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Legal Issues Related to Large-Scale Airport Construction Projects Copyright National Academy of Sciences. All rights reserved. ACRP LRD 38 23 Most airports follow the standard claims and disputes pro- cess mentioned in A201-2007, General Conditions of the Con- tract for Construction (AIA 2007). In most airport projects con- structed prior to 2017, the 2007 version of this document was used. However, in 2017, a new version, A201-2017, was pub- lished. In A201-2007: General Conditions, the process for claims and disputes for construction projects is described in Article 15 (AIA 2007). According to this document, any claim made by ei- ther the owner or the contractor must be initiated by written notice to the other party. This written notice must be sent to the initial decision maker, who is generally the architect in the case of DBB projects. The claims must be made within 21 days after the occurrence of the event giving rising to the claim. Within 10 days of the claim, the initial decision maker must either reject the claim, approve it, request additional documents, suggest a compromise, or advise the party that he/she is unable to solve the claim. Pursuant to AIA, if either party is not satisfied with the deci- sion made by the initial decision maker, then the dispute is re- solved by mediation. Claim mediation is administrated accord- ing to the Construction Industry Mediation Procedures of the American Arbitration Association. Article 15.3 of AIA A201- 2007 details the mediation process: If both parties agree to a mediation, one party requests this in writ- ing and delivers the request to the other party. The mediation usually is held at the project location, and the fees are shared by both par- ties. Any agreement that is reached during mediation is enforceable as settlement agreement. However, if the parties selected arbitration as the method of dispute resolution during the contract agreement, then any claims not settled by the mediation are subject to arbitration, which is conducted according to the Construction Industry Arbitra- tion rules of the American Arbitration Association. For a detailed explanation of the process of mediation and arbitration, refer to AIA A201-2017, General Conditions of Contracts (AIA 2017). A dispute review board (DRB) is also now commonly used in construction projects. A DRB is generally formed with one to three members chosen from among the contractor, designer, and owners. The DRB is formed before the project starts and is actively involved in the project through regular site visits. A key perceived benefit of a DRB is that disputes can be settled earlier than in a normal dispute resolution process. Before using DRBs or other alternative forms of dispute resolution, airports should always check with legal counsel to confirm whether state or local laws limit the ownerâs ability to employ these processes. A. CMAR Case Study Results All of the projects in the case study used a dispute resolu- tion process similar to the one mentioned in the AIA 201-2007 document. The participants found no significant difference be- tween a dispute resolution process for a traditional DBB project or a CMAR project. These projects did not have any disputes that could not be resolved by initial dispute resolution steps. Consequently, this clause was never fully utilized. Two of the CMAR case study participants noted that they did not gain any lessons learned related to dispute resolution provide surety bonds (e.g., bid bonds), performance bonds, and payment bonds. The owner for one of the three CMAR case study projects used an OCIP for the project, but felt that the airport may have lacked sufficient familiarity with how OCIPs function. The airport provided this insurance program in combination with other airport projects under construction during that time. The airport found that this insurance program was very expensive, and the airport could not determine whether it was getting more value for money by using the OCIP. However, the par- ticipant from this airport stated that it was easier to resolve dis- putes when using an OCIP because the airport controlled the program. The owner also stated that by providing an OCIP, the airport created a disincentive to contractors to use the program because the contractors were responsible for covering some of the deductibles. Ultimately, the airport representative felt that by using an OCIP for this project, the risks were not efficiently allocated to the responsible parties. B. Progressive DB and Lump-Sum DB Case Study Results For both the progressive DB and lump-sum DB projects in the case study, the airport owners used OCIPs. The airport owner for the terminal expansion project used OCIPs on many of its larger projects (separate OCIPs for each project). This owner typically had good experiences with the use of these OCIPs. In contrast, the owner of the lump-sum DB project for the central utility plant had only used two OCIPs (the second OCIP covering the central utility plant and several other projects) and had ceased using OCIPs based on this experience. Specifically, the owner moved away from using OCIPs because the airport felt that it did not have the necessary experience to effectively manage the programs. In addition, the airport felt that it was difficult to gauge whether the OCIP was ultimately more cost- effective than a CCIP or other approaches to insurance that it had more experience using. However, the airport representative interviewed for the project felt that the OCIP did give the air- port good liability coverage and helped avoid some volatility in coverage prices. Taken together, the main lesson learned by the airport own- ers on these projects was that implementation of an OCIP, for either a single project or an entire program, can be complicated and may require time for airport staff to develop experience in effectively managing the program if it cannot bring in personnel previously trained on working with OCIPs. However, for other airport owners, this might not be true. X. DISPUTE RESOLUTION Claims and disputes generally arise in any construction proj- ect, irrespective of the size of the project or PDM used to deliver the project. In airport construction projects, disputes among owners, architects, or contractors can delay a project or cause an overrun of the projectâs cost. Therefore, airport authorities must include a dispute resolution process in their construction contracts.
