Introducing Construction Engineering Management Students to Alternative Dispute Resolution

Introduction

It is common knowledge that the business world has become increasingly litigious.  Unfortunately, the construction industry is not immune to this crisis; project owners, as well as engineering, architectural and construction firms are too often entangled in costly and time-consuming lawsuits.  It is, however, an ineffective and unproductive use of capital to rely on the various court systems as the principal forums to resolve disputes.   

In an effort to stem the litigation tide construction industry associations, such as the Associated General Contractors, the American Institute of Architects, and the American Society of Civil Engineers, have encouraged the utilization of Alternative Dispute Resolution (ADR) methods to resolve project conflicts.   Virtually all standard contract documents promulgated by industry associations contain provisions for one or more tiers of dispute resolution outside the traditional court system. 

Alternative Dispute Resolution for Construction Professionals (ADR for Construction), a master’s level course, was developed to address the growing recognition within the industry that the resolution of project conflicts should be the responsibility of construction professionals, rather than attorneys, judges and juries.  Accordingly, there exists a genuine need for students to understand the various ADR methods from the perspective of parties to a dispute.   More importantly, students need an appreciation of the fundamental skills needed to participate in ADR as neutrals, in order to provide the expertise and leadership essential to the resolution of disputes. 

Finally, many of the skills a construction ADR neutral brings to bear on a dispute are also valuable in the employment setting.  Students, while learning these skills, will likely discover they are useful in conflict resolution with co-employees and subordinates.

Course Overview

ADR for Construction was initially developed as a three credit course for the Master in Construction Engineering Management program at Lawrence Technological University (LTU) in Southfield, Michigan.  The program includes construction related courses, such as Advanced Construction Techniques, as well as management related courses, such as Leading Organizational Change.  ADR for Construction is, in essence, a bridge between these two fields of study; the disputes discussed are those typically encountered on construction sites, while many of the skills to resolve the disputes are often addressed in management classes.

Course Objectives

The overall objective of ADR for Construction was to provide an overview of the ADR process, with a closer examination of mediation and arbitration, the two most prevalent ADR methods.  The course was designed as a hybrid; approximately sixteen hours of the content was presented in online streamed lectures, with the other thirty hours a combination of on-site lectures, group discussions and mock ADR sessions.    The learning objectives were as follows:

·         Distinguish among the different forms of ADR and describe their salient characteristics;

·         Analyze contract documents to determine the requirements for dispute resolution;

·         Apply the various ethical requirements, administrative rules and regulations that govern a particular ADR process; 

·         Develop foundational skills as a participant and a neutral in the mediation process; and

·         Develop foundational skills as a participant and a neutral in the arbitration process, including the evaluation of the relative strengths and weaknesses of competing claims.

Course Outline Syllabus

Because this was the initial offering of the course, the syllabus was provided in outline form.  Since most of the concepts were relatively unknown to the students, it was unclear as to how quickly they could assimilate the information.  With the offering of subsequent classes the syllabus will be revised to provide additional detail.

1. Alternative Dispute Resolution

2. Statutory ADR Requirements

3. Standard ADR Contract Clauses

4. ADR Providers

5. Mediation Skills Building

6. Arbitration Skills Building

Reference Material

Much of the material was written and compiled by the instructor, and disseminated to the students through BlackBoard, the class website server.  Other material included various statutes, court rules, and administrative and ethics rules from the American Arbitration Association and American Bar Association. 

Course Schedule

It was determined that the presentation of discussion scenarios, exercises and mock arbitration and mediation sessions would benefit from lengthier class periods.  Most of the students, however, worked full time in the construction industry.  Thus, it was determined that the optimal class schedule would be from 9 am to 4 pm for one Saturday each month from September to December.  The noon break was considered a working lunch; class discussions and exercises were continued during the meal.   This schedule addressed the need for longer classes, as well as accommodating the various work schedules of the students.  Additionally, since approximately one-third of the course was streamed online, it was relatively easy for the students to fit those lectures into their schedules.

Special Skill/Concept Focus Areas

There was a strong likelihood that construction students would not possess or be aware of certain fundamental skills and concepts necessary for conflict resolution.  These skills and concepts were identified by the instructor and targeted for discussion and group exercises.  As previously mentioned, some of the requisite skills of a competent neutral often dovetail with those of a competent manager, as demonstrated in the focus areas below. 

Focus: Listening Skills

Possibly the most important trait an ADR participant or neutral can possess is the ability to actively listen.  The attributes of active listening—eye contact, good note-taking, appropriate body language—were discussed and demonstrated.  The students participated in an in-class exercise to practice these skills. 

Active listening also facilitates one of the mediator’s important initial functions: summarizing each party’s opening statement.  A thoughtful summarization, which flows naturally from proficient active listening, demonstrates to the parties that the mediator fully understands their viewpoint; thus the mediator gains immediate trust and respect from the parties.

Active listening is an example of a skill that serves the student in the employment arena; a manager who is an accomplished listener will generally gain the trust and respect of co-workers and subordinates. 

Focus: Issue Identification

“Issue spotting” or issue identification, the ability to discern the legal and factual issues germane to a dispute, is standard fare in law school education.  Although logical and critical thinking are part and parcel to a construction-based education, issue identification is not necessarily a skill developed in construction courses.   Participants in ADR, as well as neutrals, are often called upon to analyze a complex set of facts, synthesize the information, and ascertain the salient issues.

A three tiered progressive scenario was utilized to teach issue identification.  In the initial tier the students read a relatively simple fact pattern recounting a dispute on a construction site.  Although both sides of the dispute were addressed, very little information was provided.  The students were queried as to their basic impressions: what were the issues, who was mainly at fault, and why.  The students responded relatively quickly and their observations were generally straightforward. 

In the second tier the same scenario was utilized, but the fact pattern was more complex.  The students were again asked for basic impressions.  This time there was a delay in their responses; cross-table discussions ensued as viewpoints differed.  Although a general consensus was reached, it was apparent that there was some lingering doubt as to the group’s conclusions. 

In the third tier the complexity of the scenario was greater still, eliciting extensive and sometimes animated discussions.  There was no consensus on the answers and the debating could have continued for some time.  When it was explained to the students that most disputes are comprised of such complex and convoluted facts, they began to realize the importance of identifying and defining the issues in a matter.  The students also gained an appreciation for the difficulty in resolving real-life, deep-rooted disputes where the facts are rarely black and white.

Focus: Ethical Considerations

Although some construction related programs address ethics, the ethical requirements relating to serving as a neutral in ADR proceedings are typically much more rigorous.  Moreover, they address issues that are relatively foreign to construction students.  For example, the concept of disclosure—advising all parties as to any previous relationships with other participants and neutrals—is usually unfamiliar to construction professionals.

Another important ethical precept for ADR participants and practitioners is that of confidentiality.  While most construction professionals do not encounter this issue often, confidentiality is an important consideration.  Through lectures and discussions, students learn that since most ADR proceedings are private affairs, the participants and neutrals are not allowed to discuss the matter outside the hearing room. 

Focus: Bias

Most students with work experience bring certain biases to the classroom; construction students are no different.  For example, a student who is employed as a project manager for a general contractor will often times possess the unshakeable view that the general contractor is in all ways superior to the subcontractor.  Be that as it may, one of the reasons the ADR neutral is entrusted with the responsibility of helping resolve a particular dispute is because the neutral is capable of an unbiased approach to the matter.

The course addressed this situation by including discussions on how and why students need to overcome potential biases created when examining a dispute through a single prism.  Furthermore, it was impressed upon students that an ADR neutral must possess the ability to walk the fine line between drawing on previous work experience to analyze a dispute, and unfairly favoring one side over the other because of a bias created by that work experience.

Focus: Fully Informed

An important talent for a neutral is the ability to refrain from formulating an opinion until all the facts have been presented.  This issue was addressed prior to commencing the mediation skills-building portion of the course.  The students were given a “test” for their potential for prejudging a conflict; i.e., their tendency to jump to conclusions.  In a group role-play exercise, the instructor played the part of a non-tenured professor, with the students playing the part of the professor’s dean.  The professor vented, loudly and emphatically, about how overworked he was due to his responsibilities to publish often, teach numerous courses and procure various grants.  A big reason the professor could not accomplish these tasks was because the department assistant provided insufficient support.  Among other things, the assistant did not copy papers for the professor in a timely manner or properly distribute the mail; in fact, the assistant was, for the most part, incompetent.

Once the vent was complete each student was asked to respond, in their role as the Dean, as to what they would do to address the situation.  One student stated simply that he would tell the professor to “shut up and get back to work.”  The other seven students, in one manner or another, blamed the assistant and planned to rectify the situation by dismissal of the assistant or some other form of punitive action (irrespective of the question as to whether they had the requisite authority, the students all believed some type of punitive response was necessary and, indeed, deserved). 

After they provided their “input” as the dean, the instructor asked the students if they knew with 100% certainty what the assistant’s actions (or inactions) had been in the matter.  It took a moment before they realized they had no idea—the assistant had never spoken to them.  After some discussion, with facilitation from the instructor, the students realized:

The exercise demonstrated that jumping to conclusions—i.e., believing the first person who talks to you and deciding on a course of action based only on partial evidence—can yield inequitable or incorrect results.  Arbitrators and other ADR practitioners must possess the ability to reserve judgment or conclusions until all parties have had the opportunity to state their respective cases.  This concept is also just as true for a manager dealing with workplace conflict, as the above scenario demonstrates. 

Mock Sessions

The mock mediation and arbitration sessions provided the real substance of the course.  The students and the instructor found them to be interesting exercises, excellent learning experiences, even exhilarating.  Although it took a few moments in each session for the students to “get into character,” when they finally did the sessions were outstanding learning tools. 

Mediation

The mediation included four roles; co-mediators (two), a principal witness for each party (the company owner), a secondary witness for each party (the on-site superintendent or foreman), and observers (two students recorded their observations as to how the mediators performed, what issues should have been addressed, etc.). 

As in an actual mediation, all participants were provided pre-hearing briefs from both sides, which set forth that particular party’s perspective on the facts of the dispute.  In practice, the term “brief’ is a misnomer; actual briefs are often quite long.  The mock briefs, which addressed a dispute between a general contractor and subcontractor, were less than two pages, with a couple of pages attached as exhibits (a portion of a contract or subcontractor quotation).  The briefs also included clearly stated damages (the amounts claimed by each party).

To assist the students in “getting into character,” each witness was provided with a 5P Form, which included the following information:

Unlike the briefs, only the two witnesses for each party discussed their 5P Forms.  The information was not shared with the opposing side or the mediators. 

This method of learning transcends the standard lecture/discussion presentation by requiring students to, among other things:

Arbitration

The arbitration included four roles; a three arbitrator panel, a principal fact witness (the company owner) for each party, a secondary witness for each party (an on-site superintendent and a subcontractor), and an expert witness (a privately engaged inspector).

Although the dispute scenario was different, many of the same concepts utilized in the mock mediation were repeated in arbitration.  Briefs for both parties were disseminated to all participants, and 5P Forms were provided to each witness.

For simplicity sake, and to keep the arbitration hearing moving in the proper direction, the instructor served as the attorney for both parties; essentially eliciting direct and cross-examination from all witnesses.  If an arbitrator asked a question that was tangential to the matter, the instructor brought the session back on track, after first discussing with the students why the particular question was not germane to the resolution of the dispute.     

Although the arbitrators have less interaction with the participants than a mediator, the arbitrators are still expected to:

Review the briefs and evaluate the claims of each party;

If necessary, ask questions of the witnesses or their attorney; and

Evaluate testimony and documentary evidence in the course of rendering a binding decision. 

Lessons Learned/Future Course Suggestions

After presenting the course for one term, it is evident that there are numerous possibilities for improving the content, delivery and learning outcomes of the students.  Below are some potential revisions and enhancements for consideration, based on discussions with the students and instructor observations: 

Conclusion

The construction industry needs to put to an end to the economically wasteful and ineffective way it presently deals with conflict.  Alternative dispute resolution, if utilized by properly trained construction professionals, can address this situation.  Construction students, as the next generation of construction professionals, must undertake the task and responsibility of acquiring the skills necessary to resolve conflicts before they reach the courts.