Partnering, Mediation, Top ADR Effectiveness List

Partnering and mediation are clearly the preferred and most effective forms of alternative dispute resolution (ADR) within the construction industry, according to a 1994 survey of attorneys, design professionals and contractors by the Construction Industry Dispute Avoidance and Resolution Task Force (DART), Washington D.C. The survey queried approximately 2,400 respondents from the ABA Forum on the Construction Industry, the ABA Public Contracts Section, the Associated General Contractors (AGC) and design professionals insured by XL Design Professional. More than half of the respondents were XL Design Professionalinsureds.

XL Design Professionalarchitects and engineers clearly viewed project partnering "as a superior method" for achieving desired results, concluded survey director Thomas J. Stipanowich, Alumni Professor of Law at the University of Kentucky College of Law. The AGC, continued Stipanowich, was also "extremely favorable toward the prospects of project partnering and tended to view it as a highly effective vehicle for achieving a host of goals on construction projects."

The survey asked respondents to rate various forms of ADR -- including partnering, mediation, binding arbitration, dispute review boards, early neutral evaluation, mini-trials and non-binding arbitration -- on their relative effectiveness in achieving goals. Partnering was rated most effective by both XL Design Professionalinsureds and AGC members for:

• Reducing dispute resolution time
• Reducing related costs
• Minimizing future disputes
• Opening channels of communication
• Preserving or enhancing job relationships
• Meeting job budgets and schedules.

The only goal category where partnering didn't top both lists was "providing a realistic understanding of the case," where XL Design Professionalinsureds selected early neutral evaluation and the AGC again picked partnering.

Other survey results:

• More than 63% of surveyed contractors said they were familiar with partnering; 35% had been involved with partnered public projects and 22% with partnered private projects. More than 43% of XL Design Professionalinsureds were familiar with partnering; 18% had been involved with partnered public projects and 11% with partnered private projects.
• More than 50% of contractors were familiar with mediation; 23% had participated in mediated public projects and 15% in mediated private projects. Fifty-two percent of XL Design Professionalinsureds were familiar with mediation; 18% had been involved with mediated private projects and 12% in mediated public projects.
• 84% of both AGC members and XL Design Professionalinsured design firms predicted future increases in the use of partnering, as did 72% of the ABA Forum on the Construction Industry and 71% of the ABA Public Contracts Section members.
  85% of the ABA Forum members predicted a future increase in the use of mediation, as did 84% of the ABA Public Contracts Section members, 71% of XL Design Professionalinsured design firms and 50% of AGC members.
• Partnering was the ADR technique that the ABA, XL Design Professionaland AGC all felt should be most "encouraged" in contract language. XL Design Professionalinsureds favored mediation as the preferred contractually "required" form of ADR, while the ABA and AGC both selected binding arbitration.
• Combined, XL Design Professionaland ADA respondents reported that favorable experiences with partnering outnumbered unfavorable experiences by a nearly five-to-one margin. Favorable experiences with mediation outnumbered unfavorable experiences by two-to-one. Both groups reported more unfavorable than favorable experiences with binding as well as non-binding arbitration.

Of all participating groups, XL Design Professionalgenerated the most impressive response rate, reported DART. Out of 8,000 surveys mailed, 1,325 (17%) of XL Design Professional's insureds responded.

Russ Chaney, XL Design Professional's senior vice president of loss prevention services, said that the DART survey results were very encouraging and reflected the successful efforts of all sectors of the construction industry to bring change to the ways parties resolve disputes.

"The trend toward more and more litigation is finally reversing," Chaney said. "Maybe it's time that ADR stands for 'appropriate' dispute resolution, and litigation becomes the last chance alternative to resolving construction industry disputes."

Today, 30% of XL Design Professional's open claims file are in some form of ADR, primarily mediation, up from 10% in 1991.