Case Study: Tren Urbano Project

Introduction to Construction Dispute Resolution

Feniosky Peña-MoraGilbert W.Winslow Career Development Associate Professor of Information Technology and Project ManagementMIT Room 1-253, Phone (617)253-7142, Fax (617)253-6324Email:[email protected]

Intelligent Engineering Systems LaboratoryIntelligent Engineering Systems LaboratoryCenter for Construction and Research EducationCenter for Construction and Research Education

Department of Civil and Environmental Department of Civil and Environmental EngineeringEngineeringMassachusetts Institute of Technology Massachusetts Institute of Technology

Case Study: Tren Urbano Project

2Introduction to Construction Dispute Resolution Chapter 11: Case Study: Tren Urbano Project © Peña-Mora, et. al. 2002

Definitions WHAT

• Light Rail Transit Line in San Juan, Puerto Rico

• Completion of the First Phase by November 2001 at a Cost of $1.5 Billion

WHO• Puerto Rico’s Department of Transportation and Public Works (DTPW)

• Parsons DeLeuw, Inc

• Federal Transit Administration (FTA)

• Siemens Transit Team

• US Partners : Daniel, Mann, Johnson and Mendenhall (DMJM) and Frederic R.Harris, Inc

• Local Partners: Eduardo Molinary and Associates (Architects), Barret and Hale and Associates (Consulting Engineers)

WHY• Real-Life Application of DART

HOW• Understand Project Circumstances

• Identify and Analyze Potential Conflicts

• Design Conflict Management Plan

• Review and Revise the Plan Based on Project Data


Outline Tren Urbano Project Story Project Description Procurement Strategy Conflict Management in Tren Urbano

• Partnering• Change Order Process• Dispute Resolution Contract Language

Analysis of Tren Urbano Components Partnering Analysis in Tren Urbano

• Enhance the Pros of Duplication• Form a Unified Management Team• STTT Contractor’s Fiduciary Relationship With Owner• Aid Non-Contractual Relationships• Improve Communication and Understanding Between the Multi-

Cultures• Initial Meetings• Follow-up Meetings• General Analysis of Partnering Components

General Analysis of Conflict Resolution


Tren Urbano Project Story 1989: Conceptual Design of Tren Urbano January 1993:

Review of Developed Concept by a New Executive Team

February 1993: Tren Urbano Designated as One of the

Four Turnkey Demonstration Projects in the Nation

January 1994: Submittal of Successful Bid for Federal

Assistance to the US Congress

April 1994:$42-Million Contract for GMAEC Services

Between DTPW and Joint Venture


Tren Urbano Project Story Tren Urbano Office (TUO): Planning and Environmental

Permitting Process, Partial Plans and Systems Specifications, Structuring Procurement Process

November 1995: Approval on Publication of Final Environmental Impact Statement (FEIS)

February 1996: FTA’s Approval on FEIS and Record of Decision

March 1996:$307.5 million Full Funding Grant Agreement Between DTPW/HTA and FTA

August 2, 1996: Groundbreaking for Phase I Alignment









Project Description


Phase I Alignment









Procurement Strategy Phase I Project Divided into Six Design/Build

Contracts for Civil Structures and One System and Test Track Turnkey (STTT) Contract

STTT Contract

• Construction of Two Stations and 2.6 Km of Test Track, Maintenance and Storage Facility, Operations and Control Center

• Delivery of train Vehicles and Systems

• Systems Integration

• System Operations and Maintenance for a Minimum of Five Years


Tren Urbano Hybrid Approach

Types of Procurement Party Also referred to as

12

TurnkeyDBOT

Siemens Transit Team (STT)

Turnkey Contractor

3

Construction Management (at no risk)

GMAEC Owner’s Consultants

45

Multiple PrimesDesign-Build

Alignment Section Contractors (ASC)

Civil Contractors


Organizational Chart

Puerto Rican Department ofTransportation

and Public Works(PRDTPW)

Puerto Rican Highway andTransportation Authority

(PRHTA)

Other Puerto RicanPublic Works and

Authorities

Tren Urbano Office(TUO)

Consultants toowner

(GMAEC)USA

Siemens TransitTeam(STT)

German/Other

ASC(ICA-MMSJ)

Mexican/PuertoRican

ASC(Redondo-

Entrecanales)Puerto Rican/

Spanish

ASC(KKZ/CMA)

USA

ASC(Entrecanales/

Redondo)Spanish/Puerto

Rican

ASC(Redondo/

Perini)Puerto Rican/

USA

Line Legend:Solid:

Management bycontract orlegislation

Dashed: Nocontractual

Relationship, onlymanagement

ASC(Redondo-


Spanish

ASC(Redondo-


Spanish



Partnering• Change Order Process• Dispute Resolution Contract Language






Partnering Objectives

• Promotion of Working Relationships Among

Participants

• Promotion of Cooperation and Trust

• Achievement of Common and Individual Objectives on

a Non-confrontational Basis

Initial and Periodical Follow-up Workshops

• Facilitators Retained Though the Partnering Program of

the American Arbitration Association



Partnering Change Order Process• Dispute Resolution Contract Language






Change Order ProcessInitial Notice

submited bycontractor

If needed (usually)request for

extension forcontractor tosubmit CCR

ContractorChangeRequest

(CCR)

Contractor mayresubmit Initial

Notice

Change Notice(CN)

ChangeDirective

Change Order

Merit to CCRsignature process

Avoided if possiblesignature process

2-4 weeks

No merit

2-6 monthssignature process Difficult and long

negotiation process

10 days



Partnering Change Order Process Dispute Resolution Contract Language






Negotiation Steps The Contractor Asserting a Claim if not Satisfied with the

Outcome of the Change Order

Five Negotiation Steps Before a Claim Becomes a Dispute

• Technical Personnel of the Parties Attempting to Resolve Claims in the Partnering Sessions With Impartiality (At Most 60 Days)

• Claim Submitted to Contractor’s Project Manager and Contracting Officer (At Most 10 Days)

• Claim Referred to Contractor’s Project Executive and Executive Director (At Most 10 Days)

• Claim Determination Submitted within 10 Days by the Contracting Officer to Contractor

• Notice of Disagreement Submitted Within 10 Days by the Contractor to the Contracting Office


Dispute Review Board DRB Consisting of Three Members

• Each of the Authority and the Contractor Selecting Three Nominees

• Each of the Parties Selecting One Individual From the Other’s List of Nominees

• Third Member: Qualified and Impartial Chairperson selected by Mutual Agreement Within 21 Days

Foundation of The DRB May Take More Than Two Months


Processing Disputes Step 1 : Contractor’s Request for Meeting and

Supporting Statement

Step 2: Authority Submitting to the DBR and Contractor, Response to Dispute and Counterclaims

Step 3: Contractor’s Statement Setting Factual and Legal Defense to the Counterclaim

Step 4: DRB Setting Date of Initial Meeting on Dispute

Step 5: DRB Issuing Draft Findings and Recommendations to Both Parties

Step 6: Notification of Miscalculation or Error in the Draft

Step 7 : Final Findings and Recommendations Submitted to Executive Director and Contractor

Step 8 : Executive Director Issuing A Written Decision to Accept or Reject Recommendations


Legal Action

Court Action Filed By Contractor Within 90

Days After Receipt of the Executive Director’s

Decision

Negotiation Time Frame

• 20 Weeks For Claim Resolution Process

• 6 Months for Dispute Resolution Process





Enhance the Pros of Duplication• Form a Unified Management Team• STTT Contractor’s Fiduciary Relationship With Owner• Aid Non-Contractual Relationships• Improve Communication and Understanding Between the Multi-




Enhance the Pros of Duplication


Example of Duplication Parsons Brickerhoff (in Siemens Group),

Responsible of the Management Functions in Terms of Interface Between Systems to Fixed Facilities and Interface Between Fixed Facilities

GMAEC, Owner’s Consultants, Responsible of Schedule and Design Reviews of the ASC’s Work

Result: More Complete Review and a Superior Project





Enhance the Pros of Duplication Form a Unified Management Team• STTT Contractor’s Fiduciary Relationship With Owner• Aid Non-Contractual Relationships• Improve Communication and Understanding Between the Multi-




Form a Unified Management Team

PRHTA

GMAEC

Siemens

PB

Partnering

Bridge





Enhance the Pros of Duplication Form a Unified Management Team STTT Contractor’s Fiduciary Relationship With Owner• Aid Non-Contractual Relationships• Improve Communication and Understanding Between the Multi-




STTT Contractor’s Fiduciary Relationship With Owner Two Contrasting Perceptions of STTT: Owner

Representative and Contractor

As Owner Representative

• Operations and Maintenance for 5-10 Years Reduced Lifecycle Costs.

• Overseeing the ASC’ s Interface With Each Other & Interface With Systems

• Reviewing ASC ’s Design & Schedule

• Partnering With PRHTA/GMAEC

As Contractor

• Design and Construction of Systems and Vehicles (Major Cost Component of STTT Contract)

• Design and Construction of One Fixed Alignment Section





Enhance the Pros of Duplication Form a Unified Management Team STTT Contractor’s Fiduciary Relationship With Owner Aid Non-Contractual Relationships• Improve Communication and Understanding Between the Multi-




Aid Non-Contractual Relationships

ASC ’s Partnering With Owner Improving Costs and Schedule

ASC ’ s Partnering with STTT Without Contractual Commitment





Enhance the Pros of Duplication Form a Unified Management Team STTT Contractor’s Fiduciary Relationship With Owner Aid Non-Contractual Relationships Improve Communication and Understanding Between the Multi-




Improve Communication and Understanding Between the Multi-Cultures Multi-Cultural Environment : Puerto Rican

Contract Managers and North American Design Managers (Different Contract Languages, Priorities in Objectives)

Multi-Phase Environment: Planning of Next Phases, Design and Construction of Phase I, Preparation for Operation and Maintenance of Phase I

Initial Partnering Meetings and Follow-up Meetings






Cultures Initial Meetings• Follow-up Meetings• General Analysis of Partnering Components



Initial Meetings

Held Between Owner and Each Party With Whom the Owner Has Signed a Contract

2-3 Day-Meetings in a Neutral Location, Facilitated by a Member of the AAA

Objectives

• Discussions of Risks, Concerns, Goals

• Development of Trusting Relationships


Quality Summit Meeting Between All the Parties, Ran By the Tren

Urbano Office

Results of Observations From Quality Summit

• Improve Cross-cultural and Communicational Relationships

• Improve in Drive and Belief in Partnering by Some of the Contractors

• Need Some Human Infrastructure in a very Compressed Time

Lessons Learned from Quality Summit

• Need for a Third Party Facilitator

• Focus on Working Together in Small Groups Instead of Numerous Presentations

• More Interactions Between Parties






Cultures Initial Meetings Follow-up Meetings• General Analysis of Partnering Components



Follow-up Meetings

Monthly Partnering Meetings Between Project

Principals Parties Presenting Status Reports and

Meetings Run by Owner’s Top Management

Issues Resolution at a Micro-Management Level

Reduced Now to Quarterly Meetings Preventing

Shortcutting the Regular Resolution Process and

Focusing on Partnering Relationship Issues


Evaluation of Partnering A Clear Champion For Partnering Was not Clearly

Identified in the Pre-Planning Stage

More Faith and Genuine Commitment Need to Be Elicited in the Partnering Process

Follow-up Meetings Could Be Improved if Run by a Third Party

More Emphasis Should Be Done on the Need and Value of Partnering

Need For More Meetings in an Informal Setting

All Management Parties Should Form One United Management Team

Partnering At All Levels (Example, in Field Inspection)






Cultures Initial Meetings Follow-up Meetings General Analysis of Partnering Components



General Analysis of Partnering Components

Lessons Learned Divided into Three Categories

• Initial Factors : Set at the Beginning of the Project,

Impact Seen at the End of the Project

• Operational Factors: Occurring Throughout the

Project, Affected by Initial Factors

• Resulting Factors : Product of Other Factors


Initial Factors Initial Meetings

• Start Early With a Full Partnering Initialization

• Don’t Cut on Time and Cost at this Stage

• Develop Trust

Education• Use Experienced Employees

• Educate and Train People

Numerous Cultures• Recognize Cultural Differences

Delivery Method• High Commitment to partnering in the Presence of

Different Non-contractual Relationships


Operational Factors Follow-up Partnering Meetings : Maintaining

the Initial Trusting Partnering Relationship Knowledge Transfer: Open Communication for

Knowledge Transfer Between Various Cultures Evaluations: Soft Measures Such as Problem

Solving Methods and Hard Measures Such as Number of Claims

Champions for Objectives: Champions for Quality, Cost, schedule and Partnering

Benefits of Duplication: Extra Cost Versus Greater Quality-Preventing Adversarial Positions and “All is Responsible, Nobody is” Syndrome

Unified Management Team Turnkey Contractor Acting as Part Owner


Resulting Factors

Site Transfer Conflicts: Monitoring Hand-Over

Between Contractors in the Absence of Direct

Contractual Links

Micro-Management: Effective Partnering

Saving on the Resources Needed for Micro-

Management

Claim Management









General Analysis of Conflict Resolution Insights From Interviews Regarding Conflicts in the Rio

Piedras Section

• Conflicts and Disputes Are Inherent to the Construction Industry

• Owner and Contractor Are Disagreeing Concerning How the Project Is Running

• Mitigation Actions Are Most Effective if Taken early

• Managers Have A Lot of Experience Regarding Conflict Management and They Feel Pretty Confident About Their Negotiation Skills

• Decision-makers Are Not Aware of the Long Term Effects of Their Actions









Summary Partnering and the Success of Innovative

Delivery Methods in a Global Market

Importance of Partnering in Multi-Cultural, Multi-Phase Projects

Partnering Embodied in Initial Meetings, Quality Summit, Follow-Up Meetings

Conclusions and Recommendations

• Contract Language Regarding Conflict Resolution Is Not the Source of Problems

• Inter-phase Conflicts Require Additional efforts


References [DTOP, 2000] : Puerto Rico’s Department of Transportation

and Public Works home page (http://www.dtop.gov.pr/english/tu/history.htm) (2000).

[Harpoth, 1999] : Harpoth, Nina. Effective Partnering in an Innovative Procured, Multi-Cultural Project, MS Thesis. MIT Deaprtment of Civil and Environmental Engineering. 1999.

[Peña-Mora et al, 2002] : Peña-Mora, F., Sosa, C., and McCone, S. Introduction to Construction Dispute Resolution. Prentice Hall, New Jersey, 2002

[Rio Piedras Contract, 1997] : Rio Piedras Design-Build Agreement, Phase I of Tren Urbano, Contract No. AC-500083, Rio Piedras Contract: Alignment Section 7, Puerto Rico Highways and Transportation Authority.

[TUI, 1997-8] : Tren Urbano Interviews with Project Participants, (1997-8). Tren Urbano Office and Siemens Transit Team Office, San Juan, Puerto Rico.

[TUQS, 1997] :Tren Urbano Quality Summit, 10/6/97 & 10/7/97, San Juan, Puerto Rico (1997).

Documents

Case Study: Tren Urbano Project