Resolving Megaproject Claims: Lessons From Boston's "Big Dig"

Abstract

The Project's objective was to create a process that would be faster and less expensive than court processes, yet produce technically sound, equitable, and auditable results. To aid in developing and gaining acceptance of a suitable program, the Project's legal staff reviewed various dispute resolution techniques and sought input from as many construction industry sources as possible. The Project consulted several government agencies, a wide variety of construction industry groups and representatives, members of the national and local construction bars, and various dispute avoidance and resolution specialists. Although MassHighway considered arbitration as a potential dispute avoidance/resolution approach and used it on one contract, the conclusion was that it did not adequately protect the public interest because meaningful court review would be precluded. From the Project's perspective, even arbitration where panelists have construction experience would be unsuitable because often the arbitration process, especially with complex construction disputes, involves litigation-type discovery and an arbitration process with a lengthy series of hearings. From the contractor's perspective, arbitration using experienced construction panelists to issue binding decisions would have been preferable to the court system or the owner's representative, whom the contractors believed would adopt the position of the Project personnel. The principal elements settled on for the Project's dispute avoidance and resolution program are described below. DRB meeting procedures were left to each DRB's discretion. The Project offered a standard procedure with relatively informal rules, which the DRB could adopt or modify. Unless the DRB prescribed otherwise, there was no formal discovery other than the exchange of position papers or as requested by the DRB itself. The DRB procedure used on the Project included an oral hearing and did not include swearing of witnesses, trial-type motion practice, formal discovery, direct and cross-examination of witnesses by counsel, or objections to evidence. Instead, the DRB hearing procedure contemplated an oral narrative presentation of the claim or defense by knowledgeable representatives of the party, followed by questions by the DRB members designed to elicit what the DRB determined to be the relevant facts and issues. The parties had to have persons with direct knowledge of the facts present to talk about the claim and answer questions. Lawyer participation was limited to legal issues or as permitted/ invited by the DRB. Later in the Project the dispute avoidance and resolution program as set forth in the contract was amended to give the parties the option of using the DRBs to give informal advisory opinions or recommendations outside the formal DRB process. The informal advisory opinion process consisted of the parties providing the DRB with a brief summary of the issue, discussing the issue with the DRB, and, after a DRB caucus, receiving from the DRB an informal opinion or recommendation on the issue. The parties did not have to accept the DRB's suggestions. A project director's decision would not issue as a result of such a DRB recommendation. If a formal claim was brought later, the prior advisory process had no bearing on the outcome. In addition, the parties could agree to mediation. Both of these options were intended to give the parties additional tools to resolve claims on a case-bycase basis. 36. See [Kathleen M. J. Harmon], supra note 25, at 18. Dr. Harmon reviewed statistical data regarding the CA/T Project DRB program to answer four questions: (1) Was there any discernable bid savings between DRB and non-DRB contracts? Dr. Harmon concluded that there was not. (2) Was the DRB successful in resolving all disputes prior to contract completion? Dr. Harmon concluded that the contracts on which there were DRBs had many unresolved claims pending as of substantial completion of the Project in 2005. (3) Were there any barriers to the DRB's effectiveness? Dr. Harmon identified the following contributing factors to the number of unresolved claims at Project substantial completion: there was an elongated dispute resolution process; the DRB process was viewed as adversarial; preparation for the hearing was timeconsuming; there were issues with the recommendations - they were not convincing; and the recommended settlement amounts were below the historical negotiated settlement average. (4) Did the DRB process reduce the costs of resolving disputes? Dr. Harmon cited per-claim statistics showing that the cost of each matter that went to a DRB (costs of DRB itself only) were far less than litigated matters, and less than the cited mediated matters.