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ASC Proceedings of the 42nd Annual Conference
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Colorado State University Fort Collins, Colorado
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April 20 - 22, 2006
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Database Management System for Dispute Resolution
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Philip Udo-Inyang, Ph.D., P.E. Temple University Philadelphia, Pennsylvania |
Vibha Deshmukh, MSCE URS Corporation Oakland, California |
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There are various methods used for construction dispute resolution, including: negotiation, arbitration and mediation. Construction disputes can be very time consuming and costly, and are counterproductive to maintaining a healthy construction company. These disputes could be avoided by taking the time to review and analyze the causes of disputes. However, this process is complicated and time consuming. A database management system was developed to identify the issues which could potentially lead to disputes on a project, and then encourage the contractors to avoid them. This will help the contractors save time and cost which may occur due to lack of information or experience. This computer application is menu-driven and user-friendly. An input screen allows the user to enter contract cost and duration, disputed project cost and duration, and the disputed reason. The program offers the probable dispute resolution method as an output. It also allows the user to analyze the database of disputed cases. Expected benefits include: saving time of the contractor/construction manager for searching the data, saving expenses required for dispute resolution that may occur due to lack of knowledge, and encouraging the contractors/construction managers to complete the projects without any disputes.
Key Words: Contract Agreement, Labor Dispute, Alternative Dispute Resolution Methods (ADR), Database Management System |
Introduction
There are usually three principle participants in a construction contract: Owner, Architect/Engineer, and Builder. The owner may carry two separate prime contracts with the Architect/Engineer for design and with the contractor for building. A contract is a voluntary agreement enforceable by law. Disputes arise if one of the parties fails to perform at all or performs partially. Parties may fail to immediately settle the dispute due to the following reasons: cost impact, time deficiency, lack of information, poor communication, and no prior experience. Disputes and claims are costly and time consuming, not only in terms of amount paid in settlement, but also in terms of legal and expert’s fees. In some instances, the cost of litigation may exceed the amount of money involved in the dispute. Indirect costs may include missed new work, strategic relationships and productivity improvements.
The objective of this research was to develop a database management system that can effectively help identify the issues leading to construction disputes. The database will help contractors/owners, to refer to the analyzed disputed cases similar to their particular dispute reason. This system would also help guide them in making decision. Whether they should opt for arbitration or if the disputes could be resolved by negotiation based on the ratio of their contract amount and disputed contract amount and/or the ratio of project duration and the disputed project duration. This system will also indirectly help to avoid disputes in future. This will help the contractors/owners to save time and cost, which may occur due to lack of time, information or experience.
Literature Review
A database is an organized collection of logically related data. In this definition, “organized collection” indicates that data is structured to be easily stored, manipulated and retrieved by users. The word “related” in the definition indicates that the data describes a domain of interest to a group of users and that the users use the data to answer questions concerning that domain. Data may be comprised of meaningful facts, text, graphics, images, sound, and video segments. Creation and maintenance of database is referred to as database management. Database management system is a storage and retrieval system which permits data to be stored non-redundantly while making it appear to the user as if the data is well-integrated.
Sai-On, Suen and Lam (2001) presented a hierarchical model developed to organize attributes of alternative dispute resolution (ADR) processes. The owners suggested the use of analytical hierarchy process methodology by a panel of experts to prioritize ADR process attributes. The top-ranked attributes identified as critical include preservation of relationships, enforceability, neutrality, and consensus. The experts also suggested means to establish these attributes. By focusing on these critical attributes, the ADR process can be kept simple and effective.
Pena-Mora and Wang (1998) presented a methodology for facilitating negotiation. Included in this methodology were: (1) game theory, which is the study of players' actions based on the premise that the decision of any player can affect the payoff of all players; and (2) negotiation theory, which is the study of the interactions between parties, designed to reconcile their differences and produce a settlement.
Harmon (2004) presented several suggestions on how, with some forethought and planning, cost and time reductions can be enacted without sacrificing the main tenet of the arbitration process, namely, a fair, swift, and cost-effective dispute resolution process. There are several studies done in DBMS and other computer application, but not many studies have been done in this field, particularly, database management for construction dispute resolution, although the subject is of vital importance in the construction management field.
Methodology
The system was designed using PHP as scripting language to create the database. PHP stands for Hypertext Preprocessor. PHP supports many databases like, MySQL, Oracle, generic ODBC, etc. PHP is free for download and use. PHP files may contain text, HTML tags and scripts. The files are returned to the browser as plain HTML. The database used for this research is MySQL. MySQL is also free for download and use. The cases are analyzed based on many factors. Although, each case is different in some way, the cases are categorized based on the chief cause of project dispute/delay.
The data were collected on random basis. The main data sources were Lexis-Nexis database and WestLaw, an online legal case search service. Arbitration cases were not readily available. Hence, the majority of the cases in the database are court cases (legal action), which may skew the analysis. Also, it was not possible to collect all data for the cases as some of the cases had their status as “filed.” The data gathered were used to develop the database application (CONSTARB). The database is stored on a remote server, which is accessed by the application through “constant.php” and the connection is established through “getconstant.php,” which also controls the appearance of database on the screen. The court cases and the arbitration cases were analyzed for the database. All the cases were grouped based on the causes of dispute/delay. To support these causes and to get the standard cost and duration ratios, a survey was conducted.
Survey Analysis
There were 24 responses to the survey from a pool of 100 contractors, who were randomly selected from regional listings of Associated General Contractors (AGC) members and others. The survey asked for the contract amount and the disputed contract amount, and/or the project duration and disputed project duration. Statistical analysis was done with the help of Microsoft Excel and these ratios were set as standards for comparison with the inputs into the application. The survey questionnaire asked for the cost and/or duration awarded and the method for dispute resolution. The standard cost ratio in the system as per the calculations was set to 0.13 and the standard duration ratio was set to 0.2. The ratios were taken as an average of contract amount by disputed contract amount for the standard cost ratio and contract project duration by the disputed project duration for the standard duration ratio. According to the survey, interpretation of drawings and specifications, owner decisions resulting in schedule changes, and differing site conditions were the prime causes of dispute. The survey results also indicated that a major cause of delay was the payment delay from the owner.
Logic Structure of the Application
Logic structure of the application is designed to aid the contractors/owners in construction dispute. Depending on the contract amount and disputed amount, and/or based on the project duration and the disputed project duration (as entered by the user), the application will help the contractors/owners to choose Arbitration or Negotiation. The application will calculate two ratios, disputed amount to the actual contract amount and disputed duration to the contract specified project duration. These ratios are compared to the set ratios in the system, which are calculated based on the survey results. If any one of the ratios (or both ratios) is higher compared to the system set ratio, then the system will suggest the option to go for arbitration, or it will recommend opting for negotiation. In addition, the application will ask the user to review cases in the database related to his particular dispute reason. Figure 1 shows flow-chart of the logic structure of the application.
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ENTER |
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contract
amount
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ENTER |
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the
disputed project duration
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ENTER |
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project
duration
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ENTER |
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disputed
contract amount
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Compare X |
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ratio |
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Compare Z |
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Y with system set
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duration ratio |
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One
Or both
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Opt for Negotiation
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Mediation |
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Opt for Arbitration |
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Search in the database for the
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probable solution of the dispute |
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High |
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Low
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Figure 1 – Logic Structure of the Application
Design of the Application
For the user interface, a web site http://constarb.com/first.php was developed. The first page of the website serves as the user interface to enable the user to enter the project specific data. The interface is designed to be user-friendly. The file developed for this page is called “first.php.” The application asks the user to enter the contract amount and disputed contract amount and/or the project duration and disputed project duration. Text boxes are designed to enable the user to enter these values. The program will calculate the two ratios using the “second.php” file, namely: amount ratio and duration ratio.
These ratios are compared with set ratios in the system, which are calculated based on the survey results. If both the ratios calculated from the input are lower than the set ratios in the system, then the application will suggest to the user to opt for Negotiation, since that would be beneficial according to time and money required for the resolution process. If any of the ratios or both ratios are higher than the system set ratios, the application will suggest opting for Arbitration. The application will also give a hyperlink for cases with similar dispute reason(s) in the database. A drop down list of the twelve prime causes of delay is designed to enable the user to select from the options that are in the database. For this purpose, “options.php” file was created. To connect to the database, “constants.php” was developed, which will in turn call “getconstants.php”, to control the appearance of the database to the user.
Database
A database table organizes data into columns (fields) and rows (records). Any construction dispute case will have a unique citation number. Hence, this is the primary key for the database. The field “resolution_method” indicates if the dispute resolution method used is Legal Action or Arbitration, whereas the field “case_status” indicates if the case has been decided or if it is still filed. “Case_filing_year,” “jury_decision_year,” “trial_court_decision_year” and the “appellate_court_decision_year” represent the year case was filed, jury decision, trial court decision and the appellate court decision respectively. “Plaintiff” and “defendant” fields represent the plaintiff and defendant names respectively. The “location” field represents the location of the project. The type of structure is stated in the “structure_type”. The contract amount and the disputed contract amount were entered into the “project_cost” and the “cost_delay” fields respectively. The project duration mentioned in the contract and the disputed project duration were entered into the “project_duration” and the “days_delay” fields respectively.
There are numerous alternative contractual and organizational approaches to the design and construction of a project. The principal categories addressed in the “organization_type” include the traditional approach, the owner-builder, turnkey, and professional construction management. There are two primary types of construction contracts: single contracts and multiple prime contracts. Variations of these types of contracts involve the participation of a construction manager or project manager.
The basic categories of contracts are lump sum, unit price, guaranteed-maximum-price and negotiated-cost-plus-fee, which are mentioned in the “contract_type” field.
A “delay_type” in the data table would either conclude award in favor of the contractor (compensable) or the owner (inexcusable or excusable), and if both are at fault then the compensation is apportioned accordingly (concurrent) by the court.
There are abundant causes of delay for construction project, but for simplicity, they are short-listed to twelve under the field “cause_delay”. These causes are mostly the same as from those surveyed. Some of the causes were added while analyzing dispute cases, as they were observed to be some of the prime causes leading to disputes. The list of delay causes are as follows:
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Interpretation of drawings and specifications |
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Poor planning and scheduling |
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Owner decisions resulting in schedule changes |
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Contractor claims for extras |
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Faulty specifications |
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Differing site conditions |
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Defects and maintenance issues in final building |
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Design changes made during construction |
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Work completion status/quality of work |
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Payment delay from the owner |
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Faulty specifications |
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Other |
From the analyzed cases, the “other” cause includes violation of the National Environmental Policy Act, vandalism, misconduct, mechanic's lien, owner’s failure to provide accurate drawings and difference between contract price and market price.
Program structure
A PHP file normally contains HTML tags, just like an HTML file, and some PHP scripting code. Example of a simple PHP script, which sends the text "Hi" to the browser:
<html><body><? php echo "Hi";?></body>
</html>
A PHP scripting block always starts with <?php and ends with?>. A PHP scripting block can be placed anywhere in the document. Each code line in PHP must end with a semicolon. The semicolon is a separator, used to distinguish one set of instructions from another. There are two basic statements to output text with PHP: echo and print. The example above uses the echo statement to output the text "Hi." All variables in PHP start with a $ sign. Variables may contain strings, numbers, or arrays.
PHP script is used for creating the first user interface for the input data and the second interface for the calculation of the ratios. For creating the drop down box, for construction delay causes, Microsoft Front Page was used. To choose the causes of delay from the drop down box, another php file was created, called “options.php.” To connect to the database, “constants.php” was developed, which will in turn call “getconstans.php” to control the appearance of the database to the user. The application does not allow the user to have access to this file, which includes the username and password to the database. The user is connected directly to the database for that prime cause of delay, selected by the user in a previous step. Database is created using MySQL. MySQL is an Open Source Software relational database management system that uses SQL. EditPlus was used for creating all the php files. EditPlus is an internet-ready text editor and HTML editor. All these software programs are available free through the internet.
Results
For input, the user would be asked to enter the contract amount and the disputed contract amount and/or the project duration and the disputed project duration or both. Figure 2 shows the input screen that will appear as user interface. Sample Project was entered assuming the following data: Contract amount = $1,100,000, Disputed contract amount = $240,000, Project duration = 365 Days, Disputed project duration = 90 Days.
Figure 2 – Sample Project Input Screen
Once the “SUBMIT THE VALUES” button is hit after entering the data, another screen showing the calculations based on the data entered, appears on the screen (see Figure 3). The new screen shows calculations of two ratios: one for amount and another for duration. It also specifies if these ratios are higher or lower compared to the respective system set ratios. A hyperlink for database connection appears on the screen. The hyperlink appears regardless of suggestion, to opt for either Negotiation or Arbitration, so that the user may get more information from the database.
If the hyperlink for database is clicked, the next screen (Figure 4) appears asking the user to choose prime cause of delay from drop down box. This will enable the user to limit database search to that particular dispute/delay cause.
Figure 3 - Sample Project Calculations Screen and Database Navigation
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Figure 4 – Sample Project Prime Cause of Delay
Once the cause of delay is selected, user will be able to view the database cases associated with that particular cause. Due to limited paper space, the sample project output screen of database search result is not shown here.
Conclusion
According to the survey results, the prime causes of construction disputes are interpretation of drawings and specifications, owner decisions resulting in schedule changes, and differing site conditions. Unfortunately, the response rate was not high enough to perform various statistical analyses. It is recommended that an expanded study be conducted to increase the survey response rate, which would lead to development of statistical models on causes and effects of construction disputes.
A computer application was developed to assist owners/contractors in managing their construction disputes and the resolution process. A web-based database system was incorporated into this system to make it more accessible to users at various locations.
Based on the analysis of court cases (legal action), the prime causes of construction disputes include: poor planning and scheduling, owner decisions resulting in schedule changes, and payment delay from owner. The arbitration cases analyzed gave the prime cause of dispute as misinterpretation of the contract requirements and conditions. Arbitration cases were not readily available. Construction disputes are extremely time-consuming as well as expensive. Therefore, the contractor could avoid incorrect interpretation of drawings and specification, poor planning and scheduling, by taking timely actions. These may include keeping a written proof of the changes made or the explanation given by the owner. It is recommended that more data sets be obtained to expand the database especially in the arbitration area.
References
Harmon, Kathleen M. J. “Cost Effective Strategies for Arbitration”, Leadership and Management in Engineering, Volume 4, Issue 4, pp. 148-153 (October 2004)
Kangari, Roozbeh “Construction Documentation in Arbitration”, Journal of Construction Engineering and Management, Volume 121, Issue 2, pp. 201-208 (May/June 1995)
Murray, Hohns H. “Preventing and Solving Construction Contract Disputes”, New York: Van Nostrand Reinhold, 1979.
Pena-Mora, Feniosky and Wang, Chun-Yi (1998), "Computer-Supported Collaborative Negotiation Methodology", Journal of Computing in Civil Engineering, Volume 12, Number 2, April 1998, Pages 64-81.
Sai-On, Cheung, Suen, Henry C. H., and Lam, Tsun-Ip (2002) “Fundamentals of Alternative Dispute Resolution Processes in Construction”, Journal of Construction Engineering and Management , Volume 128, Issue 5, pp. 409-417.
Website for Construction Dispute Cases:
Website for domain and web hosting for “www.constarb.com” website
Website for PHP and HTML Tutorials
http://www.freewebmasterhelp.com/tutorials/phpmysql
http://webmonkey.wired.com/webmonkey/programming/php/tutorials/tutorial4.html