Thursday, February 24, 2022

Advanced Mediation Advocacy Practicum in San Diego on February 23, 2022

 


The ABA FCL MidWinter Meeting in San Diego kicked off with a bang with an Advanced Mediation Practicum.  Nearly 50 attendees participated with a content-rich discussion on how to effectively mediate complex construction cases. Brenda Radmacher of Akerman, LLP coordinated the practicum and led the panel discussion with Judge Gail Andler (Ret.) at JAMS, Anne Goyette of Griffiths Goyette, Robbie MacPherson of Cokinos Young, and Chad Wilson of PSOMAS. The panel’s presentation was highlighted by demonstrative role plays led by mediator Deborah Bovarnick Mastin and her “players” Jessica Bogo (Pillsbury), Catherine DeLorey (Gordon & Rees), Michael Murray (Lanak & Hanna), Rob Ruesch (Verrill), and Joe Hellenbrand (Capital Project Management, Inc).  

The panel covered issues on how to prepare for mediation including key issues of mediator selection, timing, and briefs. Issues on opening sessions and strategies for effective caucuses were addressed in-depth. There was also a robust discussion regarding differences in how mediation of construction cases is done regionally as well as issues regarding memorializing and enforcing settlements. 

Feedback from attendees included comments like, “The pointers and tips were so on point that I can go and implement them immediately.” And “I am an experienced mediator and really learned a lot from the session.”  The attendees were so engaged that they stayed 20 minutes past the published end time!




Tuesday, February 22, 2022

View from the Field Part 3 - Interface Management

This series of blog posts provides a practitioner’s view of the management processes and challenges associated with megaprojects as well as large and complex projects. Addressed by both Edward W. Merrow of Independent Project Analysis, Inc. and construction lawyer Andy Ness at a recent ABA Forum on Construction Law conference, their high-level perspectives are elaborated herein. This multi-part series has and will expand upon some practical aspects of the many challenges facing managers as well as highlight suggestions for implementation by inside or outside counsel.

Mr. Merrow’s High-Level Findings

In Mr. Merrow’s presentation, he addressed Contracting Approaches, Contract Types and Project Outcomes.  His findings are captured in these (his) diagrams:





Relative to other Contracting Approaches (i.e., Engineer, Procure, Construct (EPC) Lump Sum, Reimbursable EPC, Integrated Project Delivery), adjustments and accommodations to ways of working for “Mixed” are needed.  In “Mixed,” the risk profile is changed.

Mr. Ness’ High-Level Findings

Mr. Ness wrote a paper Why Megaprojects Fail So Often and Why You Should Care, No Matter the Size of Your Project and focused on business decisions in “4. Business Decisions That Hurt Prospects for Project Success.”  Regarding the discussion, Mr. Ness’ key point is:

Analysis of IPA’s database demonstrates that the form of the contract actually has very little impact on project success…And IPA’s database demonstrates that attempts to transfer risk wholesale to the contractor – such as by using a tough contract that has few holes and assigns the contractor responsibility for most everything – is simply ineffective.

Mr. Ness continues “The monumental mistakes usually belong to the business side.”

Why Consider Interface Management and Risk?

Given Mr. Merrow’s findings and Mr. Ness’ perspectives, it is legitimate to question the value of “Mixed” since most projects, although they may be large and/or complex, are not industrial megaprojects.  The reasons:

  • Large & Complex success rate is 60%+, therefore, failure rate is 30%+.  However,
  • The use of Mixed Contracting Approach (over, for example, EPC) significantly increases the number and complexity of interfaces and, as a consequence, risks.
  • Interface management represent a valuable tool for planning and execution of large and complex projects (as well as megaprojects).

View from the Field – The Front-End

Interface Management – This skillset is elevated to a very high importance. Under “Mixed,” the number and complexity of the interfaces increase, possibly dramatically. The potential for managerial system breakdowns, delays, gaps and other issues is much larger (than EPC, for example).

Interface AuditsProspective audits of all significant interfaces are effective managerial tools. These audits include: management, scope, technical, project controls, administration and others. Interface audits aid in the creation of robust interface definitions as well as reveal gaps and inconsistencies.

Resources include PMI Project Management Body of Knowledge (PMBOK), Project Integration, as well as Kerzner, Project Integration Management. The Responsibility Matrix (aka RACI) tool provides excellent interface definition when developed in a collaborative environment.  Alignment can be achieved using these (and other) processes. Some include RM/RACI work products as contract documents. The processes can be implemented within the Project Execution Plan (PEP, also known as Project Plan, Project Management Plan and other titles) using an extensive PEP workshop process.

Stakeholders such as inside or outside counsel may achieve insight into the preparation for Interface Management by attending a few workshop sessions and/or reviewing the PEP deliverables.

Owner Project Management Teams (PMT’s) – Under “Mixed,” Owner PMT staffing requirements are more extensive and demanding to manage or interface (quality, quantity, complication) with contractors and stakeholders. However, newly hired personnel often lack skills to manage interfaces.

Asset Performance – Ultimately, an Owner cares about the proper performance of its investment (e.g. plant, facilities).  Under EPC strategies, performance guarantees are generally obtainable from Prime Contractors.  This, since the prime(s) are in a position to assume and manage this risk.  Under mixed strategies, responsibilities and resulting liabilities can become so diffused that performance guarantees are difficult (if not impossible) to obtain and enforce.

Completion Management – With multiple parties and interfaces, the sequence and timing of commissioning and start-up is challenging.  Lack of competence in this process is a constant problem.  By default, completion management responsibility tends to fall upon the owner.  If in-house resources and expertise are limited, owner may need to hire a specialty contractor to perform this work.  Of course, that creates another interface that requires managerial skills and bandwidth.

Scope of Work – Under EPC strategies, the concept of “scope wrap” (a high-level contract provision that makes the contractor responsible for all scope necessary to complete the work) is viable, if not common.  With “Mixed,” this becomes increasingly complex.  Effective techniques for scope of work management are needed.  Interface audits are extremely valuable.

Deliverables Quality, Completeness and Timing – Deliverables (e.g., technical, documents, materials, equipment, lists and models), must be defined in terms of quantities, timing and quality.  The quality of the deliverables can impact the labor and related work necessary for the construction contractor(s) in fabrication and erection of the work.  Since these deliverables are typically the output of a predecessor contractor and defined by the related contract, the precession with which they are defined can have a large impact on the successor contractor.

The timing of deliverables must be carefully defined.  The timing of deliverables must be carefully defined.  The timing of the successor contractor’s receipt of deliverables influences the successor contractor’s ability to perform effectively and efficiently.  The sequence of these deliverables further exacerbates this influence.

Time Management / Schedule – The parties / stakeholders take on new roles, responsibilities and risks.  The project duration and delay to individual parties / stakeholders are decoupled.  Cause and effect for delays is difficult to isolate. The collection, status, controls and management of progress is highly complex. Critical paths for one contractor / stakeholder may not be the same for successor parties.  Time management problems tend to present themselves later in the project execution.  Interface audits are extremely valuable.

Conclusions (Part 3)

Interface management becomes increasingly complex and challenging when “Mixed” Contracting Approach is selected for project delivery. Prospective interface audits are essential tools needed to support interface management. Since the developmental processes are all the responsibility of the owner, owners must recognize and accept this role in order to implement Mr. Merrow’s most successful contract approach – “Mixed.” 

View from the Field – Supply Chain Management (Part 4)

Part 4 of this series will address the challenges of Supply Chain Management that is required when using “Mixed” contracting approach.

Author George T. McLaughlin PMP CCM has worked worldwide in this industrial marketplace since the early 1980’s. He serves Owners, Prime Contractors, and Subcontractors. For the most part, Mr. McLaughlin’s work is performed on-location where the relevant work is being performed hence the title “view from the field.” Mr. McLaughlin is a principal of McLaughlin & McLaughlin out of Austin, Texas.

Monday, February 14, 2022

Meet D1’s Neutrals Series: WENDY KENNEDY VENOIT

 

Company: Cozen O'Connor
Location: Boston, MA
Law School: Pace University School of Law, JD 1996
Types of ADR services offered: Arbitration and Mediation
Geographic area served: Domestic/International (no limitations)
ADR panels: AAA Construction Panel, ICDR International Panel, AAA Construction Mega Projects Panel, and CPR Construction Panel
Email: wkvenoit@sbcglobal.netWVenoit@cozen.com
Firm Webpagehttps://www.cozen.com
LinkedInhttps://www.linkedin.com/in/wendy-kennedy-venoit-4984346/
AAA https://apps.adr.org/constructionmegapanel/faces/FeaturedPanelists 


Q:Describe the path you took to becoming an ADR neutral.

A: I was an advocate in several large domestic and international arbitrations.  I was encouraged by an AAA Administrator (Cathy Shanks) to apply for the AAA panel, which I did. After that, I was a regular panelist, as well as a presenter at AAA and ICDR events.  I was invited to join the ICDR panel, and more recently the Mega Projects Panel.

Q: What percentage of your current legal practice is spent on ADR work?

A: Approximately 30%. I typically handle 3-4 cases per year as a neutral.  When not serving as a neutral, I serve as an advocate in construction disputes.

Q: What should attorneys and their clients take into consideration when vetting or selecting an arbitrator?

A: I prefer an evaluative mediator for most of my cases – someone who will identify and convey the strengths and weaknesses of the case in a candid way.

Q: What are your thoughts on requiring mediation as a contractual prerequisite to litigation or arbitration?

A: I do not believe it should be a firm requirement (because mediation can only be successful if both parties are onboard and engaged), but it should be encouraged in most cases.

Q: When do you recommend parties in a dispute attempt mediation?

A: There are often various “windows of opportunity” for settlement including (i) before suit/arbitration is filed; (ii) before significant discovery takes place; (iii) after discovery takes place; (iv) before the start of hearings.

Q: Do you recommend individual preparatory meetings with the parties and counsel prior to the joint session, and why or why not?

A: I prefer preparatory meetings because they avoid having to spend time educating the mediator during the joint session. Also, the parties can have candid discussions with the mediator outside the joint session. Finally, it gives the client an opportunity to “vent” outside of the joint session where such venting may have a negative result.

Q: What can attorneys do to best position their clients for a successful mediation outcome?

A: Attorneys should be candid in their assessment of the case and likely outcomes if settlement is not achieved. Attorneys should also educate their clients about the process; and make clear that emotional outbursts or other overt emotional responses can have a negative influence. They should emphasize that the parties should approach the process with an open/receptive mind.

Q: What experience do you have arbitrating construction cases?

A: I have been arbitrating construction cases as an advocate both domestically and internationally since 1999. I have served as an arbitrator at least 15 times since joining the AAA/ICDR panels roughly 10 year ago. My cases have been a mix of domestic and international. I tend to get picked for larger cases, often out of my immediate geographic area. I have served as both a solo arbitrator and as a member of a three-arbitrator panel.

Q: What advice do you have for parties when considering whether to choose a single arbitrator or a panel?

A: Whether to choose a single arbitrator or a 3-member panel will typically depend on the size and complexity of a matter. Smaller, less complex matters should not require a 3-member panel. When there is a single arbitrator, parties will often pick a lawyer to serve, as opposed to a non-lawyer industry professional.

Q: What measures do you take as an arbitrator to ensure arbitration is less costly and more efficient to litigation?

A: From the first procedural conference, I encourage parties to look for (and agree upon) ways to make the process speedy and efficiently. Consistent with the AAA Discovery Guidance, I encourage the parties to be judicious with discovery and to keep it proportionate to the size and complexity of the case. I generally discourage “court-style” discovery that is inconsistent with the objectives of efficiency. I also like to set time limits on the hearings, and strongly encourage the use of a chess clock to ensure that the hearings are completed within the time allotted.

Q: Do you think limits should be placed on discovery in the arbitration context?

A: Absolutely – consistent with the AAA Discovery Guidance and the goals of arbitration.

Q: What role should traditional rules of evidence play in the arbitration hearing?

A: Unless the parties agree to apply the traditional rules of evidence, I typically will not apply them – with exceptions for “privilege” and similar issues.  The arbitrator generally does not need to serve as a “gate keeper” for the evidence, as is necessary in traditional litigation.

Q: In what way do you use technology in the arbitration process?

A: I like to use all available technology – including trial presentation software; electronic evidence (in lieu of paper) to the extent possible; real-time court reporting; etc.

Q: What are some of your interests or hobbies outside of your ADR Neutral practice?

A: Skiing, Waterskiing, Golf, and Boating.

Tuesday, February 8, 2022

Podcast Highlights (No. 2): Building Codes and Building Safety

As the litigation and dispute resolution of the Forum, D1 members deal with a variety of aspects of construction law and many are discussed on the Forum’s podcast “Construction Law Today.” This podcast was established in 2019 and created by Buzz Tarlow, one of D1’s ADR neutrals. As a benefit to members, the D1 blog is spearheading a series summarizing the podcast episodes.

Episode23: Building Codes and Building Safety 

(Click episode title for the full podcast episode)

This is a summary of the podcast discussion with noted attorney, Linda Pieczynski, who is a former prosecutor, consultant, instructor and author, in the field of building safety code enforcement. Tragically, on June 24, 2021, the Champlain Towers South, a 12-story residential condominium in the Miami, Florida suburb of Surfside, collapsed, killing 98 people. According to the Engineering News records, the Champlain met all building codes in effect in 1979, which is when the building’s construction was completed. Furthermore, the Champlain was in the process of a forty-year recertification process, required by Miami Dade County, at the time it collapsed. But still, the building failed. With this tragedy in mind, this episode focused on building codes, how they work to make buildings safe, how and when they are enforced and the impacts and limitations of these codes?  

Why did the Champlain fail? After all, during the 40-year recertification process, an engineer inspected the building and prepared a report citing numerous repairs that needed to be made with the foundation and pool areas. Firstly, the repairs were expensive, probably in the five figures for each owner, and there was likely pushback on the Board of Directors by the owners that did not want to come up with the expensive assessments, so the work was delayed. Second, no one seemed to fully appreciate the urgent nature of the repairs. Third, a New York Times report indicated that some other potential causes of the building’s failure were flaws in its design, like columns that were too narrow and deteriorating concrete, which can happen when the rebar in the cement is not properly coated causing them to rust and weaken the foundation, etc. Fourth, water was not properly draining away from the building since its initial construction. Finally, the New York Times reported that during the time of the construction of the Champlain some of the city building officials received campaign contributions to help move the project along, which could have caused undue pressure from politicians for building inspectors to approve things quickly. In fact, there were numerous grand juries convened in the 80's and 90's in Florida because of shoddy inspections conducted by city building inspectors.

How is urgency conveyed by those involved in code enforcement?

Generally, if a building is in urgent need of repair, a city inspector can issue an order of condemnation to the owner and residents noting that unless repairs are made by a specific date, condemnation will occur. If the structure is immediately unsafe or there is an emergency, the building could be outright placarded. Unfortunately, with Champlain, the emergent nature of the situation was not appreciated. On a more positive note, the tragedy of Champlain has spurred the inspection of many buildings to ensure there are no hazardous issues similar to what occurred with Champlain.

How do attorneys prosecute housing code violations?

The building official/inspector sees a problem and sends notice to the owner or tenant to rectify the situation. If they do not rectify the situation, a complaint or ticket is issued requiring then to come to court. This is the point at which an enforcement attorney typically becomes involved, however an enforcement attorney may review the case before hand to advise whether an administrative search warrant should be issued to collect more evidence, etc.

How do enforcement attorneys teach courts?

The judges switch calendars regularly, so it is important to educate the presiding judge, through the use of experts, on the purpose of the ordinances that are being enforced. Most ordinances are created to address a safety concern and with the intent of ensuring structural integrity of a building is maintained. For example, an ordinance requiring that windowsills be painted was enacted because unpainted windowsills allow water to penetrate the sill and rot the wood, which will eventually destroy the building’s structure.

How do enforcement attorneys deal with the owner or Home Owner Association (HOA) that is being prosecuted? 

Some people come into court and think they do not have to do anything.  However, once they realize that they can be fined for each day the violation exists, it motivates many to act. Some HOAs are very unskilled in this area as well. Sometimes an HOA does not even exist because it has been allowed to be dissolved over the years. In those cases, the enforcement attorney will encourage some of the more responsible owners to form a new HOA so that the enforcement attorney will not have to prosecute each owner individually—which can be quite complicated. Usually, where an HOA exists, it is represented by an attorney. The enforcement attorney can then explain to the HOA attorney what the declaration states about the responsibilities of the owners versus the HOA, explain what needs to be fixed, and that they prefer not to impose fines but need the HOA to come up with a reasonable plan that both parties agree on, to fix the issue in a timely fashion.

Which of the numerous building codes apply to a particular structure and what are the jurisdictional boundaries of codes?

The oldest building code we know of was on clay tablets found in ancient Iraq and it provided that if a builder built a home and it collapsed and killed the owner, the builder would be put to death. However, it was insurance companies that really pressed for uniform building safety codes to be created, to save money because insurance companies were losing a lot of money paying out claims related to fires. For example, a prominent area of Chicago burned down in the infamous “Great Chicago Fire”. After paying out claims related to this fire, insurance companies spurred legislation that required new construction be made of brick and stone.

The first model code that an insurance company pressed for was the Uniform Building Code (UBC), which was passed around 1905, and the insurance companies urged various states to adopt this as their own code. The UBC was mainly focused on the West and MidWest. The Building Officials and Code Administrators International, Inc. (BOCA) code was mostly in the Northeast, and then there was the Southern building code. In 2000, those three groups merged together and formed the International Code Council (ICC), which is the organization that promulgates most of the uniform building safety codes, except the electrical codes. The National Electrical Code (NEC) is promulgated by the National Fire Protection Agency. Most states adopt the NEC.

For new construction, the International Business Code (IBC) applies to commercial buildings, or anything that is larger than townhouses. The Residential code deals with new residences and one-or-two story townhouses. The international property maintenance code applies to existing buildings. There are also separate codes that cover how you construct the electrical system, plumbing system and mechanical system.

Some states have state building codes that they allow local municipalities and counties to adopt and enforce, as long as they don’t weaken the code with amendments. Some states have no state building code, which is rare, in those cases the towns have their own codes. Other states, like Ohio or Minnesota, are very regimented about enforcing the code from the state down to the local municipalities. Lawyers in this field are responsible to know what code is in force and the code at the time the incident at issue occurred, as the code may have changed, and the new provision may not apply.

How has the requirement for sprinklers in new construction evolved?

Codes get amended approximately every three years, as safer technologies become available. However, technology moves more quickly than the law does. For example, sprinklers were created but it took a while for the model code to mandate that commercial buildings of a certain size and occupancy have sprinklers—the same with residential codes. Model codes require single family residences have sprinklers, but often these provisions are amended out by the municipalities due to cost. The increase in safety often increases cost and creates a constant tug of war between developers, realtors, and the municipalities who want to assure that buildings have minimum safety standards.

What is the future of codes in light of climate change and green construction?

Earthquakes, hurricanes, natural disasters, etc. cause codes to change for the better in terms of safety. However, codes cannot keep up with the speed and impact of climate change. In fact, climate change probably played a role in Champlain, with the infiltration of sea water. The codes try to keep up with those environmental changes, but they are revised every three years or so and can’t keep up. A real challenge for building inspectors and contractors is how can they prevent destruction from natural disasters from occurring. With forest fires, for example, we know how to build with upgraded fire retardants to decrease damage, but it increases cost, and where insurance companies will only pay a certain amount to rebuild, there are not enough funds to cover the increased cost of more effective fire retardants.

Green energy and green construction are huge right now. There are specialty codes that the ICB has promulgated for green energy and green construction. There is also a lot of continuing education programs for building inspectors to take to ensure they are up to date on the latest types of construction.

How did the Champlain tragedy occur, when these safety codes exist?

The codes dictate the minimum safety standard at the time it is drafted, so the Champlain was built to minimum code standards, and the standards do not guarantee a building will be absolutely perfectly safe, as they cannot—the code writers are not architects or engineers so they have to rely on other people to build buildings and human beings are fallible. Furthermore, there have been many code cycles since the Champlain was constructed, which have upgraded safety measures. The code writers also did not anticipate the climate change that would occur in Florida that would cause a lot of erosion and infiltration of water. Also, a lot of beautiful buildings have beautiful finishes, but the minimum standards for the important stuff like the plumbing and foundation, etc. If there is a tradeoff for where money will be spent there will be a struggle between constructing a building with beautiful finishes and developing the infrastructure of the building. You can do the construction cheaply and pass the minimum building safety code standards in existence at that time, but that does not mean forty years in the future, it is going to be in the same condition that it was when constructed, especially if there is a lack of maintenance. Lack of maintenance is a common problem with condo associations that fail to spend the money to get the annual reports necessary to appreciate the state of a building and set aside adequate reserves to make repairs. A code enforcement attorneys’ job is often to prevent this by catching small building safety code violations before they become major safety code violations.

Blog contributor Kanita Williams is the Principal at The Law Office of Kanita C. Williams, PC, in Washington, DC. Her practice is criminal litigation, real estate and landlord/tenant matters, and construction law.