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CONSTRUCTIONLAW HANDBOOKVOLUME 1

ROBERT F. CUSHMANJAMES J. MYERS

ASPEN LAW & BUSINESSA Division of Aspen Publishers, Inc.

Gaithersburg New York

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CHAPTER 2VISIONS FOR THE NEXTMILLENNIUMJohn W. Hinchey

2.01 An Eagle's View[A] Advances in Technology[B] Industry Realignment[C] Globalization of the Economy[D] Privatization[E] Need for TrainingIF] Dispute Resolution Processes[G] A Profession in Search of Itself

2.02 A Proposed Paradigm for Resolution of ComplexConstruction Disputes[A] Pre-arbitration Procedures: Phased DisputeResolution

[1] Issues for Consideration[2] Vision

[B] Consolidation of Claims[1] Issues for Consideration[2] Vision

[C] Discovery[1] Issues for Consideration[2] Vision

[D] Hearings and Evidence[1] Issues for Consideration[2] Vision

[E] Decision Making[1] Issues for Consideration[2] Vision

[F] Appeal and Review[1] Issues for Consideration[2] Vision

2.03 New Opportunities for Construction Lawyers 2.04 New Millennium: "No Need to Apologize for Being a

Lawyer"

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VISIONSFORTHE NEXTMILLENNIUM 2.01[a] 2.01 AN EAGLE'SVIEW

Peter Drucker says that every' 100 vears or so in human history', adram atic transform ation occurs. _ In other w ords, society transform s itselfin new and dram atic w ays. The glacial processes of evolution fast-forw ardto new revolutionary, structures. The construction industry' and that seg-ment of the legal profession that serves the industry is now in that fast-forward process of transformation. Such an era is not for those who 3'earnfo r the past; nor is it fo r the faint of heart. Rather. the next m illenn iumbeckons to those who can take what is the best of the past, creativelyrecom bine the traditional w ith the innovative in effective, pragm atic, andeconom ical w ays, and thereby reshape the structures and processes of theconstruction industry and the legal profession.

This is a great era in which to be a lawyer. The future w ill. indeed.be "larger than the past.":

There are several major new forces driving the construction industry.into the tw enty-ftrst century. These new forces are advances in technology;industry realignm ent; globalization of the econom y; privatization: a dim in-ishing skilled wortd'orce: a transformation of dispute resolution processes:and a profession in search of itself."[A] Advances in Technology

There are a number of technology developments that clearly w illaffect the construction industry in the near future. Designers are leadingthe way. Object-orientated databases are (or soon will be l a standarddesign deliverable. Concurrent m anufacturing is driven increasingly bydesign, thus altering traditional relationships between parties to the con-struction process. Smart tools are being developed that allow wor.kers-'t'operform complex tasks more readily. Sensors are used foi: inspection.C om posite. high-strength m aterials are being tested. G lobal positioningtechnology is used to assist in layout. There are increasing uses of m odular-ized building system s, particularly in the m echanical trades.

How ever, no technology offers m ore prom ise than does the explosionof information and telecommunications technology. Com puters, of course.have been used on construction projects for some time. Until recently.they have been used primarily to perform routine functions faster and

_Pe te r Drucker . The Pos t Cap it al is t Soc ie ty (1994 ).: QuotationfromStevenT. Halverson.SeniorVicePresident.M.A.MortensonCom-pany . Presented at the 19 98 Ann ual Meetin g of th e American B ar A ssociation Forum onthe Const ruct ion Indus try. Orlando . Flo rida .The authorgratefullyacknowledgesan excellentwritingb.vStevenT. Halverson.supranote2. andDirectorsof theMortensonCenterofConstructionInnovation.publishedas Chapter 1. The Futureof the Constructionbldustra',in the Aspen publication1997Wiley Constructio n Law Upd ate. Much of the text and ideas of M r. H alverson and th eMonensonCenter formthe basisof 2.01[A] through2.0lIE] of this chapter.31

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2.01[A] CONSTRUCTIONLAW HANDBOOKbetter. The power of computing has now developed to a point that allowsthings to be done differently than ever before.

Construction is an inherently com plex business. Even casual observ-ers of the construction process are struck by the enormous amount ofinform ation required to construct a project. Hundreds, even thousands,of detailed draw ings are required. Hundreds of thousands of technicalspecifications, requests for inform ation, and other docum ents are needed.Complex calculations are used to produce the design. For years, thiscom plexity dictated a labor-intensive, highly redundant m ethodology fordoing the work . Projects were fragmented and brok en into m any parts.D ifferent entities undertook different parts of a project, both for design andconstruction. Therefore, the construction industry becam e exceptionallyfragmented. On a project of even average complexity, there may havebeen from 5 to 15 firms involved in design. From 40 to 100 companiesmay have been engaged in construction. M any more companies suppliedm aterials, professional services, and other elem ents necessary for com ple-tion of the project. It w as effectively im possible to convey the sum ofk now ledge necessary to construct a facility in a set of plans and specifica-tions. Stated another w ay, the inform ation technology traditionally usedfor con struction is inadequate.

Now , however, there is a major push toward integration of designand construction services. This is not a matter of doing things faster: itis a m atter of doing things differently. For the first tim e. technologicaltools enable simultaneous and virtually instantaneous sharing of enormousquantities of data relating to the construction of facilities. M any designand construction processes can be done at the same tim e. Indeed, th is isalready being done in small ways. Studies at the Massachusetts Instituteof Technology have demonstrated how design teams from around the worldcan be electronically link ed w ith data and video transm ission capabilities toproduce com plete designs from locations that are spread literally aroundthe globe. A 1996 study by VTT, the Technical Research Center in Finland, "_argues in favor of a reo_anization of the building process and suggestsa theoretical model for reducing the cost and time of construction by3 0%. In its 1995 report, the Construction Industry Institute found thatim proved use of inform ation technology could result in project cost savingsof 4% to 33%. -_Research projects at Stanford, Purdue, New Mexico, andthe University of California at Berkeley are currently under way that seekto apply modem information technology to the task of reducing the costand tim e of construction.These new ways of doing things will alter basic relationships withinthe industry. Of necessity, there will be basic restructuring of how the

Lahdenpera.TechnicalResearchCir. of Finland.Reorganizingthe BuildingPro-ces s (1996 )._ConstructionIndus. Inst.. Opportunitiesfor Improvementin the A/E/C Industry(1995).3 2

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VISIONS FORTHENEXTMILLENNIUM 2.01[B]industry, is organized. Architectural firms, engineering firms, and construc-tion contractors will need to change in order to remain competitive. Thesimple notion that design and construction are separate functions is. inpolitical parlance, no longer operative.[B] Industry Realignment

M ost certainly, the com ing years w ill bring m ore "'strategic alli-ances." Firm s w ill com bine and collaborate in ways not easily im agined.The industry, started a revolution with partnering a few years ago. Origi-nally conceived as a means for reducing debilitating disputes, partneringwill continue to evolve, leading to relationship-based collaboration oncomplex projects. Firms w ill combine, based on complementary compe-tencies, to produce required services for their custom ers.

One trend sure to drive industry realignment is the exponentialadvance in telecomm unications. W ork will be transform ed from a placeto go into a task performed. The implications for construction are substan-tial. The industry has always struggled with how to deliver its humanresources to projects, particularly w ith the immobility brought by theincrease in dual-incom e fam ilies. There are new w ays of delivering hum anresources to projects--through fax, video, and interactive computer com-munications.

A second, even m ore pow erful trend driving realignm ent is the trendtoward trust-centered relationships. There is clearly a hunger for moretrust in construction relationships. In various ways. much of what hashistorically been done in the construction process w as rooted in m istrust.A majority of the term s of a typical construction contract do not definethe work to be done but rather seek to allocate risk to other parties, oftenin overreaching, unfair ways. This is derived from a fundam ental lack oftrust that people w ill act fairly, absent a contractual obligation to do so.Much of the waste and inefficiency attendant to construction is a productof mistrust.

The industry, has tired of mistrust. It is seeking ways to restore trustto the construction process. This is driven by a desire to make the businessmore enjoyable and by simple pragmatism. Research conducted by theConstruction Industry, Institute and various academic practitioners, includ-ing Dr. William Badger at Arizona State University, suggest what industryprofessionals intuitively have always known: the greater the trust, thelower the cost of the project.The search for increased trust drives industry, realignment by encour-aging long-term relationships in which success is defined over time ratherthan by a single transaction. Partnering. strategic alliances, and evenacquisitions often are motivated, at least in part. by a desire to create amore trusting environment for the construction process.

Some may think these trends only affect large businesses. In fact.the reverse is true. John Naisbitt correctly argues that ever larger informa-

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VISIONS FORTHE NEXTMILLENNIUM 2.01[D]oping countries throughout the w orld. A sian countries (particularly C hina)will, notw ithstanding recent problem s, enjoy possibly the most rapidexpansion in history. W ith sound foreign policy leadership, the NorthAmerican Free Trade Agreement could become the America Free TradeAgreement, as other Latin American countries reach sim ilar accords. TheUnited States should encourage economically progressive countries likeChile to join NAFTA and avoid the threat of economic balkanization, aconsequence of careless foreign policy.

Developing countries represent substantial new markets in areas inwhich local industry capacity may be inadequate to m eet demand. TheConstruction Industry Institute estim ates that by the year 2000, fully 8 0%of the world construction market will be in developing countriesY For allof the concern about productivity, the United States construction industry,rem ains among the most productive in the world . It is fully 3 5% moreproductive than the much celebrated Japanese construction industry. It ismore productive than those of the United Kingdom and France, and, infact, more productive than every nation with the possible exception ofGermany. United States fu'ms have particular experience and facilitiesthat are much in demand elsewhere, including water and wastewatertreatm ent plants, pow er plants, health care facilities, and advance technol-ogy com plexes. There is no question that the globalization of the construc-tion economy is already upon us and that it favors U .S. firm s.[D ] P riva tiza tio n

Few developm ents are m ore lik ely than the trend tow ard "privatiza-tion," a loosely applied term that generally refers to the private operationof traditionally public activ ities. Exam ples include the construction and.operation of roads, prisons, wastewater treatment facilities, and utilities.The United States infrastructure is in a state of serious decay. Thenet public investm ent in infrastructure, as a percentage of gross dom esticproduct (GDP), declined from a high of 1.4% in the late 1960s to alow of 0.4% through much of the 1980s. Estimates of necessary publicinvestm ent range as h igh as $3 trillion, just to m aintain 1983 levels ofservice. Obviously. this level of spending is not lik ely. Furtherm ore, no-tions about the role government should play in providing vital servicesare changing. The role of government is shifting from a provider to afacilitator of public services.

The strategic use of privatization has been em ployed with dramaticsuccess elsewhere in the world. The Philippines, Malaysia, Brazil, Hun-gary, and other developing countries have skillfully attracted foreign in-vestment through use of privatization. Mexico used privatization to trans-form its staggering budget deficit (13% of GDP) to a budget surplus in

Yates et al.. Construction Indus. Inst., Anatomy of Construction Industry Competi-tion (1991).

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2.01[E] CONSTRUCTION LAWHANDBOOKless than six vears. Poor monetary, policy and a reluctance to forcefullyattack institutional w eak ness should not obscure the econom ic accom plish-m ents of M exico over the past eight years. The opportunity for privatizationin the United States is substantial. Studies bv the Reason Foundation. aLos Angeles-based public policy think tank . estim ate there are publiclyowned facilities valued in excess of $100 billion that are candidates forprivatization.J Private developm ent of roads and highw ays is becom ingmore common, and the United States Council of Mayors has focused itsattention on public-private partnerships as a m eans of addressing pressingdem ands for infrastructure im provem ents.

Nevertheless. privatization is not a panacea. W hile privatization cancertainly increase private equity investm ent in infrastructure, it can alsocreate substantial opportunities for the construction industry. H ow ever.privatization does not truly create new w ealth or value; it sim ply transfersit. Nonetheless, construction com panies need to significantly expand theservices they provide to m eet the com ing dem and for privatized projects.They m ust com bine feasibility planning, design, and financial servicesw ith traditional construction services in order to com pete in grow ing futurem arkets. The concurrent opportunities for lawyers should be obvious.

[E] Need for TrainingThe labor needs of the construction industry and trends in w ork force

com position are on a collision course. No one seriously argues the proposi-tion that the w ork force of the future m ust be m ore highly sk illed, bettereducated, and continuously trained. Rapid technological change in a morecom plex work environm ent ensures this.

What is happening to the Am erican w orkforce? Nothing very. positiv .e.-for our industry. By the year 2000, according to a report from the HudsonInstitu te. there w ill be 12 .000.000 fewer entrants in to the work force, z_The needs of the construction industry, are grow ing. Historically, construc-tion has employed about 5% of the U .S. w ork force. By the year 2 000,this percentage is estimated to grow to 5.8%. Researchers, including astudy by the CII. predict the industry, w ill need to attract 200,000 newworkers each year to meet anticipated demand. _: This w ill not be easy.The industry has done a terrible job at prom oting construction as a careerchoice for young people. Survey after survey reveals that construction isperceived as a dirty, dangerous occupation, lack ing in prestigious andlo ng -te rm oppor tunity .

_"ReasonFound..Privatization1995-9thAnnualReporton Privatization)(19961.: HudsonInst.. U.S. Dep't of Labor.WorkForce2000:WorkandWorkersfor the2 1 st Century I 19 87 _.;:Yateset al.. ConstructionIndus.Inst.. Anatomyof ConstructionIndustryCompeti-t ion _19911.3 6

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VISIONS FORTHE NEXTMILLENNIUM 2.01[E]An even greater challenge will be to tram the work.force to meet

the future. Historically. the industry has relied on the public school systemand trade unions to train its worldorce. For different reasons, neitherwill be adequate in the future. The National Assessm ent of EducationalProgress reports that only 27% of all new entrants into the work .forcew ill be adequately trained to m eet the sk illed trades level. _-_The literacylevel is the lowest it has been in forty years. Reportedly. more than90,000.000 Am ericans cannot read at a ninth-grade level. Deductive rea-soning sk ills have slipped more than 40% over the last ten vears.

The situation w ith trade unions is not much better. Unions sim plydo not have the resources they once did to apply to craft work er training.This w ill not lik ely change. Only 25% of the construction work force isunionized. B y them selves, unions w ill not be able to train the constructionw ork force of the future.

These problem s are not new , they are just unaddressed. There is acompelling need for the construction industry to tak e forceful steps toprovide comprehensive training and education for its own work force.This requires a fundamental change in thinking. By any measure, theconstruction industry has lagged behind alm ost all others in its per capitainvestment in its workers. The vision of the construction industry for thefuture should be to:

1. Provide com prehensive sk ills and educational training program sfor the w ork force2 . Be active, supportive partners w ith the educational system s (par-

ticularly vocational education) to im prove the quality of newentrants to the construction industry

3. Promote construction as a career, not just as a job4 . Offer benefits com mensurate w ith the dem ands of the.indust_"5. Reinvent the historic relationships betw een contractorSa'rid orga-

nized labor to focus m ore on train ing.The training needs of the industr?' are not simply limited to the

field work force. The evidence suggests that w hile labor productivity hasdeclined, the managem ent of labor is also seriously deficient. The indus-trv 's professional m anagers are ill-suited for the future. For exam ple, in1994 . only 12% of the baccalaureate degrees awarded in the United Stateswere engineering degrees. _ A significant number of these (an even higherproportion of graduate degrees) went to foreign nationals, m any of whomwill not remain in the country. A vastly disproportionate amount of theconstruction research and developm ent being performed at American uni-versities is being funded for foreign construction and engineering .com pa-nies. It is a tragic ironv that the United States has built the w orld 's finest

_HudsonInst..U.S. Dep't of Labor.Work Force 2000:"Workand _brkers for the21st Cen tu ry _19871._ U.S . Departmen t o f Educa tion.37

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2.01[F] CONSTRUCTION LAW HANDBOOKuniversity svstem and fails to tak e advantage of it for the benefit of ourd omes tic b usin ess e nterprise s.

The benefits of a new approach to w ork force training are enorm ous.It is estim ated that 50% of a construction w ork er's tim e is spent unproduc-tively. Consider the benefits of improving this percentage. There is nobetter or surer wav to im prove productivity, and profitability of the con-struction industry, than to develop a coherent plan for addressing thechallenge of training the work .force of the future.[F] Dispute Resolution Processes

Today, particularly in the United States, we see ADR techniques.m ost notably arbitration, evolving into a process sim ilar to litigation.while litigation is becom e m ore lik e arbitration. This is m ainly as a resultof the follow ing factors:

1. There is an increasing involvem ent of lawyers in ADR, resultingin its procedures being influenced by those fam iliar w ith thelitigation process; and2 . Continuing pressures exerted upon the public courts by publicreform groups to curb litigation through the adoption of variousADR p ro ced ures .

For exam ple, the Am erican Stock Exchange Constitution and ArbitrationRules provide for exchanges of litigation-lik e pleadings, consolidation ofclaim s and parties, m andatory discovery, rules of evidence, and reasonedawards. On the other hand, the Superior Court of the state of Delawarerecently adopted a sum mary nonjury litigation procedure providing forextrem ely lim ited discovery, the extensive use of affidavit testim ony, andaccelerated trial tim es.Thus, the question arises as to whether, and on what terms, willADR and litigation m eet. in term s of evolving effective dispute resolutionprocedures for com plex construction in the vear 2000 and beyond?

Dispute resolution has becom e the subject of literally thousands ofexperim ents by public and private institutions, professional associations.private corporations, governm ental entities, courts, and individual partnersto business contracts. As a result, certain hybrid procedures are em ergingthat appear to be better suited to ser','e the interests of all parties to majorconstruction projects and offer to be the pattern for procedure in the newmillennium. These new procedures and developing patterns are presentedin more detail infra 2.02.[G] A Profession in Search of Itself

Perhaps it is because of a reduced dem and for legal services. Perhapsit is a reaction to com plaints from the construction industry that lawyersare too contentious and the legal process too expensive. Perhaps it isbecause clients are turning to the consulting and accounting professions

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VISIONS FORTHENEXTMILLENNIUM 2.01[G]for advice in strik ing their agreem ents and resolving disputes. Or. it couldbe. perhaps, that a new m illennium is approaching. W hatever the cause.the fact is that som e of the best m inds in the construction bar are look ingfor new roles for lawyers to play. Basically , they are seek ing to reinventthe profession in the face of a declining market, increased competition.and widespread challenges to our professional values.

During the m id-'80s, when the ADR revolu tion was at its peak .construction lawyers began to seize the initiative and declare ourselvesenthusiastically supportive of mediation, DRBs, mini-trials, and variousother alternative m ethods to arbitration and litigation. O ur clients, how ever.were only m ildly im pressed. In the late '80s and early "90s, as partneringbecam e the rage, m any of us declared, breathlessly, that w e w ere reform edand recovering lawyers and pleaded to have a seat at the partnering table.Clients, w ere, for the m ost part, unpersuaded.

The m ost recent efforts to find and redefine ourselves as a professioninclude such creative concepts as the "Project Counsel," the notion beingthat outside counsel would be engaged to facilitate the overall process ofproject delivery, and not to exclusively, or even primarily, represent theinterests of any particular participant, such as the owner, design profes-sional, or contractor. The core idea of a Project C ounsel is that the attorneywould eschew advocacy for a more neutral advisory and facilitative role. L*Another innovation is that the k ey project participants w ould hire outsidecounsel, all of whom would agree mutually to a flat or fixed fee forservices rendered during the duration of the project: how ever, a conditionsubsequent to this arrangement is that if a dispute developed that couldnot be resolved short of litigation or arbitration, all fees from each counselwould be refunded to the clients.

The underlying assum ption of these quite creative and innovative pro-,.fessional reform s is that our clients do not w ant advocates: rather,- they w anttheir attorneys to tak e a m ore neutral, project-oriented role--look ing outfor the "good of the w hole" rather than the interests of individual parties.

Although no lawyer or any other person has an absolute grip on"the right way," the future w ill lik ely dem onstrate that clients w ill notwant their lawyers to abandon the essential attitudes, tenets, and skills ofadvocacv. R ather. w hat clients w ill continue to require is that their law yersbe knowledgeable, skilled, experienced, and cost effective in the use ofall available substantive and procedural tools--these to be com bined w ithour best energies and creative talents to achieve the best results reasonablypossible under the existing circumstances. In most cases, what is in thebest interests of the client w ill be in the best interests of the project team ,and the success of the project w ill follow .

_ Leadingproponentsof the "'ProjectCounsel"approachare ChristopherH. Noble.E sq.. of Boston. M assach usetts. and R ichard D . Conner. Esq.. of G reensbo ro. N orthCarolina.39

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2.02[A] CONSTRUCTIONAWHANDBOOKWhat we. as a legal profession, w ill have to learn to live w ith is a

little paradoxical behavior on the part of our clients. While they may saythat thev w ant a neutral and "'project-oriented '" outside counsel, at the endof the day, when the transactional or dispute-related issues are on thetable, our client will want to look us squarely in the eve and ask for ourdead-level best call as to what is in their best interests--not what is bestfor the other parties or the am orphous "'project."

This is not to say that com pleting the project on tim e. w ithin budget.and with no disputes is not in the best interests of all the parties aswell as our clients. Most of the time, the universe of interests will beconcurrent--at least on the m ajor objectives. However. once in a while.our client's interests, needs, and requirem ents w ill conflict w ith those ofthe other participants; and, if so. the client w ill w ant com plete assurancethat our advice is com petent, ethical, and given with com plete fidelityand loyalty to the client alone.

To be an effective advocate is, also, to be knowledgeable and experi-enced in, and willing to use, the entire universe of ADR techniques,whenever they are appropriate, and after full and com plete disclosure ofall options and their consequences. N evertheless. com petency inadvocacyalso requires that we be prepared to take off the gloves and go to thelitigation m at on occasion. Unilateral disarm am ent is alw ays dangerous.both for lawvers as well as nations.

So. perhaps what our clients are really trying to tell us is that theywant a lawyer who is at once a counselor, confidant, and conciliator, butalways an advocate, and. when necessary., a commando. Thus. althoughit is good that we continue to explore alternatives for deliver3, of legalse_ 'ices, we should not easily let go of what is m ost vital in our tradition.As T.S. Eliot put it:

We shall not cease from explorationAnd the end of all our exploringWill be to arrive where we startedAnd know the place for the first tim e.

2.02 A PROPOSED PARADIGM FOR RESOLUTION OFCOM PLEX CONSTRUCTION D ISP UTESThis section considers the developm ent of ADR processes as applied

to construction industry, disputes and proposes new paradigm s or "visions"of how these ADR processes will evolve to meet the needs of the industryin the new m illennium .[A] Pre-arbitration Procedures: Phased Dispute Resolution

[1 ] Issues fo r Cons id era tionIn recent vears, the "'evolution" of certain ADR procedures has

developed rapidly due to the adoption by the business world, particularly40

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VISIONSFORTHENEXTMILLENNIUM 2.02[A]the construction industry, of mediation, mini-trials, and Dispute ReviewBoards.

The success of early mediation and mini-trials was as a result ofthe principle that the earlier the parties to a dispute are forced to evaluatetheir positions in the light of opposing argum ents, the earlier the chancesfor settlement or resolution. This has been recognized by a number ofstudies of court procedures:

Our [court] system permits rudim entary pleadings to start anaction. It leaves to discovery, the developm ent of evidence insupport of each side's claim in order to permit each side toput forth its best case at trial. In the discovery, process, theparties, often for the fu'st time, learn the strengths and weak-nesses of their cases. There comes a point in the course ofdiscovery when the parties have learned enough about theirfactual and legal strengths and w eaknesses to assess their caseintelligently, but perhaps, not enough to try the case m ost effec-tively. Settlem ent becom es practical w hen the parties understandtheir cases .... Settlem ent is also aided by requiring the partiesto focus on their cases. This often happens only w ith the pres-sure of an imminent trial. Thus, it is not unusual for settlem entsto occur as late as the eve or the midst of trial.

Because the great m ajority of cases are settled [9 4 .6%].an opportunitj." for expediting resolution of civil cases andreducing discover3" exists in moving up the point at whichparties understand their cases and must focus on their merits.This can be done in appropriate cases by form alizing a restricteddiscovery, process to reach that point quick ly, and then im posinga settlem ent procedure to force serious consideration of settle-m ent. If that process falls, the case can proceed to a full trialon the m erits after full discovery. _ADR should be introduced at the early stage of contract negotiations.

It is at this time that the parties first identify their differing interests,allocate their respective risks, and are in a position to anticipate thepotentia l disputes that m ay arise between the parties so as to provide fortheir efficient and econom ical resolution. A prime cause of disputes islack of knowledge. The more facts that are made available, the morediscernible the solution to the problem .

A contract may require that the parties prepare, m aintain, and pre-serve certain categories of docum ents, records, and other sources of infor-mation with respect to the subject of agreementEe.g., tender documents,

_eSobol. ADR and the Courts: A Manual for Judges and Lawyers 194-95 (Butter'worth1 98 7) ( em ph asis a dd ed ).

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2.02[A] CONSTRUCTION LAWHANDBOOKaccounting records, correspondence, site meeting minutes, logs. dimes.weather conditions, laboratory, test reports, etc. More importantly, thecontract can require that the parties exchange certain categories of docu-m ents in inform al discovery, as a condition precedent to proceeding w itha claim . Clearly. it w ill be much easier and far more econom ical for theparties to exchange documents and information at this earlv stage ofdispute resolution rather than under the form al rules of discover3 ' in thecontext of a litigation or arbitration.

This concept of contractually required inform al negotiation and infor-mation document exchange procedures is beginning to be accepted andincorporated into standard form agreem ents such as the American Instituteof Architects, AIA Document A-3 12 , Performance Bond (Dec. 1984 ed.) .There is no apparent reason w hy such consensual provisions in a contractw ill not be enforced. For exam ple, in a case of first instance, the UnitedStates District Court for the Eastern District of New York enforced anagreement between two m anufacturers to use a sim ilar ADR proceduraldevice, holding that the dispute resolution clause w as, in effect, an enforce-able a_eem ent to arbitrate under the Federal Arbitration Act or. alterna-tively, was specifically enforceable because the plaintiff did not have anadequate rem edy at law . _v In any event, m ore and more businesses arebeginning to develop and to incorporate inform al dispute resolution clausesinto their contracts, recognizing that they are practicable and work ableas a first-stage form of ADR.

Follow ing an informal exchange of evidence, the next "'phase" oropportunity for ADR may be referral to mediation, a m ini-trial, or to aDispute Review Board. There are literally hundreds of definitions ordescriptions of mediation; however, rights-based mediation is most farnil-iar to the construction law yer. The goal is to settle the dispute w ith attentionto the identified legal rights of the parties. R ights-based m ediation isconsidered to be an extremely effective m ethod of solving complex con-struction cases, in relatively short periods of tim e. and at lower coststhan would be the case with litigation or arbitration. '_ It differs fromconventional m ediation in the follow ing respects:

Dispute resolution by rights-based m ediation perm its the partiesto m ak e inform ed business decisions based on an independentand impartial analysis of the facts. Because disputants musthave a thorough understanding of the facts and the underlyinghistory, of the case, they need an im partial, confidential assess-m ent of the probable outcom e and possible future costs (shouldthey go to arbitration). W ith that inform ation in hand, the partiesare able to make rational choices that allow the mediation to

; AME Inc. v.BrunswickCorp.,621F. Supp.456 (E.D.N.Y.1985)._Marcus.Fact-basedMediationor theconstructionlndustr3;42Arb.J.6 (Sept.1987).42

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VISIONS FORTHENEXTMILLENNIUM 2.02[A]be successfully concluded. The settlem ent rate for fact-basedmediation is approximately 90 per cent. _Even if the m ediation fails to result in a settlem ent, the m ediation

process forces the parties, at an early stage, to analyze and test theirrespective positions before adversaries and a neutral party. As a result.weak contentions can be abandoned and strong contentions m ay besharpened.

Another significant benefit of m ediation is that it can occur duringthe currency of the project while the facts, docum ents, and witnesses arereadily available to the parties. This is also the central idea behind D isputeReview Boards.

The concept and use of Dispute Review Boards (DRBs) for resolu-tion of contract claim s is not new to the Am erican construction industry.The first well-k nown use of a DRB was in 1975, on the second Eisen-bower tunnel in Colorado. Since then, several major projects have suc-cessfully used DRBs.: A DRB consisting of three neutral parties, usuallydesign professionals and contractors, is typically nam ed in the contract.They m eet for the first tim e at the pre-construction m eeting, and continueto meet during the course of the job, usually every, two to three months.These meetings usually coincide w ith completion of critical stages ofthe job. or at m ilestones considered lik ely to generate claim s. Thesefrequent meetings generally ensure that the DRB will have maximumand up-to-date information about the project. DRBs stand ready to dealwith disputes as soon as they arise, when issues are more manageableand the parties are open to settlem ent. D isputes are typically subm ittedto the DRB by correspondence, after initial negotiation has failed toresolve the issue.

Presentations before the DRBs are informal, consisting Of writtenand oral presentations by all parties, rebuttal by each adversary party.followed by questions from the DRB. The DRB then makes a recommen-dation for resolution of the issues based on entitlement, i.e.. interpretationof the contract documents and applicable law . rather than a projectionof a potential award by arbitrators or courts. Generally, most disputesare resolved, and the job moves forward. Essentially. then, the DRBform at is a variation of the m ediation process, which requires the partiesto shape their case and analyze and test their contentions before adversar-ies and the neutral parties at an early stage of the dispute resolutionprocess.Another variation of the mediation process is the m ini-trial. As withm ediation, there are m any variations of m ini-trial procedures; how ever, the

_'ld. at7.:"See Coffee, SpecialReport: The Use of DRBs in WashingtonState. 43 .a,.rb.J.(Dec. 1988).

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2.02[A] CONSTRUCTIONAWHANDBOOKAm erican Bar Association. Standing Com mittee on Dispute Resolution.describes m ini-trials as follow s:

A private, consensual proceeding where counsel for each part 5,to a dispute makes a truncated presentation of his or her bestcase before the top official w ith settlem ent authority for eachside and, usually, also, a neutral third-party adviser. At theconclusion of th is exchange (w hich usually lasts a dav or tw o).the principals attem pt to settle the underlying dispute. If theyare unable to do so, the adviser renders a non-binding opinionas to the probable litigated resolution of specific legal, factualand evidentiary issues as well as the probable overall courtoutcome of the dispute. Arm ed w ith this additional data, thedispu tants en ter in to further co nfiden tial settlem en t neg otiatio nsin an attempt to reach a mutually acceptable agreement. `_In order to m ake an effective presentation of a claim or defense.

each party must have a relatively thorough understanding, not only of itsown contentions but also of the contentions of the other parties as well.As a practical m atter, this m eans that there m ust be a reasonable opportu-nity for limited discovery by each party before participating in a mini-trial. Accordingly. m ost m ini-trial procedures recom mend or m ake som eprovision, usually on a voluntary basis, for limited discovery in advanceof the m ini-trial presentation, z:

The pre-arbitration concepts described above have been developedin various w ays, w ith a view tow ard the early, efficient, and fair resolutionof com plex construction disputes. One of the m ost sophisticated exam plesof a phased dispute resolution form at is that developed by the Construction.Dispute Resolution Forum (CDRF) in 198 8 .-': Essentially , the parties toa contract that incorporates the CDRF procedures agree to subm it disputesinvolving $25.000 or less for inform al m ediation, and disputes involving$25.000 to $100,000 for a m ini-trial. If the disputes are not resolved atthe m ediation or m ini-trial stage, they w ould be presented for arbitrationpursuant to specified arbitration procedures. D isputes involving $100,000or more could voluntarily be submitted for mediation and/or a mini-trial butwould be subm itted for arbitration if not resolved by the form er procedures.

The philosophy underlying phased procedures is that constructiondisputes should be resolved as soon as possible and w ith the least cost.The value of phased procedures is that they facilitate movement from

: StandingComm.on DisputeResolution.AmericanBarAss'n. AlternativeDisputeResolution . An ADR Primer.::CenterforPub.Resources.Anti-trustCommitteePre-trialmanagementand JudicialSettlement Strategies in Arbitral Litigation. CPR Legal Program. Practical Guide. Alterna-tive Discovery Practices at D32 (Sept. 19981.

:: See Special Dispute Resolution Procedures: Notice to the Construction Industry fromAAA and Construction Dispute Resolution Forum (1988).

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VISIONS FORTHENEXTMILLENNIUM 2.02[B]informal mediation to the more formal m ini-trial, then to arbitration.without the need for additional agreem ents at each stage.

[2] VisionPhased pre-arbitration dispute resolution procedures should be ex-

pressly incorporated into construction contracts, providing for the follow -ing progression w ith respect to all disputes arising under the construc-t ion con tr ac t. The parties should be bound to exchange all relevant documents and

inform ation pertaining to the claim or defense as a condition to proceed-ing further w ith the dispute; thereafter, the parties should be boundto m eet inform ally and attem pt to negotiate a resolution of the dispute.

If the dispute is not resolved at the initial negotiation stage, the dispute ,together w ith all pertinent docum ents and evidence previously ex-changed, should be subm itted to an impartial independent party (orDRB) for inform al m ediation. The m ediation (or DRB) proceedingshould be "rights-based"--i.e.. the mediator should assist the partiesin resolving a dispute based on the contract docum ents, applicablelaw , and pertinent facts.

If the dispute cannot be settled by m ediation, the parties should proceedwith the limited discovery procedures provided for infra 2.02[C].After lim ited discovery , is com pleted, the parties should present thedispute in the form of a m ini-trial, before a designated representativeof each party, sitting together with a designated independent partywho w ill not have had previous involvem ent w ith the dispute.

If the dispute cannot be settled during or w ith in a specified period oftim e follow ing the m ini-trial, the dispute should then be subm ittedto arb it ra tion .[B ] Conso lid a tio n o f Cla im s

[1 ] Issues fo r Cons id era tionOne of the more significant advances of modern civil litigation is

the prevailing policy that all related claim s should be joined and resolvedin a single trial, za to promote economy of both costs and time, and toprevent inconsistent results that m ight otherw ise result from a m ultiplicityo f a ctio ns .

: -' See. for example, the CUnited States) federal procedural rules governing counterclaimsandcross-claims(Fed.R.Cir. P. 13): third-partypractice{Fed.R.Cir. P. 14);joinder ofclaims and remedies {Fed.R. Cir. P. 181:joinder of persons (Fed. R. Cir. P. 19-21):inter'pleaderFed.R. Civ.P. 221:intervention{Fed.R. Civ.P. 24);andclassactions{Fed.R . C ir. P. 2 3 ).45

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2.02[B] CONSTRUCTION LAWHANDBOOKIronically. arbitration and other ADR procedures, w hich w ere them -

selves designed to save tim e and expense, generally do not provide for con-solidation of claim s by and against persons not parties to the ADR agree-m ent. In the U.S. construction industry, this om ission often leads to delays,multiplicity, o f actions, inco nsisten t resu lts, and increased exp ense and expo -sure to greater risk . This is because construction project disputes often in-volve m ore than the im mediate parties to a construction contract:

The building ow ner probably has contracted with an architec-tural or engineering firm for design and construction adm inis-tration services, and the owner will look to either of theselatter parties for indem nification if the contractor alleges designdeficiencies. The design professional, in ram . m ay seek toplace ultim ate responsibility on the shoulders of one or m oreengineering consultants responsible for system design w ork .Likewise, the prim e contractor has inevitably subcontracted asubstantial portion of the construction work to others and willattempt to place their claim s against it on to the owner, whilelook ing to them to rem edy any construction deficiencies forwhich the ow ner seeks recom pense.

If the prim e contractor has defaulted on its obligationsunder the performance or payment bond given to the owner atthe com mencem ent of the project, the owner m ay seek satisfac-tion from the contractor's surety under the terms of the bond.To complicate matters further, the potential exists for a varietyof counterclaim s and cross-claim s: the contractor, for exam ple,m ay sue the architect for negligence or seek recovery, as a third-party beneficiary, of the owner-architect contract. All thingsconsidered, the m ost construction-related disputes are m uchm ore com plex than the tw o-party scenario.-':Frequently, in this interlocking web of contractual relationships,

there will be third-party indem nitv obligations, s'ubrogation rights, andother potential claim s against persons not parties to the im mediate dispute.Owners, particularly, are exposed to this risk . the classic exam ple beinga claim bv the main contractor against the owner for delay caused bv adesign defect. Obviously. the owner will want to look to the designprofessional for ultim ate liability on such a claim . However. the typicalobstacle is an owner-architect agreem ent that may provide as follows:

No arbitration arising out of or related to this Agreement shallinclude, by consolidation, joinder or in any other manner, anadditional person or entity not a party to this Agreem ent. except

:_ Stipanowich. Arbitration and the Multipart3." Dispute: the Search.for Workable Solu-tions, 72 Iowa L. Rev. 473. 478-79.

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VISIONS FORTHE NEXTMILLENNIUM 2.021B]by w ritten consent containing a specific reference to the Agree-ment signed by the owner, architect or an,,, other person orentity sought to be joined. -'_

Typically, the architect w ill not voluntarily agree to become embroiledin a dispute between the employer and the contractor; thus. two. ratherthan one, sets of arbitration proceedings m ay becom e necessary. A partyseek ing consolidation of claim s by arbitration or litigation m ay seek reliefin the courts; how ever, the rights to such relief are uncertain and dependentupon the jurisdiction involved. -'v

In recent years, counsel have begun to develop custom constructioncontracts that undertak e to bind all parties, including ow ners, design profes-sionals, co nstructo rs, su bco ntracto rs, an d supp liers, to the d ispu te resolutio nprocedures, including m andatory consolidation of related claim s. :_

[2 ] V is io n That the dispute resolution and arbitration procedures require the asser-tion of all counterclaim s that arise out of the transaction or occurrence

that is the subject m atter of the opposing party 's claim s, based on thesame principles as provided in the Federal Rule of C ivil Procedure13 (a) (com pulsory counterclaim s); and

That the follow ing criteria for joinder and consolidation be providedin the dispute resolution procedures: /--Where separate proceedings are pending between the same parties.or one party is involved in a separate proceeding w ith (or is aboutto assert claim s against) a third party; and

--Where the dispute sought to be consolidated arises from the sametransaction or related transactions: and--Where there are com mon issues of law or fact in the dispute sought

to be consolidated , thus creating the possibility of inconsistent re-sults; and--Where no party sought to be joined in the primary proceeding will

suffer substantial prejudice: and--Where consolidation or joinder w ill result in a more econom ic andefficient resolution of the issues. -`

:_AIADoc. B-141,StandardFormofAgreementBetweenOwner-Architect][1.3.5.4( 1997 ed .} .:"See.e.g..Stipanowich.Consolidation,supranote25.at483:MacKellar,ToConsoli-date or Not to Consolidate.44 Arb. J. 15: Coulson.BusinessArbitration--WhatYouNeedto KnowtAAA,2d ed. 1982).:"See. e.g..ADR. Ci_:Engineering57: Cal.Admin.Codetit. I. ch. 3."'ArbitrationofClaimsunderStateContractAct Contracts."para. 340.:vSee Stipaaowich.supranote25.72 IowaL. Rev.473.

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2.02[C] CONSTRUCTIONAWHANDBOOKClearly. all parties involved in a single project should be required to agreeto incorporate the dispute resolution procedure rules in to their respec-tiv e a gr eements .

[C] D isco very[1 ] Issues fo r Considera tionThe adoption of the United States Federal Rules of Civil Proce-

dure in 1938 marked the beginning of the "'age of discover),." The newrules of discover)' were designed to eliminate "trial by ambush" or the"sporting" theory of practice. They were supposed to put all the facts onthe table and thereby make trials fairer and more efficient. These rulesand concepts have been fn'mly established in the federal system of courtsfor more than fifty years; and virtually all state courts have adoptedidentical or sim ilar discovery codes. Many, however, have said that the"age of discovery" produced a "m onster. ''3 Another com mentator notedthat the prim ary, reason for abuses of the discovery process has been thatthe "foxes" (i.e., lawyers) have been left in charge of the "henhouse."which is to say that there are, essentially, no effective controls overthe extent or scope of discover)', other than the lawyers, who. in theindividual interests of their clients, will go to the limit to find an.,,'potentialevidence. On a cost-benefit an/alysis, the costs of discovery have be-come profligate. :_

The absolute right to discovery, as envisioned in federal and stateprocedural codes, is not generally available in arbitration proceedings. Astwo critics of arbitration have observed, one typically discovers what theother side 's case is all about "'by the third day of hearings."::The American Arbitration Association (AAA ) Construction IndustryDispute Resolution Rules for Large Com plex Cases provide that:

[a]s prom ptly as practicable after the selection of the arbitrators.a prelim inary hearing shall be held am ong the parties or otherrepresentatives and the arbitrators .... At the prelim inary hear-ing the m atters to be considered shall include... (c) the extentto which discovery shall be conducted) 3

"' JusticeLewisE Powell.in referenceto thegrowthof discover)',said that "litigationcostshavebecomeintolerable,andtheycast a lengtheningshadowover thebasicfairnessof our legal system."See alsoHeru3"& Lieberman,TheManager'sGuideto ResolvingLegalDisputes12." See Oberer.TrialbyAmbushor Avalanche?TheDiscover3"Debacle,Mo. J.Disp.Resol. 1 19 87L_:SeeBayer& Abrahams.The TroublewithArbitration.11Litig. 30. 31.":AAAConstructionIndustryDisputeResolutionProceedings.RuleL--41997_.

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VISIONSFORTHE NEXTMILLENNIUM 2.02[C]The AAA also publishes Guidelines for Expediting Larger. Complex

Cons truc tion Arbitrat ions , which permit, but do not require, a prelim inar 3hearing for the purpose of "'addressing" the follow ing item s:

I. A brief statement of the issues. The panel may requestparties to briefly describe the dispute and what issues areto be resolved.

2. Specification of claims and counterclaims. The panel mayrequest the parties to specify the amounts involved andc la im s o r c ou nte rc la im s.

3. Stipulation of uncontested facts. The parties should agreeon uncontested facts prior to the prelim inary, hearing. Thisdocument shall be presented to the panel at the hearing.

4. Schedule for the exchange of information, including an,,'reports from experts. The panel may ask the parties toexchange information as to each other's documents andw itnesses. Consistent w ith the expedited nature of arbitra-tion. the arbitrators m ay, at the prelim inary hearing, estab-lish (i) the extent of and schedule for the production ofrelevant docum ents and other in form ation. (ii) the identifi-cation of any witnesses to be called, and (iii) a schedulefor further hearings to resolve the dispute. The panel willdeterm ine the scope of such an exchange if the parties areunable to agree. When the information to be exchangedhas been determ ined, the panel may set a schedule for suchan exchang e.

5. Lists of witnesses, including biographies of expert wit-nesses and outlines of testimony; The panel may re.quire -,.the parties to provide each other with a list of witnessesthey intend to call, as well as outlines of testimony ofw itnesses, including expert w itnesses.

However, the m ain difficulty with the AAA rules and guidelines isthat they are purely discretionary: thev confer no rights to discovery, andthere is no assurance that the tribunal adm inistrator or arbitrators w illfollow the procedures for discovery, suggested by the guidelines or setforth in the rules. Thus, a party against whom a substantial claim is filed,and w ho legitim ately requires docum entary evidence in the sole possessionof the claim ant, may have no effective rem edy.Arguably. the AAA rules authorize arbitrators to subpoena docu-m ents for discovery, purposes, in advance of the laearing. _ How ever, partiesrequesting discover 3' may often receive the response. "'This is arbitration,not l it iga tion!"

'_ Hamilton. Pre-hearing Discover3." and Arbitration. Constr. Litig. Rep. 142. 143.49

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2.02[C] CONSTRUCTION LAW HANDBOOK

Difficult questions of law and fact have arisen as to whether a partydesiring pre-hearing discovery m av seek the aid of a court:

The vast m ajority of courts that have addressed these m atters.how ever. "have concluded that allowing discovery on the m eritsof a case prior to arbitration is inconsistent with the aimso f arb itratio n. '':-_

Although federal courts have the power under Rule 81 (a)(3) to order discovery in an arbitration, they should rarely doso. W hen parties agree to arbitrate, they relinquish certainprocedural niceties w hich are norm ally associated with a form altrial. One of these accouterm ents is the righ t to pretrial dis-coverv. 30

Although the arbitration rules m ight perm it the tribunalto subpoena documents or w imesses, the arbitrating parties haveno comparable privilege to conduct discovery on their own. 3 :The two generally recognized exceptions to these case holdings are(1) that discovery is permitted in the context of a motion to compel

arbitration, where there is an issue w ith respect to the arbitrability of thedispute: 3 sand (2 ) that discovery is perm itted if there are "'exceptional" or"'com pelling" circum stances. :"A number of court studies have concluded that the cause of mostdiscovery abuse is Park inson's Law, which posits that "'work expands soas to fill the tim e available for its com pletion. ''_ In a very real sense, theills of our present litigation system are attributable to the single phenom e-non that if you give a lawyer five years to do everything that can be doneto w in a case. the lawyer w ill think of five years of discovery activ ities. ;The fallacy in this approach is. from a results standpoint, that the outcom ewould probably not change very. much if the same case was completedin three years, one year. or. perhaps: six months. The solution seemsobviousm we m ust shorten discovery deadlines:

If parties can agree, for exam ple, on discovery cutoff six m onthsfrom the date the suit is initiated, our judicial system shouldnot stand in the way of the substantial tim e and cost savings

:_Mississippi Power Co. v. Peabody Cole Co.. 69 ER.D. 558. 567 (S.D. Miss. 1976):Suarez-Valdez v. Shearson/American Express. 845 E2d 950 (llth Cir. 1988): MillerBrew ing Co. v. Fort W orth D istrib. Co.. 781 E2d 494 . 4 98 (5th Cir. 1986 ).

_'Burton v. Bush. 614 E2d 389. 390 (4th Cir. 1980).2-Tupman. Discovery and Evidence in U.S. Arbitration: the Prevailing Views, Arb. J.27.3 0. 40.'" See. e.g.. International Union of Elec.. Radio & Mach. Workers v. Westinghouse

Elec. Corp.. 48 F.R.D. 298 (S.D.N.Y. 1969).:_See Tupman. supra note 37. at 30 (bibliography). See also Hamilton. supra note 34._"Oxford American Dictionary (1980).

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VISIONS FORTHE NEXTMILLENNIUM 2.02[C]achievable by such an approach. Establishm ent of hard . fastand speedy case m anagem ent deadlines w ill have a trem endousim pact on the managem ent of the case. Gone would be theability to litigate for "as long as it takes." In its place wouldbe a structure that required all parties to evaluate their case.prioritize, and adopt the best litigation strategy which couldbe accomplished in the time available. "_A related discoverv device from litigation procedure is the pretrial

hearing and subsequent pretrial order typically used in Am erican courts.These orders are often quite com prehensive, including: Detailed outline of each party's case. Stipulations of fact. Statem ents of factual and legal issues to be resolved . Listings of proposed w itnesses, together w ith sum maries of testim ony. Listing of docum ents and exhibits to be offered at trial, bound, tabbed,an d in dexe d.

- Summaries of depositions and affidavits to be offered at trial/: Sucha schedule does have the effect of forcing the parties to prepare theircase. Although it may arguably increase the expense of getting to atrial or hearing, it also narrow s the issues and leads the parties to engagein settlement discussions, certainly saving hearing time and expense/._

[2] Vision

Arbitration procedures should provide for: Limited discoverv as a matter of right. Prelim inarv definitions of issues and contentions. Mandatory exchange of documents and lists of witnesses and pro-p ose d d isco very .

J_See also Pretrial Management and Judicial Settlement Strategies and Antitntst Litiga-tion, Model ADR Procedures at D-4: Abbreviating Complex Civil Cases, ADR and theCourts 193: Groenke et al.. Proposal for Reducing Discovery Costs 263; Evans, AdmissionsPractice 285: Peckhorn. A Judicial Response to the Cost of Litigation: Case Management,Two-Stage Discover)" Planning and ADR 37 Rutgers L. Rev. 253: Brazil. Effective Ap-proaches to Settlement: A Handbook for Lawvers and Judges (Prentice-Hall): Schwarzer &Pasanow. Civil Discovery: A Guide to Efficient Practice (Prentice-Hall): Final Report.Second Circuit Committee on the Pre-trial Phase of Civil Litigation.

_: See. e.g.. Schooner. The Lacey Order: Control of Complex Litigation before theBoard 28.__ld.

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2.02[D] CONSTRUCTION LAW HANDBOOK Resolution of discovery issues and prom ulgation of a detailed discov-

ery plan by the arbitrators, if and to the extent the parties cannot agree. Strict time limits on discovery--e.g., not to exceed six months, exceptw ith the approval of the arbitrators. Following discovery, a consolidated pre-hearing order that defines the

issues and details the proof to be offered by each party.[D ] Hea rin gs a nd Ev iden ce

[1 ] Issues fo r Considera tionThe AAA Construction Industry Dispute Resolution Procedures nov,'

provide as follow s:The Parties m ay offer such evidence as is relevant and m aterialto the dispute and shall produce any such evidence as theArbitrator may deem necessary to an understanding and deter-mination of the dispu te .... The arbitrator shall be the judgeof the relevance and materiality of the evidence offered, andconform ity to legal rules of evidence shall not be necessary.. _The AAA guidelines for expediting complex cases do not deal w ith

evidence. However, the Guide for Construction Industr3"Arbitrators states:As an arbitrator, you do... have the responsibility to determ inethe relevance and m ateriality of any evidence or proof offered.You also have the discretion , in the interest of conducting thearbitration proceeding expeditiously, not to receive irrelevant,immaterial or unnecessarily repetitive proof/5In practice, v irtually all proffered evidence is adm itted "for what it

is worth," or subject to objections regarding its probative value. Thereason for this liberal po licy is that the arbitrator is

interested in getting all of the relevant facts he can: his principalobjective is to render a reliable decision, and any inform ationthat adds to his k now ledge of the total situation w ill almostalways be admitted. 4_As a general rule, courts will defer to the arbitrator's decisions

regarding the adm issibility of evidence, except where the failure to adm it

"AAA ConstructionIndustry.DisputeResolutionProceedings,,RuleR-31 (1997)._ AAA Guid e fo r Constru ctio n Indu stry . A rbitrato rs 4 .'_'HarveyAluminumInc. v.UnitedSteel "_brkersofAm.. 263F.Supp.488.491 (C.D.Cal. 19671 .

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VISIONS FORTHENEXTMILLENNIUM 2.02[D]evidence denies a party a fundamentally fair hearingY Indeed. courtshave held that an arbitration tribunal m ust be given discretion to determ inew hatever evidence is necessary, or cum ulative, so as to "'rid the proceedingof formalities and expedite it in line with the ver_' aims of the arbitralprocess."z

Perhaps the most useful innovations w ith respect to presentation ofevidence at arbitration hearings can be draw n from the m edia. For exam ple.a University of Texas law professor advised a group of local law yers that.with decreasing amounts of time to present evidence and arguments.lawyers m ust learn to think and communicate lik e T.V. anchorpersons. _Several good exam ples of m edia-type evidentiary presentations to jurieswere described in a recent article, s The most dramatic of the innovativeprocedures was the video presentation of deposition testim ony at trial.Although videotaped depositions themselves are not unusual, the mannerand extent of their use in the case described w as apparently unprecedented.The result was a presentation that closely resem bled a T.V . docum entan 'or new s report:

For its direct examination of a particular witness, the offeringparty would prepare a summary and excerpts for review by itsadversary. As long as the presentation was accurate, the oppos-ing party could, not require the addition of other excerpts onthe same or related subjects. That was left to the subsequent"'cross-examination,'" at which the non-offering party couldpresent its own video summary and excerpts. D isputes wereresolved by a m agistrate.

Each party was tree to choose the mechanics and hardwarefor its video presentation. The plaintiffs produced a singlevideotape that included the lawver's summary, as well as thedeposition excerpts. They constructed an elaborate rear projec-tion system using two side-by-side eight-foot-square screensacross from the jury box. The double screen allow ed sim ultane-ous viewing of the video summary, and exhibits or graphicsrelating to the testim ony.

Defendants presented their video testim ony differently:their attorneys read the summaries in person and showed videoexcerpts on a regular television m onitor near the w itness stand.Exhibits were shown on a separate screen using an overhead

_ See. e.g.. GraphicArts Int'l Unionv. HaddonCraftsmanInc..489 K Supp. 1088.1095IM.D.Pa. 1979):Newark%'pesettersUnionv.NewarkMorningLedgerCo.. 594F.2d_ (3dCir. 19681._ See Reed& Martin Inc. v. WestinghouseElec. Corp.. 439 F.2d 1268. 12752dCir. 1971): Catz Am . Co. v. Pearl Grange Fruit Exch. Inc.. 2 92 F. Supp. 5,4 9. 553cS.D.N.h:19681._ SeeBNA.AlternativeDisputeResolutionReport356 Oct.1988)."_"ee Buxton& Glover.Managinga Big CaseDownto Size. 15Litig.22.

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2.02[E] CONSTRUCTION LAWHANDBOOKprojector. In some instances, defendants simply presented asumma_r?'without showing any excerpts at the actual testimony.

The use of deposition summaries and tightly edited video-taped deposition excerpts was obviously more interesting forall concerned. It also saved a lot of time. In all. videotapedtestim ony of 3 3 witnesses was presented in segm ents lastingfrom a few m inutes to four hours. Had the parties been forcedto read depositions into the record, or even just to present allthe back ground testim ony in lieu of summaries, juror attentionm ight have w aned and evidentiary points m ight have been lost.The pace of the trial would have slowed to a craw l. :_[2] Vision

Arbitrators should continue to determ ine the adm issibility, relevance,m ateriality, and w eight of all evidence offered and should be perm ittedto exclude irrelevant or unduly repetitious evidence. Arbitrators should,how ever, respect the law yer-client privilege and any evidence that theparties have agreed should rem ain confidential, such as settlem entdiscussions. This should also include any evidence subm itted in m edia-tion or in the context of a mini-trial)-"

Arbitrators in complex cases should encourage such innovations inthe presentation of evidence as the use of narrative summaries ofevidence, document summ aries, and videotaped presentations of ev-idence.

[E] D ecis io n Makin g[1 ] Issues fo r Considera tionThe most significant issues for consideration in this section relate

to the follow ing questions: Should arbitrators be bound by the underlying contract and the applica-ble law ? To what extent, if any. should the arbitrators be authorized to apply

principles of equity in decision m ak ing and therefore to provide equita-ble relief, such as the rem edy of specific perform ance? Should arbitrators be required to make specific findings of fact andconclusions of law, or otherwise give reasons or a rationale for

t he ir dec is ions?

_'/d. at 23.:: See. e.g.,Centerfor Pub.Resources.RulesandCommentaryfor Non-AdministeredArb itr ati on o f Bus ines s Dispu te s, Rule 11.2 .

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VISIONS FORTHENEXTMILLENNIUM 2.02[E]The extent to w hich arbitrators are bound to apply the underlying

contract and applicable law has no clear answ er. The United States A rbitra-tion Act (9 U.S.C. 1 et seq.), the Uniform Arbitration Act. and statearbitration statutes do not deal w ith this question. M any standard arbitra-tion clauses do not contain a reference to the law to be applied bv thearbitrators: nor do they typically state that the strict requirem ents of thecontract are to be applied. M uch of the confusion w ith respect to arbitrationand applicable law has to do w ith the somewhat paradoxical principlethat although arbitrators "'m ay disregard the strict and traditional principlesof law.'" the,,, are not free to "'disregard the rule of law."'-_>

The practice of com mercial arbitration in the United States is gener-ally that arbitrators do have the freedom of decid ing dispu ted issuesaccording to their own sense of justice and fairness, unless they arerequired bv the underlying contract to apply the strict term s of the contractand applicable law . _ This practice is based on the rationale that arbitratorsare not presumed to have been trained in the law and on the assumptionthat the parties have chosen to let the issue be determ ined in accordancewith the "'sense of justice and equity ... that reposes in the breast andm inds of their self-chosen judges. ''-_-_

The AAA Construction Industry Dispute Resolution Procedures pro-v id e tha t th e a rb itrato r:may grant an',' remedy or relief, including equitable relief, thatthe arbitrator deems just and equitable and w ithin the scopeof the agreement of the parties. _"Rem arkably . there is no specific requirem ent that the arbitrator's

decision be in accord w ith the same underlying contract that empowersthe arbitrators to decide disputes arising under the contract, or _'ith apiSlica-ble law. On the other hand. the AAA Guide for Consti:uction IndustryArbitrators undertakes to outline "'what it takes to be a good arbitrator."Among the listed attributes of the "'good arbitrator" is that "'he or shem ust be able to decide cases in accordance w ith the contractual agreem entof the parties and the applicable rules of procedure. "'_-

As a practical matter, and based on the personal experience of m anylawyers, m ost arbitrators feel bound to apply the term s of the contractand applicable law . at least to the extent that they are aw are of it. Professor

_See Dornke.CommercialArbitration391 Callaghan.ev.ed. 1984_.'_SeeUniversityof Alaskav.ModemConstr.Co..522R2d 1132.1140IAlaska1940):A.Wenge& Co.v. PopperSilkHosier3"Mills.239N.Y.199.203_1924):Domke.supra.note 53 . at 3 91-9 2.:' See SpectrumFabricsCorp.v. MainstreetFashions.139N.Y.S.2d612. q_f'd.309N.'_:709 11955).See alsoDomke.supra note 53. at 392:Crane.Arbitral Fr,,edomfromSubstantiveLau. 14 .aa-b.. 163119591.'"AAA ConstructionIndustr3.,DisputeResolutionProceedings.Rule R--43_1997)._"See AAA Guide.supra note45. at 3.

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2.02[E] CONSTRUCTION LAWHANDBOOKMentshikoff, in one of the earliest studies of arbitration, reported thatapproxim ately 8 0% of the arbitrators questioned believed that they shoulddecide w ithin the framework of substantive law : however, 90% wouldnot do so if they believed a m ore just decision m ight otherwise be m ade. 5s

The fact that arbitrators are not bound to apply the terms of theunderlying contract and applicable law has provoked severe criticismof arbitration and ADR in generalJ 9 The parties have generally spentconsiderable tim e, m oney, and energy in carefully allocating rights, duties,respo nsibilities, an d risk s am ong them selves at the tim e of contracting--allwith the reasonable expectation that if there is a dispute, it will be decidedaccording to the term s of the agreem ent and applicable principles of law .Moreover, the parties also have a reasonable expectation that disputeswill be decided according to custom and practice in the industry, includingreported precedent. 6As a result of the widespread concern on this issue.a num ber of private and governm ental ADR institutions have prom ulgatedprocedures that require principled decisions. For exam ple, the Duk e Uni-versity , Private Adjudication Center, Rules of Practice and Procedure,state:

Except as modified by these Rules or by ageement of the_ parties, questions of law shall be decided in accordance with

the procedural, conflicts and substantive law of N orth C arolina.and, where applicable, federal and state arbitration statu tes.... In all cases, the tribunal shall decide in accordance withapplicable law and valid term s of applicable contracts betw eenthe parties and shall tak e into account the uses of the trade tothe transaction? jUnited States M ediation and A rbitration, Inc., has prom ulgated ADR

rules for deciding disputes under the Johns M anville Reorganization Plan,as confirmed by the U .S. Bank ruptcy Court in the Southern District o fNew York. Rule IV(E) of the Manville Rules states that the "award ...shall be based upon the client's legal right to recovery ... based uponapplicable court law ."

In other agreements, provisions have been m ade to allow equitableprinciples to override the applicable contract and law:

The arbitrators shall determine the rights and obligations ofthe parties according to the substantive laws of the State ofNew York (excluding conflict of law principles) ...

:_SeeMentshikoff.CommercialArbitration.61 Colum.L. Rev. 846.860 (1961).Seealso Coulson.BusinessArbitration--WhatYouNeed to Know27 (AAA. 2d ed. 1982).:_See. e.g.. Brunet.Questioningthe Qualio"of ADA. 62 Tul. L. Rev 1: Bayer&Abrahams.TireTroublewithArbitration,11Litig.30._'SeeCardozo.TheNatureof theJudicialProcess20:Bayer& Abrahams.supranote

32.at31-32._PACRules.para. 1.04.56

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VISIONSFORTHE NEXTMILLENNIUM 2.02[E][Optional addition:.., but shall have the power, as amia-

bles compositeurs, to disregard any provisions of substantiveNew York law which, in their judgment, would lead to a resultthat is unjust, unfair and inequitable, or commercially unrea-sonable.] 6:The AAA Construction Industry Rules authorize arbitrators to pro-

vide for extraordinary , equitable relief, such as specific perform ance.Specifically, the AAA Guide for Construction Industry Arbitratorsprovides:Remedies do not necessarily tak e a monetary form . For exam-ple, [the arbitrators] might direct specific performance of thecontract. [The arbitrators] might also grant injunctive relief.barring a person from continuing a violation of the contract. 03The freedom of arbitrators to depart from the underlying contract

and applicable law is pro tected by the lack of any obligationmat leastunder the AAA rulesm to state reasons or a rationale for their decisions.A form er United States Claim s Court judge once said: "It is an invitation totyranny to be afforded the right to render final decisions without reasons. "'_

The Center for Public Resources (CPR) recognizes the im portanceof reasonable decisions in arbitration of business disputes. CPR Rule13 .2 p rovid es :

All awards shall be in w riting and shall state the reasoning onw hich the award rests unless the parties agree otherwise. W henthere are three arbitrators, the award and any part thereof shallbe made and signed by at least a majority of the arbitrators.

The CPR Commentary on this Rule is as follow s:Most parties engaging in arbitration want to know the basis onwhich the arbitrator(s) reached their decision. Our Committee,m oreover, considers it good discipline for arbitrators to requirethem to spell out their reasoning. Som etim es this process givesrise to second thoughts as to the soundness of the result. TheRule 13 .2 m andate gives the arbitratorfs) greater leeway thanwould a requirem ent to state "conclusions of law and findingsof fact."

Some parties hesitate to arbitrate out of the concern thatarbitrators are prone to "'split the baby," i.e. to make compromise

::Hoeniger.Toolsto TailorAAAArbitrationfor Large.ComplexMatters15.":AAA. A Guid e fo r Con stru ctio n Indu str? A rb itrato rs 2 6t.JudgeLouisSpector.speakingfromhisexperiencein arbitrationof complexconstruc-tion cases.See BNA.AlternativeDisp. Resol.Rep., Feb. 1990.at 46.57

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2.0211:] CONSTRUCTION LAW HANDBOOKawards. Any tendency on the part of arbitrators to reach com-prom ise awards should be restrained by the requirement of areasoned awardJ -_[2] Vision

Arbitrators in complex construction cases should be bound by theunderlying contract and applicable legal principles, w hich include theestablished doctrines of equity; otherw ise, the essential purposes ofcontracting w ill be underm ined.

Arbitrators in com plex construction cases should continue to be author-ized to order extraordinary equitable relief, if and to the extent it isauthorized by the underlying contract or applicable law .

Arbitrators in complex construction cases should be required to statereasons for their decisions, w ithout necessarily being required to m ak e"findings of fact" and "conclusions of law." If damages are awarded.the basis for damages calculations should be included.

IF] Appea l a n d Rev iew[1] Issuesfor ConsiderationThe primary goal of arbitration and ADR generally is that the decision

or award of the arbitrators shall end the dispute once and for all, withlimited or no right of appeal. On the other hand, if arbitrators in complexconstruction cases are to be required to apply the contract and applicableIaw, it is appropriate that there should be some effective check upon ,."arbitrary" decisions by arbitrators. O ne possibility w ould be to.pro.videfor appeals, but on som ewhat more liberal grounds than are provided byexisting law--for exam ple, the jury award standard, or the "substantialevidence" standard. Almost no one would advocate a de novo reviewstandard. A m odified approach is lik ely to prevail for review in com plexconstruction cases--i.e., a panel of select arbitrators who would reviewthe award on motion by an aggrieved party.

[2] Vision

Arbitrary proceedings should provide for a thirty-day expedited appealfrom written or reasoned awards in complex construction cases to aselect panel of arbitrators, which review would be dealt w ith strictlyon the basis of w ritten subm issions, w ith no oral argum ent.

e:CPR Rules & Commentary, supra note 52, at 14. See also Mandelbaum. NewArbitration Rules Reflect Corporation "sNeed for Litigation Alternatives, 3 Inside Litig. I.

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VISIONSFORTHENEXTMILLENNIUM 2.03 2.03 NEW OPPORTUNITIES FOR CONSTRUCTIONLAWYERS

The fundam ental changes in the construction industry, w ill lik elylead to comparable changes in the legal profession. With a declining needfor litigators, there w ill be a rising need for lawyers who can structurethe increasingly com plex transactions of the construction industry.

Consider the com plexity, of the follow ing hypothetical project for apower p lant. The pro ject is located in Canada. The lead engineer is inthe United States; how ever, there are five design consultants from aroundthe world. The contractor is a consortium of three or four builders fromdifferent countries. The engineer and lead contractor are operating underthe term s of a long-term strategic alliance. The ow ner (an independentpower producer) only wants to buy power and proposes a twenty-yearconcession agreement, after which time the plant w ill revert to publicownership. Schedule requirements have dictated that many design andconstruction activities proceed concurrently. Design documents, specifica-tions, m aterial properties, and the schedule w ill be produced in an inte-grated CAD-based system , on a shared software platform , with all design-ers and builders contributing data. Construction instructions are embeddedin the CAD files and may have been derived from any one of the conso,"tiumm embers. Land needs to be acquired, technology agreem ents negotiated:the entire project is governed in part by multilateral trade agreementsY'

Who will structure the m ultiple agreem ents and analyze the issuesin this scenario, if not construction lawyers? W ho will help ensure thatrisks are fairly allocated, when traditional roles are blurred? Who issituated to structure the deal itself and bring the various parties together?A t present, there are no industry professionals w ho can adequately respondto the challenges presented in this m ultilateral, global transaction. C ontrac-tors are forced to assem ble and manage a team of consultants, each w itha typically myopic view of the issues involved. Some verb' large firmshave developed much of this expertise in-house. However. these "kindsof transactions increasingly involve larger num bers of m edium -sized firm snot possessed of such resources. 6

O ther than traditional opportunities, there are also expanded opportu-nities for construction law yers. Construction law yers are "'renaissance"people. Sooner or later, eveN" construction law yer w ill touch on virtuallyevery, subject of law and will deal w ith a broad range of human activity.Construction lawyers are quick studies on technical subjects--they haveto be. And they learn how to translate the theoretical in to the practicalfor presidents of corporations and job-site forem en. M ost lawyers spendas m uch tim e on the transactional and troubleshooting side of construction

_"See Steven T. Halverson. The Future of the Construction lndustr3; in 1997 Wile.,,'Construction Law Update 14._ld. at 14-15.

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2.04 CONSTRUCTIONAWHANDBOOKas they do on the dispute resolution side. In short, construction lawyersare versatile , and they have a "w ide-angle" view of the world.

This being the case, the training, skills, and experience of construc-tion lawyers will qualify them to take on a much broader spectrum ofcontracting than just construction contracting. Think about it! Virtuallvevery business organization in the world contracts every day for varioustypes of goods and services, e.g., manufacturing equipment, computerhardware and software, utilitv services, consulting services--the list isendless. What do these procurement contracts involve7 They includeacquisition of design services; they involve specifications for m anufactur-ing, the transportation of equipm ent, and transfer of title under the UniformC ommercial C ode. There is the usual allocation of risk s; there is schedulingand the installation, construction, and servicing of various products. Thesegoods and services contracts also contain such fam iliar contracting ele-ments as scopes of work , bonding requirem ents, and letters of audit.warranties, indemnification provisions, and force majeure, change order,ADR, and term ination clauses.

In other words, procurement contracts, even for the broadest rangeof goods and services, involve basically the sam e sk ills and experiencethat attorneys develop as construction lawyers. As an added bonus toprospective procurement clients, construction lawyers can offer experiencein crafting tailor-made ADR arrangements, including "partnering" onnonconstruction projects. A nd because the industry, is "grow ing global."the construction bar can be prepared to tak e its sk ills onto the interna-tio na l s ce ne . 2.04 NEW MILLENNIUM: "NO NEED TO APOLOGIZE FORB EING A LAW YER "

In the new millennium, it will be time for lawyers to stop apologizingfor what we do. for being an advocate in a world where one person'sjustice is another's injustice; one person's beauty is another's ugliness;and one person's wisdom is another's folly.

Let the bar begin to reclaim the pride of our profession by puttinginto context the oft-quoted line from Shakespeare's King Henry VI, Part2 , Act IV , Scene II:

The first thing we do, let's kill all the lawyers.

Those who glibly quote this line either ignore, or never knew , that it wasa call to anarchy by Dick the Butcher, in furtherance of Jack Cade'sconspiracy to create a communistic tyranny in sixteenth century. England.This all-too-fam iliar Shakespearean line is almost always quoted out ofcontext, the reason being that it reflects a fundamental condition of oursociety that gave rise to the legal profession. No two persons, no matterhow wise, how well educated or inform ed, or how well intentioned, w illperceive reality in exactly the sam e way. And even if their perceptions

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VISIONSFORTHENEXTMILLENNIUM 2.04are totally aligned, the communication of those perceptions w ill be flaw ed.sometimes inaccurate, usually biased, and alm ost alwavs am biguous. Inother w ords, even honest, honorable, and w ell-m eaning people see realitxdifferently, and they communicate im perfectly. Consequently. these im per-fect conditions lead to recurring controversies, contentiousness, and con-flict. The world has alwavs been so, and it always will be. at least onthis planet and in our lifetim es.

The legal profession 's grand objective is to resolve conflict, m uchlik e the m edical profession 's is to cure disease. Because the Am ericanlegal svstem has its roots in English law . the fundamental belief is thatthe best and fairest way to resolve conflict is for each contending partyto have an advocate who is dedicated and committed to putting forth thebest case that can possibly be made to a neutral decision maker. Thereare other svstem s for pursuing justice, for exam ple, the "'inquisitorialsystem," based on the Roman Civil Law, where the primary responsibilityfor discover" of facts and putting forth the best arguments lies w ith theadjudicator rather than the advocates. For m any historical and philosophi-cal reasons, our Am erican founders adopted the m ore contentious, adver-sarial sy stem .

The positive side of the adversarial model is that it provides each- contending party far more creativity, and more freedom , in m ak ing a c ase.

The negative side of our system is that it encourages, even requires, acertain amount of contentiousness. No m atter whether the dispute is tobe resolved by trial, arbitration, negotiation, or even m ediation, our systemputs the contending parties in an arena where each part,,', through itschosen advocate, pushes, pulls, and strains toward the best possible resultfor that part3.'.Out of this not-so-pretty and sometimes unpleasant process.the dispute is reso lved, civilly and nonviolen tly : the aggrieved partyaccepts the decision, and life goes on.Unfortunately. but inevitably, when one speak sill of lawyers, thereference is usually to an opponent's lawyer, not one's own. Perhaps thesecritics should be reminded that although we are required to wash ourclient's dirty linen in public, we did not dirty the linen.

Most lawyers do their jobs honorably and well. They learn com plexsubjects quick ly: they work tirelessly to absorb and identify w ith theirclient's circumstances: the,,' are adept at making the complex simple andcommunicating the essence of a m ass of information in brief sound orword bytes, making use of the best and latest in communication andpersuasive techniques. They should, also, rem ind critics that far moredisputes are resolved quietly in lawyers" offices than are taken to courtso r p riv ate trib una ls.

So let the legal profession be reconciled to the reality that societywill continue to tell "'lawver jokes" and recall that familiar line fromShakespeare. Nevertheless. these same persons, i.e.. clients, will continueto call when their vital business interests are at risk. when they are introuble w ith civic authorities, when their "k ids are arrested for drug or

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2.04 CONSTRUCTIONAWHANDBOOKtraffic charges, and when they need able leaders for church or civicorganizations. And. ves. they will be the first to tell us and others, w ithpride, that their child has been accepted to law school.

And, finally, w e, the advocates, w ill continue to do as our predeces-sors have always done in law, "strive mightily, but eat and drink as friends."

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THE FIVE MOST IMPORTANT CLAUSESOF EVERY CONSTRUCTION CONTRACT

Pr_arod By:JohnW. HinchcyKing & SpaldingAtlanta, Georgia

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THE FIVE MOST IMPORTANT CLAUSESOF EVERY CONSTRUCTION CONTRACT

John W . H incheyK ing & SpaldingAtlanta, Georgia

TABLE OF CONTENTS

I. Introduction ...................................................... 2

II. The Five Clauses .................................................. 3A. Scope of Work .............................................. 3B. Payment ................................................... 5C. Changes ................................................... 8D. Warranties ................................................ 10E. Termination ................................................ 13

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I. INTRODUCTION

What a challenge! How does an experienced construction lawyer go about selecting "the fivemost important clauses" of every construction contract? More importantly, will such a selection findgeneral agreem ent by other experienced construction law yers?

This exercise requires one to look to the fundamental elements of commercial contractingin general and construction contracting in particular. These fundamental elements, in my view, arethe fol lowing :

A description of the work (Scope of Work) How and when the contractor will be paid (Payment) Changes in the work (Changes) Warranties and guarantees of the contractor's performance (Warranties) Terminating performance under the agreement (Termination)

If these are the core elements, rest assured that there will be significant other elements of anyconstruction contract that are vital to the process and to the deal. Also, be cautioned that otherconstruction industry professionals will likely differ as to what contract provision should make "thetop five." However, take comfort in knowing that all will agree that the following contractualelements consume the bulk of construction contract negotiations and lead to at least 90% of thelitigation and other dispute resolution processes that result from construction contracting.

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II. THE FIVE CLAUSES

A. Scope ofWork

In construction contracting a description of the work is commonly referred to as the "scopeof work." That portion of the agreement describing the scope of work usually appears in generalterm s at the front of the docum ent and is described in excruciating detail in one or m ore appendicesto the agreem ent. The scope of w ork provisions w ill also define the contractor's role in deliveringthe project. For example, is the contractor going to function as a traditional general contractor, withoverall responsibility for the work, orwill the contractor function as a construction manager, servingas the owner's agent, consultant or representative with only limited responsibility for delivering theproject?

Precisely what work is going to be done is a cornerstone of a construction agreement.Clearly describing what is expected from each side will go a long way toward eliminating disputes.The scope of the work, from the viewpoint of the contractor will usually be defined exclusively, thatis, "we will only perform .... " The scope of the work, from the owner's viewpoint, should bedefined inclusively, that is, this agreement includes "all work, labor and materials and services thatmay be required to complete the project. ''! The ob