The renovation of a heritage building started with preparations to demolish some walls to accommodate a new room layout. Unfortunately, during the preparations the general contractor discovered that the building structure had deteriorated to the point where there would be serious structural problems if the walls were removed.
This discovery would result in additional construction costs, and delay the project completion date. The architect with the consultant team drafted a Proposed Change Order. The general contractor provided a very expensive quote for the work of the change, and a notice in writing of a delay claim. The owner responded that he could not accept any change in the schedule and that the proposed change order quote was crazy and bordered on extortion!
What would you do, if you had a dispute that looked like it could not be resolved? There are 2 possible strategies that you could use.
The first standard approach would be for the consultant to make an interpretation and finding pertaining to the issue “without partiality to the Owner or Contractor” and provide this in writing to both of the parties. This could lead to “Positional or Competitive” negotiations, where each party takes a side, and tries to get the best deal using a variety of negotiation tactics (somewhat like buying a used car, or pounding your fist on the table to get a point across). If the parties fail to agree with the consultant’s findings, the next step in the dispute resolution process would be to appoint a mediator. Failing that, the parties could agree to arbitration or refer the unresolved dispute to the courts.
The problem with a positional strategy is that a lot of money and time can be left on the table, not everyone comes out a winner, and you don’t necessarily end up with the best solution. However, there may be a better way to resolve this if, as architects, we use some of our creative problem solving abilities not only for great building design but for negotiation and conflict management.
Many believe that an alternative such as an interest based negotiation (IBN) or a collaborative approach has the potential to achieve consensus in the shortest time, without having to resort to lengthy positional or competitive negotiations, and often leads to finding the best solutions.
The IBN process in action for our heritage building renovations above could start with the owner, contractor and key team members agreeing to a private meeting, with the architect acting as a facilitator for the discussions.
At the start of the meeting, all the parties would agree to a set of ground rules. For example, the contractor and the owner will be open to sharing their information, schedules and costs with each other. Each party would have a turn to speak to each issue without interruption and have their opinions respected, nothing would be agreed to until all issues are agreed to, what happens at the table would stay at the table, etc.
Next, both sides would present their issues and the facilitator would list them on a flip chart in the room. Issues might be the following:
- Additional costs due to schedule delay, doesn’t want to lose money (contractor)
- Building has to open Sept 1 (owner)
- Change order costs greater than expected (owner)
With the issues listed, the facilitator can collaborate with the parties to see if the issues can be divided or broken down into smaller fractional components. What exactly are the additional costs, why is the date Sept 1st? For example with further discussion you might find out the following:
- Time and half overtime pay is required for carpenters, dry-wallers, plumbers and electricians to work at night and on weekends in order to meet the deadline.
- Expensive reinforcing would be required for the existing walls, and additional structural bracing would be needed in other areas in order to accommodate the proposed room layouts.
- Flooring contractors are going to be delayed and have scheduled another project, so are charging double the price to come back to the project at a later date, while in the meantime their crews sit idle.
- Owner has already given notice to move from his present location into the renovated building
Now with the fractional issues listed, the creativity and brainstorming can begin. All parties try through collaboration to find solutions focused on each of the smaller issues. The atmosphere should be similar to that of a consultant team working together on the details of a design problem.
- Is there a way that scheduling of the trades can be done so that not everyone is incurring overtime?
- Can the room layouts be shifted or changed to reduce the amount of structural gymnastics?
- Can the owner’s layout change to suit the existing layout, could the walls remain as they are and instead cut a door opening?
- Maybe the contractor overestimated some of the costs because of uncertainties?
- Can the owner occupy a portion of the building, meeting his deadline, but still allow the contractor more time to complete the work at non-overtime rates?
- Can an offsite storage be used for some of the owner’s furniture?
- Maybe at this point the owner begins to realize that the costs are legitimate?
Once everyone feels that all possibilities have been exhausted, the brainstormed solutions are reviewed and tested to see if they meet the initial issues stated by both parties. Not all solutions brainstormed will pass the test, but there is a good chance that some will and that this process will result in a successful negotiation with all parties feeling that they have achieved a win, fostering increased trust and collaboration for the remainder of the project.
Next time you come across a dispute, no matter how small give the collaborative approach a try. You have nothing to lose, and much to gain.
