Fundamentals of Construction Claims. William J. McConnell
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contracting series are as follows:
In the event the project personnel from the contractor and owner cannot resolve a dispute, direct discussions should be conducted between the parties' representatives that possess the necessary authority to resolve the matter.
If the parties' representatives are not able to resolve the matter within 5 business days of the first discussion, the parties' representatives shall inform senior executives of the parties that resolution could not be reached.
Upon receipt of such notice, the senior executives of the parties shall meet within 5 business days to endeavor to resolve the matter. If the dispute remains unresolved after 15 business days from the date of the date of the first discussion, the parties shall submit the matter to dispute mitigation, if applicable, and dispute resolution procedures.
The optional non-binding dispute mitigation procedures can either be a project neutral or a dispute review board. The project neutral or dispute review board shall issue nonbinding findings within 5 business days of a referral. If the matter remains unresolved after the findings, the parties shall submit the matter to binding dispute resolution.
If direct discussions do not result in resolution and no dispute mitigation procedure is selected, the parties shall endeavor to resolve the matter by mediation. Mediation shall be convened within 30 business days of the matter first being discussed and shall conclude within 45 business days of the matter first being discussed. Either party may terminate the mediation at any time after the first session by written notice to the non-terminating party and mediator.
The matter is resolved via binding dispute resolution.
C. C-700, Standard General Conditions of the Construction Contract (2018 Version)
EJCDC is a joint venture of three major organizations of professional engineers: (1) the American Council of Engineering Companies; (2) the National Society of Professional Engineers; and (3) the American Society of Civil Engineers. Most EJCDC stipulated sum and cost-plus-fee contract forms incorporate EJCDC's C-700 general conditions, which set forth dispute resolution provisions within Article 10, “Changes in the Work; Claims,” and Article 16, “Dispute Resolution.” The process is summarized as follows:
If the contractor or owner has a dispute that involves time and/or money, the claimant shall issue written notice to the engineer within 30 days after the start of the event giving rise to the claim.
The claimant shall provide the engineer with supporting cost and/or time data within 60 days after the start of the claim event.
The respondent shall submit a response to the engineer within 30 days after receipt of the claimant's last submittal.
Within 30 days of the respondent's last submittal, the engineer will either approve the claim, deny the claim, or advise the parties it cannot resolve the claim.
Either party can invoke the dispute resolution procedure within 30 days of the engineer's decision. Failure to do so within this 30-day period renders the engineer's decision final and binding.
The owner or contractor can request mediation of a claim issue to the engineer for a decision before it becomes final and binding. The parties shall conduct mediation within 60 days of filing.
Within 30 days of an unsuccessful mediation, the contractor can trigger binding dispute resolution.
The claim is resolved via binding dispute resolution.
D. Proprietary Contract Dispute Resolution Provisions for Owner–Contractor Agreements
Proprietary contract forms are used by thousands of public and private owners so it is not possible to review the dispute resolution provisions for each proprietary contract form; however, it is possible to review the dispute resolution procedures that apply to federal construction contracts as well as a typical state contract, in order for the reader to get a feel for the typical requirements.
1. Federal Projects Dispute Resolution Provisions for Owner–Contractor Disputes
The US Federal Government procures and administers construction contracts according to the Federal Acquisition Regulation (FAR). FAR Regulation Part 33, Subpart 33.2, “Disputes and Appeals,” outlines the dispute resolution procedures for federal construction contracts. Section 33.202, “Disputes” notes that 41 U.S.C. chapter 71, “Disputes,” establishes procedures and requirements for asserting and resolving claims.
A contractor shall submit claims against the Federal Government to the contracting officer for a decision. For claims of more than $100,000, the contractor shall certify that the claim is made in good faith, the supporting data are accurate and complete to the best of the contractor's knowledge and belief, the amount requested accurately reflects the contract adjustment for which the contractor believes the Federal Government is liable, and the certifier is authorized to certify the claim on behalf of the contractor.
The contracting officer shall issue a decision in writing to the contractor. For claims less than $100,000, the contracting officer shall issue a decision within 60 days. For claims over $100,000, the contracting officer shall issue a decision within 60 days or notify the contractor when the decision will be issued.
A contractor can appeal a contracting officer's decision to an Agency Board4 within 90 days of receipt of the decision or bring an action on the claim in the US Court of Federal Claims within 12 months of receipt of the decision.
A contractor may appeal Agency Board or US Court of Federal Claims decisions to the US Court of Appeals for the Federal Circuit within 120 days from the date the contractor receives a copy of the decision.
2. Example State Agency Contract Dispute Resolution Provisions for Owner–Contractor Disputes
Dispute resolution provisions for state construction contracts vary by state and by state agency. The following example is the dispute resolution provisions that the Colorado Department of Transportation prescribes in its standard construction contracts.
Colorado Department of Transportation––2019 Standard Specifications for Road and Bridge Construction CDOT's “Standard Specifications for Road and Bridge Construction” include exhaustive provisions for non-binding dispute resolution. This non-binding process can take more than a year before a contractor can trigger binding dispute resolution. The process is outlined as follows:
Contractor to bring dispute issue to CDOT's Project Engineer's attention within 20 days of Contractor being aware of the issue.
If this discussion results in an impasse, Contractor issues a notice of dispute to CDOT's Project Engineer within 15 days of the impasse.
Contractor provides Request for Equitable Adjustment (REA) to the CDOT's Project Engineer within 15 days of the notice of dispute.
Contractor and the CDOT's Project Engineer discuss merits of dispute within 7 days of the REA submission.
CDOT's Project Engineer reviews the REA within 7 days of the discussion.
Contractor rejects the CDOT's Project Engineer's denial and notices the CDOT's Resident Engineer within 7 days of the Project Engineer's rejection.
Contractor's project and executive team meet with the CDOT's Project Engineer and the Resident Engineer to discuss within 30 days of notice.
If impasse, the CDOT's Project Engineer initiates Dispute Resolution Board (DRB) process within 30 or 45 days of this group meeting, depending on type of DRB.
Contractor to sign the DRB agreement within 20 days.
Contractor and the CDOT issue pre-hearing submittals