Economic, Financial, and Dispute Resolution Thrust
Summary of Activities
This research thrust is to aggregate issues that seemed to have high potential for meaningful research investigations. Subjects for study include industry economic drivers, innovative project financing, project accounting, sureties and bonding, project insurance, claims avoidance, and alternative dispute resolution. The research has drawn on a University-wide education portfolio program in dispute resolution in which five CCIS-funded graduate students are actively participating. The Texas State Bar and the National Academy of Construction have expressed interest in participating in studies through this thrust area. Specific topics studied to date include:
Owner/Constructor Work Structure: Five studies have been performed on the subjects of owner downsizing and loss of expertise. A series of findings and recommendations for policy changes have been formulated and published and the study has garnered widespread acknowledgment as the first of its kind in the industry.
Risk Assessment for International Projects: International construction performance can be enhanced when owners and contractors consider risks across the spectrum of a project including commercial, country, facilities and operational areas. Furthermore this approach can provide greater transparency in decision-making and help in optimizing project governance. This study will result in a risk assessment tool that can be used to better understand and mitigate 82 risk elements when considering projects in foreign jurisdictions.
Legal Implications of Design/Build: This study looked at the legal implications of using design/build and other contract delivery methods for Texas highway projects. Policy guidelines and an implementation manual were developed to assist in transition to new project delivery methods. Much of this study is extensible to other jurisdictions.
Root Causes of Litigation Disputes: This study is looking at 570 litigated construction cases in the Armed Services Board of Contract Appeal involving Navy projects over the past 20 years. A root cause analysis is being performed and the results will offer specific recommendations for avoiding litigation in the future. The process should be readily applicable to other owner organizations as well.
Future Plans for CCIS Economic, Finance, and Dispute Resolution (EFDR) Thrust
A workshop involving interested academic and industry parties was held in 2003 to develop a list of critical topics for investigation. Topics of discussion included: 1) The general health of the construction industry compared to other industries (including an assessment of the impacts of overbuilt sectors); 2) Implications of terrorism on the project surety and facility insurance industries; 3) Over-reliance of the industry on surety bonds for prequalification of contractors; 4) Economic and legal effects from owner downsizing; 5) Innovative project financing mechanisms; and 6) Alternative dispute resolution usage, efficacy, and lessons-learned.
Many attractive proposed study topics have surfaced and Sloan support will be used to leverage other research funds. To ensure that a comprehensive perspective for affecting long lasting positive changes in the industry are pursued, industry advisors will assist in prioritizing topics for analysis.
