avoiding and resolving the issues and disputes that inevitably arise during the course of a building project. Indeed, it has been said by one of America's leading construction industry scholars, that

...no sector of American industry is more directly affected by current trends, and no secfor has demonstrated more creative zeal in developing and utilizing alternatives to court.... [T]he construction industry represents not only the cutting edge of experience with dispute resolution processes, but also the spearhead of experimentation with mechanisms aimed at avoiding disputes by attacking the roots of controversy.4

This creative zeal to discover the causes and cures of disputes in the construction industry began in the mid-1980s with a survey sponsored by the American Bar Association, Forum On The Construction Industry (ABA Forum). The survey revealed:

* concerns regarding the competence and training of construction arbitrators;

* doubts about the effectiveness of the arbitrator selection process, particularly the completeness of biographical information provided to parties concerning prospective arbitrators;

* concerns regarding the speed and efficiency of arbitration in complex cases;

* support for greater use of prehearings and pre-arbitration orders concerning procedural matters, including limited discovery;

* concerns regarding lack of procedural mechanisms to deal with multiparty disputes; and

* division of opinions regarding the appropriateness of reasoned awards by arbitrators.5

Partly in response to this mid-1980s ABA Forum survey, the American Arbitration Association (AAA) modified its Construction Arbitration Rules and Procedures, and, in 1993, established a "Large, Complex Case Program" to improve case administration for disputes involving claims of at least $1 million.6

Professional and trade organizations in the construction industry also worked in the ADR "laboratory." The Dispute Avoidance and Resolution Task Force (DART), a multidisciplinary entity claiming members in all sectors of the construction industry, was established in 1991 with the goal of changing the culture of construction industry dispute resolution through education. In October 1994, DART sponsored a landmark conference on dispute avoidance and resolution with the participation of representatives from 15 countries.7

Contemporaneously with the organization of DART, the ABA Forum initiated a task force to study and recommend revisions to existing rules and processes for resolving disputes in "large complex cases."8 Based on the Task Force Report, a much broader survey was commissioned by the ABA Forum with the objective of providing more detailed information regarding perceptions of and experiences with various dispute resolution processes, particularly mediation, mini-trials, summary jury trials and nonbinding arbitration, all of which were then becoming subjects of increasing attention for resolving construction disputes.9 The 1991 ABA Forum survey derived the following conclusions:

* Arbitration of construction industry disputes was attracting a great deal of criticism for becoming too much like litigation;

* mediation and mini-trials, together with other ADR methods, were becoming favored for resolving construction industry disputes, with mediation being the clear favorite;

* lawyers preferred at least some discovery prior to mediation;

* mediators should be encouraged to express their views on the potential outcome of cases, particularly on a confidential basis in private caucus with individual parties; and

* the most successful mediations were those which were agreed to after the dispute developed; only rarely were mediations successful when conducted pursuant to a predispute agreement.10

By the mid-1990s, the ADR reform movement gained even more momentum, such as to generate an unprecedented multidisciplinary survey co-sponsored by DART, the ABA Forum, the ABA Section on Public Contract Law, the DPIC Company, Inc. (an insurer for design professionals), and The Associated General Contractors of America (AGC).11 In addition to this nationally oriented survey, regional surveys were undertaken, and many articles, treatises and reports were published on which ADR processes were working, and which were not.12 The cauldron was bubbling over with praise, criticism, with revisions to existing ADR and arbitration rules, and with creative approaches to dispute resolution generally. A sampling of the stew is presented in the following sections.

B. Traditional Dispute Resolution Processes

1. Informal Decision Making by Design Professionals

Traditionally, an incidental duty of the architect or engineer, as the design professional, was to serve as the judge of first resort for project-- related disputes. For quick and informal determinations between owners and contractors, it was reasoned, the logical source of authority was the design professional who was responsible for having drafted the drawings and specifications. The decision of the architect could be either final or binding on the parties, or, as more typically was the case, the decision was tentative and subject to de novo review arbitration or litigation.

Currently, the American Institute of Architects (AIA) standard form contracts and other standard forms provide that the project architect or engineer will serve an adjudicative role with regard to project disputes. In most cases, the design professional's decision is not deemed final, and the matter may be submitted to binding arbitration by either party following submission to the design professional. Some contracts, particularly public contracts, go so far as to establish the design professional (even an employee of the owner) as the final judge of claims and controversies. New York courts, among others, have validated and enforced such provisions.13

Notwithstanding tradition, the quasi-adjudicative role of the design professional has been controversial, especially in light of the multiple roles and allegiances of design professionals. For example, many of the ABA Forum survey responses indicated that a substantial majority of design professionals and contractors agreed that design professional decisions should not be final and binding, unless the parties so agreed after the dispute had arisen. Contractors, especially, tended to be opposed to design professionals having the final say, even over aesthetic questions, and the responses of design professionals on that subject were mixed.14

2. Binding Arbitration

Binding arbitration, historically, has been the favored alternative for adjudication of construction disputes. Since colonial times, the industry has referred disputes to private adjudication by panels of experts. As the ultimate structure for governance of design and construction contracts, arbitration offered several advantages: a limited process, relatively prompt hearings, privacy, informality, and, above all, an informed judgment which could soften the hard edges of the law, within the elastic bounds of arbitral discretion. To contractors and businesspersons, arbitration was, and remains, a latter-day court of chancellery, holding out the promise of a different, and potentially superior, kind od justice. With the advent of standardized agreements for owners, contractors and design professionals, arbitration became a standard fixture in construction contracting and dispute resolution.15

Yet, while construction industry arbitration experienced steady growth over the years, there were growing pains, and a long-simmering struggle over the "soul" of construction arbitration, especially in cases of complex controversies. How should multiparty disputes be addressed in arbitration clauses? Should arbitration be administered by an impartial administrative agency such as the AAA, or can administrative duties be effectively handled by the arbitrators? How much discovery should be available in arbitration? Should arbitrators write opinions in support of their awards? Should arbitrators have the authority to make summary rulings on "legal" issues?16 In response to these questions, some survey respondents expressed a general view that to address the complexities of disputes fully and fairly, arbitration procedures must borrow certain features of civil litigation. These included, among other things, more extensive discovery, multiparty practice, awards of attorney's fees, and reasoned opinions accompanying awards. A competing view, however, was that making arbitration more like litigation would sacrifice the essential virtues of the process, such as economy, efficiency and finality of judgment. 17

3. Litigation

Of course, litigation is anti-polar to ADR, being the judicial forum of last resort as to which all other processes are "alternative." Yet, litigation has traditionally played a significant role in construction industry dispute resolution in a number of important respects. First, it has established a body of precedent by which construction counsel advise their clients. In fact, a significant deficiency of all ADR methods, currently, is that, while resolving construction disputes, they leave no legacy for the future. Secondly, the broad discovery mechanisms available in American litigation have made it possible, and practical, to obtain critical documents and take key depositions of witnesses in other states and jurisdictions, which would be extremely onerous and expensive in an arbitration mode. And, finally, there are a significant number of major construction projects where the participants, with millions, if not billions, of dollars at stake, have quite exactingly allocated construction risks through excruciating contract negotiations, and, therefore, would not easily relinquish the interpretation of these hard-won negotiated rights to the tender, equitable mercies of arbitrators who are not strictly bound by applicable law or even the substantive terms of the agreement.

Hence, litigation has been, and will likely continue to be, an "alternative" process for resolving construction disputes in America.

C. The Preventative "Vaccines" For Disputes

It should go without saying that parties to construction agreements should structure their relationships and take appropriate action to avoid or prevent disputes from developing on the job. From a conceptual standpoint, these construction dispute "vaccines," including enlightened risk management, the use of incentives for exceptional performance, "partnering," project alliances, and project counsel to assist in contracting, should not be confused with procedures to resolve disputes once they arise. Unfortunately, quite a few surveys and debates regarding the merits of ADR have prompted industry representatives to opine, for example, that they prefer &&partnering above arbitration," which is about as enlightened as preferring peace over war. Clearly, in any regime of relational contracts, construction transactions being prime examples, one should always begin with efforts to prevent disputes; then, if they do arise, one can concentrate on pursuing the most effective means of resolving them.

D. The ADR "Remedies"

1. Required Negotiations

As with the construction dispute "vaccines," there is virtually no debating the proposition that parties should first attempt to meet and negotiate solutions to their disputes, as they normally do. What appeared on the American scene during the 1990s were contractually mandated exchanges of documents and information, and required negotiations.

A prime cause of disputes is insufficient knowledge. The more facts that are placed on the table, the more discernable the solution to the problem. In fact, information exchange is at the heart of dispute resolution, and again, the construction contract is the starting place to provide for the exchange and communication of data relative to the dispute. For example, the contract may require that the parties prepare, maintain, and preserve certain categories of records and other sources of information with respect to the subject of agreement, e.g., estimates, bid and bookkeeping records, correspondence, internal minutes, logs, diaries, weather conditions, and test reports, etc. More to the point, the contract can require that these categories of documents be presented to the other party as a contractual condition for asserting a claim. Clearly, it will be easier and far more economical for the parties to exchange documents and information at this early stage of dispute resolution, rather than under the formal rules of discovery in the context of a lawsuit or arbitration.

An exchange of documents and information can also be combined with contractual requirements for the parties to meet and negotiate; a typical provision is that the executives will meet, together with other persons having knowledge of or an interest in the claim, at mutually agreed upon times and places, in a good faith effort to compromise and settle the claim. The agreement can also provide that the failure or refusal of a party to follow such a mandated negotiation procedure will constitute a waiver of the right to arbitrate a claim. This concept of contractually required informal negotiation and information exchange is beginning to be accepted and incorporated into standard form agreements that are enforceable in courts of law.18

2. Mediation

Mediation has been very generally defined as:

... a private, informal process in which the disputants are assisted by one or more neutral third parties in their efforts towards settlement. The mediators advise and consult impartially with the parties in order to bring about a mutually agreeable resolution of disputes.19

From all indications, mediation has firmly assumed a place in the pantheon of standard industry dispute resolution forms. There are a number of possible explanations for the popularity of mediation. Mediation tends to be informal and flexible; it need not involve structured presentations or intricate procedures, and may be conducted in a mutually agreed venue. It may or may not require lawyer participation, and is often described as speedier, and less expensive, than more elaborate dispute resolution techniques.20

Mediation, also, is said to give the parties a primary role in structuring solutions to their own problems, "limited only by the imagination and willingness of the parties, their counsel and the mediator."21 The parties' direct participation make it more likely that they will be satisfied with, and live up to, the resulting agreement. By bringing the parties to the table for discussion, mediation may reopen channels of communication between parties. For these reasons, the process is often recommended for disputes involving continuing relationships, and, according to most studies, usually results in a full or partial settlement.22

On the other hand, the tendency has been to regard mediation as inappropriate where the dispute involves a novel question of law, where the credibility of witnesses is critical or where there is reason to believe that an opponent is untrustworthy or unwilling to compromise. Indeed, the most common observation by participants was that good faith, and a basic commitment to resolve differences and to seek collective solutions, are essential to the success of mediation.23

An ABA Forum survey on mediation24 conducted in 2000 indicated that the respondents have a clear bias in favor of selecting attorneys as mediators, and particularly those who have extensive subject matter expertise. Given that the respondents were attorneys, this result may simply indicate a preference for individuals with similar backgrounds. On the other hand, the preference was so strong (94%) that it may indicate an assumption that attorney mediators have experience and skill sets not possessed by lay mediators.25 Of course, many lay mediators vigorously argue that they are often effective precisely because they don't "think like lawyers." With training and experience, the skill sets necessary to be an effective mediator can be possessed by both attorneys and lay mediators alike. The trick, of course, is finding which individuals possess those skills.

The 2000 ABA mediation survey also indicated that the most highly regarded mediator behaviors were evaluative, up to a point, rather than facilitative. The parties clearly want a mediator who will "confidentially discuss with each party the merits and potential outcomes of the case." Other responses suggested that mediators should be more aware of the preferences and expectations of the mediating parties, and, when appropriate, should strive for greater congruence between these expectations and the techniques the mediators employ. To accomplish this, mediators will have to be more flexible about what works in practice and pay less attention to constraints imposed by certain theories of mediation.26

Counsel for the disputing parties can improve the prospect of having their mediation expectations met by entering into an agreement concerning the desired qualifications for a mediator and the type of mediator conduct they prefer. Then, counsel can conduct a thorough search for a mediator who can satisfy their requirements. Obviously, the parties should discuss their expectations with each prospective mediator and with the mediator that they ultimately choose.27

3. Standing Neutrals and DRBs

The United States construction industry has experimented with "standing neutrals" of various types, including project arbitrators, project mediators and Dispute Review Boards (DRBs). A project mediator facilities negotiations, while a project arbitrator makes interim or final binding decisions. A DRB, on the other hand, usually issues nonbinding recommendations.28

The parties typically appoint the standing neutral or DRB members in the construction contract or at the commencement of the project. In each case, the person or persons selected are kept informed about the project and its progress, and are supposed to be available on relatively short notice to help resolve any disputes that arise. Of the three types of standing neutrals, DRBs have been more frequently used because of their remarkable success in resolving disputes between owners and contractors.29

First used in the 1970s on tunneling projects, the DRB process has also been employed on other types of construction, including heavy civil engineering projects, industrial projects and conventional buildings. Most DRBs have operated under procedures developed by the American Society of Civil Engineers Guide Specification For DRBs. As of September 2000, DRBs had been planned or used on 662 projects, having a combined construction value of $35 billion. Some 841 disputes were settled after referral to DRBs, and only 25 referred disputes were challenged. Virtually all of these were resolved shortly after litigation commenced.30

While there was an early concern that the ready availability of a DRB would attract disputes, in practice, just the opposite has occurred. Although "nonevents" are difficult to measure, the existence of the DRB seems to have had a dampening effect on controversies, by, in effect, giving the parties an incentive to resolve disputes among themselves.31

Because the DRB process provides a high-quality recommended resolution by selected experts, it seems better suited to the determination of complex technical disputes between the owner and contractor, as contrasted with payment disputes or questions of contract interpretation.32

Based on the surveys and anecdotal reports, party satisfaction with DR-Bs is high. Those who have used the process on one project tend to use it repeatedly. The high level of satisfaction is usually attributed to the nonbinding nature of the DRB's recommendation, the mutual selection of DRB members by the parties, the DRB members' experience in construction, and their familiarity with the project and the project participants.33

4. Mini- Trials

A number of ADR organizations have established and published procedural rules for minitrials. Most persons having experience with minitrials have recognized that in order to make an effective summary presentation of a claim or defense, each party must have a relatively thorough understanding of its own contentions and the contentions of the other parties. As a practical matter, this means that there must be a reasonable opportunity for limited discovery by each party before participating in a mini-trial. Accordingly, most mini-trial procedures recommend or make some provision, usually on a voluntary basis, for limited discovery in advance of the mini-trial presentation:

Any discovery conducted should be expedited, limited in scope where feasible, and scheduled to conclude at least two weeks prior to the mini-trial. Counsel bear a special responsibility to conduct discovery expeditiously and voluntarily in a mini-trial situation.34

Apparently, mini-trials can be remarkably successful in concentrating a complex case into a concise, but comprehensive format. For example, in a well publicized mini-trial involving Bechtel National, Inc. and the U.S. Corps of Engineers, Bechtel counsel had this to say:

During the mini-trial, the detailed schedule quickly proved impracticable, but the informality of the process and common purpose of the mini-trial participants nonetheless permitted comprehensive, detailed presentations of, and responses to, all significant issues involved.

In part, this was possible because the 'trial' days were made very long and breaks were minimized. Far more importantly, the minitrial process itself, the informality of presentations, the pre-hearing exchange of detailed position papers, the presence, obvious commitment and active participation of the actual decision makers and the neutral advisor, forced the lawyers, consultants and witnesses to concentrate on the case at hand and to minimize posturing and other tactical ploys. The consequence was a massive, focused, almost unbelievable intense laying out of information relevant to the claims at issue.35

Nevertheless, while mini-trials can be quite effective in resolving complex disputes, their use, according to the surveys, has been quite limited.

5. Early Neutral Evaluation (Nonbinding Arbitration)

As defined by the various survey instruments, early neutral evaluation is:

a process in which a neutral third party inquires into the merits of a dispute during the early stages of litigation. The neutral's evaluation of the case may assist in settlement of some or all issues prior to extensive discovery.36

As the definition suggests, early neutral evaluation, including nonbinding arbitration, aim at encouraging evaluative discussions at an early stage, thereby potentially obviating the need for full-blown trial preparation. Although evaluative processes of this kind are not unknown in private consensual settings, their primary utility to date has been as an adjunct to pretrial processes, whereby litigants must participate in some form of neutral evaluation as a condition to proceeding with litigation.

6. Expert Determinations

Commercial agreements will sometimes provide for a special determination of technical issues. For example, in a business asset purchase and sale, issues concerning the valuation of assets on particular dates may be referable to an accounting firm or appraiser for a binding determination. Typically, no procedures other than "as determined by the expert" are provided. The designated expert may request written or oral submissions by the parties, conduct interviews, take evidence or make inspections, all at the discretion of the expert. Yet, because the decision is final and binding, the process is in the nature of a summary arbitration.

This process of referring discrete technical issues to an expert or, perhaps, to an expert panel, for a final decision, is becoming more popular and would seem to lend itself well to some construetion industry disputes, particularly those involving the quality or quantity of the work.

7. Arbitration

Over the past 15 years or so, we have seen arbitration take on certain attributes of litigation, while litigation has drawn certain techniques from arbitration to achieve greater efficiency in the judicial process. The dual forces causing this synthesis are: (i) more attorneys are participating in ADR and are tending to remake its procedures in the image of litigation; and (ii) public reform groups are compelling the courts to curb litigation by adopting various ADR concepts, such as severe quantitative and temporal limits on discovery. Perhaps it is appropriate to ask, where, and on what terms, will ADR and litigation meet? Where should these regimes interface in terms of evolving the fairest and most efficient dispute resolution procedures for complex construction cases?

Lord Bacon once posed this question:

[He] that will not apply new remedies must expect new evils; for time is the greatest innovation; and, if time, of course, allows things to be worse, and wisdom and counsel shall not allow them to be better, what shall be the end?37

It was in this remedial spirit that the organized American construction bar began in the mid-'80s to search for reforms, so as to address perceived weaknesses in domestic arbitration processes, particularly as they would be applied to complex construction cases. Some of the reforms and special procedures were as follows:

(a) Selection of Arbitrators and Neutrals. The ABA Forum Task Force recommended that there should be a select "blue ribbon" panel of arbitrators who would be available to arbitrate complex construction cases, who have had experience in larger construction projects, extensive experience in dispute resolution, and a solid reputation for impartiality and fairness. Nevertheless, the task force recommended that arbitrators should continue to be selected from the various disciplines in the construction industry, i.e., contractors, design professionals, subcontractors, and construction managers. Moreover, efforts should be made to recruit more representatives of owners on construction arbitration panels. It was also recommended that the chairperson of the panel should be an attorney with extensive experience in representing these industry groups, with significant experience in dispute resolution.

(b) Consolidation of Claims. The task force recommended that the special procedures should require the assertion of any counterclaims which arise out of the transaction or occurrence that is the subject matter of the complaining party's claims, based on the same principles provided in the Federal Rules of Civil Procedure. Moreover, criteria for joinder and consolidation should be provided for in the special procedures. All parties involved in a single project should be required to incorporate the special procedures into their respective agreements.

(c) Discovery. The task force report recommended that arbitration provisions for complex cases should provide for:

* reasonably detailed statements of issues and contentions;

* mandatory exchanges of documents;

* lists of expected witnesses;

* limited requests for production, limited interrogatories, and limited depositions as a matter of right;

* resolution of discovery issues and promulgation of a detailed discovery plan by the arbitrators, if and to the extent that the parties cannot agree on discovery; and

* strict time limits on discovery, e.g., not to exceed six months, except with the approval of the arbitrators, and, following discovery, a consolidated prehearing order which would define the issues and detail the proof to be offered by each party.

(d) Hearings and Evidence. The task force recommended that the traditional standard for admission of evidence in arbitration hearings should be retained, which is that arbitrators shall determine the admissibility, relevance, materiality, and weight of all evidence offered. However, in complex construction cases, the arbitrators should apply the attorney-client privilege and attorney "work product" immunity. Furthermore, the arbitrators should generally exclude such evidence as settlement discussions, communications which the parties have agreed are confidential, and settlement discussions which have taken place in the context of a mediation or mini-trial. Also, arbitrators in complex construction cases should encourage such innovations in the presentation of evidence as the use of written testimony of witnesses, narrative summaries of evidence by counsel, document summaries, and videotaped presentations of evidence.

(e) Decision Making. It was recommended by the task force that arbitrators in complex construction cases should:

* be bound by the underlying contract and applicable legal principles, which include established doctrines of equity;

* continue to be authorized to order extraordinary equitable relief, if authorized by the contract or applicable law;

* state reasons or a rationale for their decision or award;

* if damages are awarded, include the basis for damage calculations;

* be authorized to impose sanctions, e.g., dismissal of the demand for failure or refusal to abide by applicable procedures or decisions of the arbitrators; and

* award attorney's fees and costs, if and to the extent the contract or applicable law provides; however, arbitrators should not be permitted to award punitive damages, unless expressly authorized by the contract.

(f) Appeal. While somewhat controversial, the task force finally recommended that the special procedures should provide for an expedited appeal from a written or reasoned award in complex construction cases to a select panel of arbitrators, whose review would be strictly on the record, with briefs and no oral argument.

Conclusion

The last decade's prolific output of surveys, studies, seminars, task force reports, and institutional rule revisions regarding ADR in America have been grounded upon the implicit assumption that there are one or more "ideal" ADR forms for resolving construction disputes. To ask what is "wrong" implies that there is a "right" approach. To conclude that a process is "ideal" presumes that other processes are less than ideal or are deficient in some respect. Perhaps these assumptions are overly critical and possibly even misguided.

The American construction bar has been extremely energetic and, in some cases, innovative, in developing a broad array of dispute resolution tools for resolving issues arising out of construction projects. Moreover, the trend of decisions in the United States federal and state courts has been to strongly support the extension of ADR processes, both in private disputes as well as in controversies where federal agencies are parties.39 All of these efforts seek the same end: creative and flexible responsiveness to conflicts within contractual relationships. The inherent shortcoming is that, in most instances, the process tools are decided upon and incorporated into the contract before the nature and quality of the claims and controversies are known. The likely truth is that the entire array of ADR tools should be available or adapted for use in resolving a dispute, but only insofar as the dispute has flowered.

While mediation is universally favored by the construction industry, it may not be ideal to resolve a case presenting a novel issue of law. Mediation also takes some time to prepare for and execute. Perhaps an interim binding award, subject to appeal to an arbitration panel, would provide a more timely and just result. A Dispute Review Board can be effective, but expensive, to put in place and maintain; perhaps an expert determination would serve as well. In certain construction cases, heavily laden with complex fact and contract interpretation issues, the full panoply of litigation-derived processes may be appropriate, whether in the context of a judicial or arbitral forum. In other cases raising only quantum or quality issues, "due process" has little or nothing to add to the traditional role of arbitrators acting essentially as appraisers.

Thus, while American lawyers have unrelentingly explored "what is right?" and "what is wrong?" with ADR processes, perhaps the more appropriate questions would have addressed how and under what circumstances any or all of the various ADR processes should be applied to construction disputes.

Some forward thinkers in the construction industry have envisioned the creative design of dispute resolution processes after the dispute arises, in an effort to more perfectly tailor the process to the problem. Mr. Robert Hunt, president of the Institute of Arbitration and Mediation in Australia, has proposed a multi-faceted approach to construction industry dispute resolution, as follows:

It is similarly open to parties that have agreed on a particular dispute resolution procedure in their contract, to subsequently agree on some modification of that procedure after the dispute arises, so as to achieve a mechanism which is better suited to efficient resolution of that particular dispute. The multi-faceted approach involves the arbitrator or mediator being pro-active in identifying where some modification of the agreed procedure would be beneficial for the prompt and cost-effective resolution of the particular dispute, and then endeavoring to persuade the parties and their legal advisers to adopt that course. Success will, of course, partly depend on the knowledge and professionalism of the parties' respective legal advisers in agreeing on a proposal which should be to the mutual advantage of their clients.40

Tom Stipanowich, now president of the CPR Institute For Dispute Resolution, has suggested two possible approaches to post-- dispute process design in the context of the American construction industry:

1. The parties' willingness, post-dispute, to seek the advice of a conflict management advisor regarding customized alternatives to the stipulated default mechanisms, and, in appropriate cases, to accept binding decisions from the advisor regarding process selection or design, including choice of neutrals.

2. The establishment of special panels of experienced ADR design professionals, perhaps affiliated with ADR institutions such as the American Arbitration Association, who would take an existing dispute by agreement of the parties, and who would have authority to direct the parties in the use of one or more ADR processes, from mandatory negotiations through binding arbitration.41

Similarly, other members of the American College of Construction Lawyers and bar organizations have put forward the notion of a "project advocate" or a project advocate team whose "client" is "the project," and whose responsibilities would include the giving of independent advice and counsel to parties in evaluating fair, effective and economical mechanisms to address disputes, with the least collateral damage to the project.42

Thus, the construction industry, long a laboratory for development of mechanisms for the handling of relational conflict, may once again serve as a proving ground for solutions which could ultimately change the face of consensual conflict resolution in America.