Its common knowledge that lawsuits can be time consuming and extraordinarily expensive. With litigation not getting any cheaper, the construction industry often looks to alternative strategies for resolving disputes. One strategy that could be an actual game changer for the industry is a "project neutral."
A “project neutral,” sometimes called a “standing neutral” is a trained alternate dispute resolution (ADR) specialist, who is familiar with the project scope and schedule, keeps up to date on a project’s status, and is on call during the construction project to help resolve disputes that cannot be readily settled by the parties. The project neutral is based on the tenet: disputes are inevitable, but claims and law suits are not.
One key advantage of a project neutral is to allow the parties to resolve disputes quickly and efficiently when they arise. While the length of any resolution process depends upon the parties' willingness, typically the time fame for the process is 4 weeks for an initial recommendation and 3 months if more in-depth research and analysis is required. It also allows the project team to maintain control of the claim without the outside intervention of third parties, such as arbitrators and courts.
The likelihood that disputes will settle amicably and quickly increases dramatically with the use of a project neutral.
A project neutral is generally a consultant who is an expert in delay, productivity and damages evaluation. The expert provides non-binding opinions, unlike an arbitrator who makes decisions that bind the parties. A project neutral can objectively analyze specific issues of liability, costs, schedule impact, and damages, and make recommendations to the parties. Although a project neutral draws conclusions, makes recommendations, and gives advice he or she does not make a decision for the parties. The objective is that the project neutral makes recommendations so that the parties can settle their own differences, without the relationship-destroying results that often comes with full-blown litigation. The likelihood that disputes will settle amicably and quickly increases dramatically with the use of a project neutral.
Parties to construction contracts would be wise to consider using project neutrals to help manage the risk of costly litigation.
The 2007 ConsensusDOCS provide for a project neutral or dispute resolution board (DRB) as one of the dispute resolution options available to the parties. The standing neutral process is also contained in the American Institute of Architects (AIA) Documents. In the AIA documents, the parties designate an independent neutral third-party, called an “Initial Decision Maker” (IDM) if they do not wish the architect to serve in that capacity. Contractors may want to consider using a more objective party; after all, a contractor's claim may be derived from errors in design or other actions/lack of action by the architect.
There are multiple ADR options available to owners and contractors. Parties to construction contracts would be wise to consider using project neutrals to help manage the risk of costly litigation. A neutral can provide fast and private resolution of disputes that helps preserve the relationship of the parties and minimize the impact on current and future projects. For more information on this topic, please contact Don Carlow at Florida Construction & Scheduling Consultants at info@florida-consultants.com or www.florida-consultants.com.