Analytical Model for Analyzing Construction Claims and Opportunistic Bidding

Construction claims are considered by many project participants to be one of the most disruptive and unpleasant events of a project. Construction claims occur for various reasons. There is a need to understand the dynamic nature between construction claims and opportunistic bidding. An analytical model, the Claims Decision Model (CDM), based on “game theory,” was developed to study opportunistic bidding and construction claims. This model explains (1) how people behave during a potential or existing claiming situation, (2) how different claiming situations are related to opportunistic bidding behavior, and (3) what situations encourage or discourage opportunistic behavior. The results of this pilot study indicate that the equilibrium solution of a construction claim is to negotiate and settle, which concurs with most of the claim cases in the industry. The possible range of a negotiation settlement is obtained in this paper. The model provides the rationale for recent innovations to manage disputes. The model can also help project owners identify the possibility of opportunistic bidding, and can assist the project participants in analyzing construction claims.     

Avoiding and Mitigating Delay and Disruption Claims Conflict: Role of Precontract Negotiation

Delay and disruption claims often generate conflict and contract dispute in the delivery of building and civil engineering projects. If construction delay claims conflict can be avoided or mitigated, there could be substantial financial savings on projects. This study explores the effect of precontract negotiation as a means of avoiding or mitigating delay and disruption claims conflict. The data collection instrument was a structured questionnaire administered face to face on 41 contractors’ personnel on 41 completed projects in Singapore. The data were analyzed using structural modeling with partial least squares estimation approach. The results indicate that when the contractors received an unfavorable outcome from the contract administrator’s decision on their claims for delay, the intensity of conflict was lower when there was precontract negotiation and precontract agreement regarding the rules for quantifying and assessing the impact of anticipated delays than when there was none. It was also discovered that the higher the level of precontract negotiation and precontract agreement on the rules for quantifying and assessing delays, the higher the contractors perceived the quality of the decision-making process for delay claims during the construction phase. Further, the higher the contractors perceived the quality of the decision-making process for delay claims, the lower the intensity of conflict. At the time of entering into contracts, owners and their project management team need to pay more attention to precontract negotiation and agreement with their contractor to clarify and agree on the rules for quantifying and assessing the impact of anticipated delay and disruption. Aspects that require precontract negotiation, agreement, and clarification include: the rules of evidence for claims, the record requirements for claims and the procedure for keeping the records, form of construction program including the software for the preparation of the program and the procedure updating the program, the methodology for analyzing delay claims, formula for quantifying unabsorbed head office overhead component of prolongation cost, the method for quantifying disruption cost, the handling of concurrent delays, profit—whether claimable and the rate of profit to be paid, acceleration—circumstances under which it will be compensated and basis of compensation, and the question of who owns the float. These are, typically, not adequately covered by most standard forms of contracts. The agreements on these matters may be incorporated as part of partnering agreement or as a supplement to the contract agreement. Precontract negotiation, clarity, and agreements could produce instrumental and noninstrumental (social psychological) effects, which could facilitate delay and disruption claims assessment and their resolution. It could mitigate conflict even when the outcomes are unfavorable to a party.     

Ontology for Relating Risk and Vulnerability to Cost Overrun in International Projects

Risk management is about identifying risks, assessing their impacts, and developing mitigation strategies to ensure project success. The difference between the expected and actual project outcomes is usually attributed to risk events and how they are managed throughout the project. Although there are several reference frameworks that explain how risks can be managed in construction projects, a major bottleneck is the lack of a common vocabulary for risk-related concepts. Poor definition of risk and patterns of risk propagation in a project decrease the reliability of risk models that are constructed to simulate project outcomes under different risk occurrence scenarios. This study aims to extend previous studies in risk management by presenting an ontology for relating risk-related concepts to cost overrun. The major idea is that cost overrun depends on causal relations between various risk sources (namely, risk paths) and sources of vulnerability that interfere with these paths. Ontology is used to develop a database system that represents risk event histories of international construction projects and to construct a model for estimation of cost overrun. It will form the basis of a multiagent system that can be used to simulate the negotiation process among project participants about sharing of costs considering the risk allocation clauses in the contract, sources of vulnerability, and causal relations between risk events and their impacts. The ontology is constructed by interaction with Turkish contractors working in international markets and extensive literature review on risk-related concepts. The validation test results provide evidence that the ontology is fairly effective to help Turkish contractors to assess cost overrun by considering sources of vulnerability and risk in international construction projects.     

Lessons Learned from Principled Negotiation in International Construction Projects

Compared with other dispute resolution approaches, negotiation is still the easiest, most efficient, and most time- and cost-saving approach, if conducted appropriately. However, dispute resolution in international construction projects faces many unique challenges. This requires effective negotiation approaches, principles, and strategies. Although principled negotiation has been developed for more than two decades and is widely accepted by academics as an effective approach to solving conflicts and disputes, its applications in industries are still very limited. Practitioners need applicable guidelines and lessons learned. This paper, by reviewing and analyzing the negotiation processes in two international projects, discusses the key challenges facing construction dispute negotiation and the applications and limitations of principled negotiation in dispute resolution.     

Hybrid Model Incorporating Real Options with Process Centric and System Dynamics Modeling to Assess Value of Investments in Alternative Dispute Resolution Techniques

Project-specific dispute resolution ladders (DRLs) are typically implemented in construction projects to resolve issues arising between the project participants. The DRL typically consists of single or multiple alternative dispute resolution (ADR) techniques to address construction issues at the three levels of escalation: conflicts; disputes; and claims. However, a DRL requires significant investments to cover the direct costs incurred in-house by the project participants or, externally, if construction specialists and lawyers are recruited to assist in the resolution. Thus, the benefits of the DRL implementation in a construction project must outweigh its costs for the implementation to be worthwhile. This paper presents a methodology to study the effect of different resolution strategies on the value of the investment in a DRL using option/real option theories from financial engineering, process centric modeling, and system dynamics methodology. Of particular interest in this paper is the integration of these research methodologies into a computer model to support the evaluation of the DRL investment in a particular construction project by taking into account the characteristics of (1) the project and (2) the different ADR techniques chosen for the DRL implementation. Finally, an example is presented to illustrate the application of the computer model in a real construction project. The results of the simulation serve two main purposes. First, the results of the simulation are used to verify the intended model behavior in terms of proper integration of the three methodologies (i.e., real options, process centric, and system dynamics) in one computer system. Second, the model application to a real construction project using actual project data illustrates the potential of the model in providing the project participants with information related to the expected number of claims and change orders resolved at each level of the DRL, the change in the expected savings during the construction phase, and finally the value of the investment from the perspective of the project owner.     

Reasoning and conversation.

Informal arguments take place when individuals exchange views on whether it is worthwhile to believe some assertion or take some action. Debates between friends or family members, classroom sparring about an idea, scientific exchanges about empirical results or theories, and critical discussions and responses in many fields can all be instances of arguments. This article describes the structure of these arguments in terms of the conversational moves that participants can make within them—for example, asking for a justification, giving a reason, offering an objection, or conceding a point. The central part of the article proposes a model for the way people determine to which of the argument's claims each participant is committed. According to the model, commitment is the result of rules defined over the sequence of conversational moves. A participant's commitment to claims that occur later in the argument has well-defined implications for commitment to claims that occurred earlier. Predictions from the model compare well with people's judgments of commitment over a range of argument types. The analysis of argument commitment also illuminates concepts such as burden of proof that are difficult to define within current reasoning theories that treat just a single side of an issue. (PsycINFO Database Record (c) 2011 APA, all rights reserved)     

Contractors’ Claims Insurance: A Risk Retention Approach

The negative effects of claims and disputes have serious negative impacts on contracting parties, their projects, the construction industry as a whole, and consequently on the nation’s economy. This paper explores a method for mitigating the negative effects associated with contractors’ claims and disputes using a risk retention approach. This method can help contractors in getting early relief from the financial and economic burdens of construction claims. To meet the goals and objectives of this study, the writers have: (1) investigated the feasibility of pricing insurance premiums using the options pricing theory; (2) explored the applicability of modeling the options pricing theory using Monte Carlo simulation; (3) set up the principles required for optimal design of a risk retention group for construction claims; and (4) tested the possible impact of the newly developed risk retention group using historic data of 10,193 construction projects spanning over 12 different California districts. Pursuant to this study, it was verified that construction claims satisfy the required principles for insurance. Also, based on the used testing framework, the developed risk retention group for construction claims has been proved a success from the insured and insurer sides. It is the writers’ hope that this study will lay the basis for a leading risk management technique that could be extended over the nation for the benefit of relieving the negative consequences associated with lengthy claims and disputes resolution in the construction industry.     

Responsible Use of Computer Technology by Engineers

Computer technology has given rise to new forms and modes of project failures in the construction industry. Engineers are prime targets of claims to recover financial losses caused by these computer-provoked failures. Thus, engineers should have a basic understanding of their legal responsibilities associated with the use of computers. In order to foster such an understanding, this paper discusses examples of how computer accidents can occur in the construction industry and examines the legal ramifications to engineers, discusses potential recourse theories engineers may have against hardware and software vendors or insurers, and identifies measures engineers can take to reduce the likelihood of an accident and the corresponding likelihood of a claim.     

Generic Methodology for Analyzing Delay Claims

It is common for a construction project to encounter delays. There are several reasons that can contribute to delaying a project. Analyzing the various causes that contribute to a project's delay is an important task to resolving it. Determining, in a scientific manner, the impact, timing, and the contributing effect of each of those causes to the overall delay should assist in helping the parties settle the delay without litigation. Project participants are becoming more aware of the high costs and risks associated with delay claims and their litigation. Thus, the construction industry needs to develop methodologies and techniques to prevent and more efficiently resolve delay claims. While many practitioners have been following some kind of a methodology for analyzing delay claims, a written exposition of such a methodology is not widely available in the literature. Thus, this paper presents a written exposition of a generic methodology for analyzing delay claims. This methodology has been developed and successfully used, by the writer, in various projects to resolve delay claims. The developed methodology will be illustrated through its application in those projects. Moreover, this methodology shows that while there are several techniques for analyzing delay claims, very few of these can be considered adequate. The use of such an adequate technique is a key in obtaining a fair allocation of the delay responsibility. This paper's methodology utilizes one of these few adequate techniques for analyzing delay claims.     

Modeling the Hinge Moment of Skew-Mounted Tape Spring Folds

Tape springs, defined as thin metallic strips with an initially curved cross section, are an attractive structural solution and hinge mechanism for small satellite deployable structures due to their low mass, low cost, and general simplicity. When mounted at skewed angles to the hinge line, the tapes can be subjected to complex folds involving both bending and twisting of the tape. These folds have been experimentally investigated and theories have been developed to model the resulting opening moment. However, the opening moments of these theories are not equivalent to the opening moment about the hinge line, which is the parameter required in satellite deployment applications. This paper derives a method to determine the hinge moment from the previous theories and compares the theoretical predictions with experimental and finite element results. It uses this model to investigate the predicted hinge moment trends for full deployments of 180°. The model is then applied to a practical spacecraft hinge application.     

Computer-Supported Collaborative Negotiation Methodology

The development of large-scale civil engineering projects requires the collaboration of experts from different specialties. However, conflicts and disputes occur regularly during the entire life cycle of large-scale projects due to the complex structure of organization and the different types of expertise involved. If these disputes or conflicts cannot be resolved or addressed quickly and effectively, the collaborative mode of the participants can be affected, creating a hostile environment in which progress of the project will slow to a halt. Therefore, better methodologies are needed to improve the collaborative process and to create more effective, efficient, and sustainable solutions to conflicts. This paper presents a methodology for facilitating the negotiation of conflicts during the development of large-scale civil engineering projects. Two fundamental theories are used in this methodology: (1) game theory, which is the study of players' actions based on the premise that the decision of any player can affect the payoff of all players; and (2) negotiation theory, which is the study of the interactions between parties, designed to reconcile their differences and produce a settlement. The strong support given by these two theories to negotiators is highlighted in the following observations. First, people need to negotiate because of their conflicting interests. From the negotiator's point of view, expressing the interests of all participants is very important in conflict resolution and can be accomplished by following the principles outlined in negotiation theory. Once the interests have been expressed correctly, the influence of positions or of conflicting interests on the overall negotiation outcome is evaluated using game theory. Based on these two fundamental theories, this paper presents a collaborative negotiation methodology and a computer agent named CONVINCER, which incorporates that methodology to facilitate or mediate the negotiation of conflicts in large-scale civil engineering projects. Hypothetical case studies and resolution processes demonstrate the effectiveness of the CONVINCER agent in conflict resolution. Results of applying the methodology to different scenarios also show that the CONVINCER agent provides efficient, effective, and sustainable solutions, thus improving the conflict resolution paradigm in the A∕E∕C industry.     

Negotiation for the perioperative nurse: it's all up to you

This article explores negotiation and related theories involved in the negotiation process. Philosophical views, stages, and various negotiation styles are discussed. Particularly, principled negotiation is addressed as a useful framework for conflict resolution. In addition, barriers, strategies, and skills inherent to the negotiation process are explored. Finally, a case application is presented to highlight the potential effectiveness of using successful negotiation tactics in the perioperative nursing setting.     

Moderating Effect of Equity Sensitivity on Behavior-Outcome Relationships in Construction Dispute Negotiation

This study builds on Adam’s equity theory by examining the moderating effects of equity sensitivity (i.e., a person’s perception of what is equitable or inequitable) on behavior-outcome relationships among negotiators in construction dispute negotiation. First, an equity sensitivity construct is developed. This construct reveals that most construction negotiators are entitleds, also known as “takers,” at the negotiation table. Moderated multiple regression (MMR) is used to test the moderating effects of equity sensitivity. The MMR models affirm that the nature of behavior-outcome relationships varies, depending on the perception of equity. An entitled construction negotiator is found to be a versatile moderator who fosters satisfactory negotiation outcomes. The models show that negotiators are able to predict inequitable responses and to take measures to forestall or deal with different inequitable situations. This study indicates the merit of further study of equity theory in the context of construction dispute negotiation. Future challenges in this area include the examination of the equity restoration responses of negotiators to create an equitable environment.     

Why models rather than rules give a better account of propositional reasoning: A reply to Bonatti and to O'Brien, Braine, and Yang.

D. P. O'Brien et al (see record 1995-08272-001) argue that the mental model theory of propositional reasoning is easy to refute, and they report 3 experiments that they believe falsify the theory. In contrast, L. Bonatti (see record 1995-08253-001) argues that the model theory is too flexible to be falsified. It is shown that the experiments by O'Brien et al do not refute the model theory and that Bonatti's claims are ill founded. Formal rule theories of propositional reasoning have 3 major weaknesses in comparison with the model theory: (1) They have no decision procedure; (2) they lack predictive power, providing no account of several robust phenomena (e.g., erroneous conclusions tend to be consistent with the premises); and (3) as a class of theories, they are difficult to refute experimentally. (PsycINFO Database Record (c) 2010 APA, all rights reserved)     

建设施工企业商务谈判模式及其行为浅论

在激烈的市场中,处于弱势地位的建设施工企业如何在工程项目谈判中,与开发单位达成双赢,对于建设施工单位来说,是个极为关键的课题。本文通过建立谈判模式,引入律师、谈判对手的授权程度等新的权变量,研究对于不同行业地位的公司,如何恰当的选取谈判模式,争取最理想的谈判结果进行探讨。     

Arbitral Tribunal Proceedings Case Study: Egyptian Large-Scale Construction Project

This paper investigates how arbitration is used as a dispute resolution mechanism in Egyptian large scale construction projects and what are the types of issues that construction professionals should address when they encounter claims in the Egyptian construction market. To meet the goals and objectives of this study, a research project was conducted to study the arbitration process for a dispute that was in excess of $31 million, which arose out as a result of the proceeds of a large-scale project with an original contact price of $85 million that was constructed in Cairo, Egypt. This research project analytically investigated the background of the conflicts, the arbitral proceedings, and the award issued by the arbitral tribunal. Based on such thorough study, it was concluded that arbitration did not provide a timely and cost-effective resolution for the said dispute. Moreover, the same study has raised questions in relation to the overall management of megaconstruction projects in Egypt namely: (1) the impartiality of project managers; (2) the magnitude of change orders and consequent delays; (3) the magnitude of claimed amounts; and (4) the level of management and administration of claims and disputes. It is perceived that this paper would trigger professionals to think of other suitable dispute resolution mechanisms, such as dispute review boards, for settlement of claims arising from Egyptian large scale construction projects. Furthermore, this study would be of value for contractors and owners who intend to work in the Egyptian construction market.     

Multiagent System for Construction Dispute Resolution (MAS-COR)

This paper develops theoretical foundation and implements technologies for generation of legal arguments based on precedent construction disputes. First, the authors simulated the process of legal discourse in construction disputes using a formal logic algorithm that is based on adversarial precedent law. In this regard: (1) facts associated with construction change order cases were factorized into binary, dimensional, and abstract factors; (2) relevance of the developed factors was associated with the disputing parties; (3) logical predicates and rules were generated based on the said factors; (4) factors were logically analyzed into distinct classifications; and (5) an 11 stage logical induction algorithm was used to show similarities, differences, strengths, and weaknesses between current and precedent construction disputes. Second, the authors created a multiagent system for construction dispute resolution (MAS-COR) that automates the developed algorithm. In this connection: (1) an agent-based role model was developed to represent the developed algorithms; (2) an agent-based role model was built to represent the developed algorithm; and (3) system implementation was carried using object-oriented programming on NetBean’s integrated development environment. Using 30 previously arbitrated construction disputes, testing and validation steps were rigorously applied to assess the developed formal logic algorithm as well as the associated created agents and their integration into the MAS-COR system through syntactical debugging using theorem proving, model checking, and system testing. The results of this validation process illustrated that the system was capable of deriving significant legal arguments that help save time and effort of construction claim and dispute professionals while preparing the defense for their respective positions.     

Option Pricing Model to Analyze Cost–Benefit Trade-Offs of ADR Investments in AEC Projects

Alternative dispute resolution (ADR) techniques are adopted by architecture, engineering, and construction project participants to help achieve reasonable settlement of claims and change orders (CCOs) that arise during a project’s life cycle without having to resort to protracted litigation for final determination of merit. Since such ADR techniques require resources to prepare, review, and resolve CCOs, the managerial decisions regarding the investments for these resources need to be economically justified. The application of the net present value approach to determine the value of any ADR investment is limited because the future cash flows resulting from such an investment cannot be estimated a priori as they will vary with the nature of the CCOs, the amounts claimed, and the effectiveness of the ADR in addressing these CCOs. This paper presents a conceptual and mathematical model to evaluate ADR investments by drawing an analogy from theories of financial and real option pricing. The objective is to provide the owner with a decision framework that accounts for the uncertainty in estimating the ADR investment cash flows during the project planning phase, and provides realistic results regarding the value of this investment. The model presented in this paper is applied to a real case study involving a seismic retrofit of a bridge project to demonstrate the parameter estimation and the practical application of the model.     

Attitude-Based Negotiation Methodology for the Management of Construction Disputes

A systematic negotiation methodology for construction disputes is presented to take into consideration the attitudes of negotiators at two complementary levels of decision making: strategic and tactical. At the strategic level, the proposed methodology employs the graph model for conflict resolution and helps negotiators find the most beneficial subset of solutions to the conflict. At the tactical level, the proposed methodology examines the most beneficial strategic decisions using utility functions to provide agreed-upon tradeoffs with respect to any conflicting issues. A construction case study is used to illustrate the proposed methodology and demonstrate the importance of incorporating decision makers’ attitudes into negotiation to better identify the most feasible decisions. The proposed methodology may assist negotiators with the challenges of conventional negotiation through the incorporation of decision makers’ attitudes into a range of analytical tools that will clarify interests, determine equilibrium outcomes, identify tradeoffs, recognize negotiators’ satisfaction, and generate optimum solutions.