VOLUME 6, ISSUE 2

The Dispute Resolution Board Foundation

APRIL,2002

The East Side AccessProject - Changing theParadigm for Disputes

byKathleen M. J. Harmon

IntroductionThe Metropolitan Transportation au­

thority ("MTA") operates the largest tran­sit and commuter rail transportation sys­tem in North America and one of thelargest in the world . The MTA claimsthat no area of the country is more thor­ough ly integrated into its public transpor­tation network than the New York Citymetropolitan region. As a result , the re­gion 's economy and quality oflife de­pends on the smooth daily operation ofthe MTA public transportation, bridgeand tunnel network. The scope of bene­fits provided by the MTA consists of ser­vicing two billion passengers each yearand approximately eight million passen­gers each weekday (www.mta.nyc.ny.us/mta/cap2000-2004).

One of the most important activities

In this issue of the Forum

affecting the economy and well-being ofthis region is advancing the MTA five­year capital program for rebuilding theregion's mass transportation network andimproving that network to achie ve evengreater reliability and enhanced servicelevels . The first five-year capital pro­gram was launched in 1982 in an effort to"reverse a near-complete breakdown ofthe New York City public transportationsystem" (www.mta.nyc.ny.us/mta/cap2000-2004). Over the period of tenyears , a program of "sustained rescue andrecovery work was implemented" (www.mta.nyc.ny.us/mta/cap2000-2004).

Necessary investments concentratedon the restoration and maintenance of theexisting MTA network. As a result ofthese efforts, MTA agencies made majoradvances in bringing substantial portionsof their assets into a state-of-good-

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THE EAST SIDE ACCESS PROJECT - CHANGING THE PARADIGM FOR DISPUTES

AL MATHEWS AWARD NOMINATION INFORMATION.......... .................. . .............. . ............ ..... .. ..... ..... ... ........ ... ........ . • .

OTHER NEWS

BOARD OF DIRECTORS BUSINESS

NEW FOUNDATION MEMBERS

1

5

8

14

18

,.- - ----- ------ - _._- _._-- -II

- TO COrHACT THE

DRBF OFFICE

Dispute Review

Board Foundation

6100 Southcenter

Blvd., Suite 115

Seattle , WA 98188­

2441

206-248-6156

206-248-6453 (FAX)

888-523-5208 Tollfree (US only)E-maii: home@ drb.·rg.

F")UND;;'T lON F ORU M

(C om inucd fr om p lJge 0 .)

Branch and ~.....lain Line to a new 8track, four-p latfo rm, L1RR terminalbene ath GeTs lower leve l. It will in­vo lve more than 20,000 linear feet ofnew hard-rock and soft-ground tunnelsbetween Long Island C ity and Man hat­tan , including outfitt ing the lower-leve lof the exi sting 63 rd Street-Q ueensT unnel , which is part of the 63 rd StreetSubway line. The project a lso wil! in­vo lve a major reco nfiguration of thewes t side of GCTs lower track leve l,co nstruct a new passenger conc oursefor LIRR passengers, new accesspoi nts at GCT, reconfiguration of NewYork City Transit' s Lexington Avenuesubway station to accommodate in­creased passenger traffic, a new com­muter rail stat ion at Sunnyside Yard inLong Islan d C ity, and a new ra ilcarstorage yard in Queens, as we ll as trac­tion power, signals, and comm unica­tions systems (www. mta.nyc.ny.us/plann ing/e sas ).

Two engineering optio ns were ex­amined for the Manhattan al ignment.Eng ineering Opt ion I has been she lvedand Engineering Option 2, which wasthe preferred option, will create a newdeeper termi na l beneath GCT's lowerlevel tracks. Seve ra l design schemesfor the new platfo rms and tracks arecurrently under design review and op­tions are being ex plored . The net re­sult, each platform wi ll have sta irs andescalators rising to four mezzanine­level cross-passageways above andperpendicular to the platforms. Fromthese common passageways, stairs andesca lators w ill rise to a large concoursefor the LIRR in the area currently oc­cupied by Metro-North ' s Madi sonYard .

The MTA selected the joint ventureof Bec hte l Infrastructure Inc. fURS,Inc . ("Bechte IlURS") as the proj ectmanager for this project in November1998. The duration of the constructionproject is 2000 to 20 10. The Bechte l!URS program managem ent teamserves as the L1RR's primary day-to-

7

day manager and will superv ise the Tu nnelEngineering and Systems EngineeringConsultants as well as the EnvironmentalConsultant. The program managementtea m also recommends approaches to alldesign and construction req uirements, pro­motes utilization of the most cost-effectivedesign, conducts value engineering andconstructibility rev iews, prepares consult ­ant scopes of work. manages constructio nand force account act ivities, and managethe project's budget and schedule.

Current StatusA Maj or Investment Study on the East

Side Access project was completed inMarch 1998. In June 1998 , the New YorkMetropolitan Transportation Council(NYMTC), the Metropolitan Planning Or­ganizat ion, passed a resolution endors ingthe recommended extension of the LIRRinto Grand Central Terminal. In Septem­ber 1998, Federa l Transit Administrat ionapproved preliminary engineering andpreparati on of an Environ mental ImpactStatement for the project which deta iledthe possible environmental effects of hav­ing LIRRR trains into GCT. The DraftEnvironmental Impact Statement was ap­proved in May 200 0; the Fina l Environ­mental Impact Statemen t approved inMarch 200 I. In May 200 I the MTA re­ceived a Record of Decis ion from the Fed­eral government which conc luded that theEast Side Access proj ect was a wor thyproject and finalized the environmentalmitigation effort to be required of the pro­ject. These app rovals in addition to otherswill allow Federal funds to be released .These Federal funds are pending but lettersof "No Prejudice" have been rece ived bythe MTA which allows the final design togo forward.

Shifting the Dispute ParadigmAll construction projects have confli cts,

(Augustine, 1993; Clegg, 1992; Fenn, etai, 1997; Kane , 1992 ; McManamy, 1994;Stanley, 1989) but not a ll conflicts escalateinto disputes. Many peop le confuse theterms of conflict and dispute and some

(Continued on pag e I))

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repair. The capital program for 1995-1999period has been an astounding achieve­ment and by the end of 1999 had com­menced close to $12 billion of work criti­cal for the continued operation of MTAservices. Including all of the investmentsmade since 1982, approximately $35 bil­lion of work was completed or underwayby the end of2000 (www.mta.nyc.ny.us/mta/cap2000-2004) .

In the 1990's the MTA's primary focuswas the restoration of the system, but ithad also enacted improvements that en­

. hanced rider services . In addition in 1996,ider New York 's Governor George E.

Pataki's Master Links program, the MTAbegan a planning effort to improve the re­gional transportation system. In this ef­fort, the MTA agencies are cooperatingwith New York City and the Port Author­ity of New York and New Jersey the pur­pose of which is to establish a unified re­gional transportation system that will linkimportant business centers, communitiesand airports with each other and the rest ofthe region. This effort focused on severalprojects: to provide Long Island commut­ers with access to the east side of Manhat­tan via Grand Central Terminal; to im­prove subway services on the east side ofManhattan with the construction of a new<ervice along Second Avenue; to provide.Ietro-North riders direct access to the

west side of Manhattan via Penn Station;and to provide direct rail access to La­Guardia and JFK airports (www.mta.nyc.ny.us/mta/cap2000-2004). The MTA'sCapital Program for the 2000-2004 periodtotals over $17 billion. Today , the finaldesigns for the LlRR access to Grand Cen­tral Terminal are underway (www .mta.nyc .ny.us/mta/cap2000-2004).

East Side Access ProjectThe East Side Access project will im­

prove access to Manhattan's East Side forcommuters in the Long Island Transporta­tion Corridor, which includes Manhattan,Brooklyn, Queens, and Nassau and Suf­folk counties. The benefits oftransporta­tion improvements include expanded seat-

FOUNDATION FORUM

ing capacity on the Long Island Rail Road("LlRR") system and a reduced number ofstandees on LlRR tra ins during peakhours, less train congestion at New York'sPennsylvania Station ("Penn Station") anda more balanced use of Manhattan's rail­road terminals, and significantly reducedcongestion on the regional highway net­work and East River crossings resulting inimproved air qual ity (www.mta.nyc.ny.us/planningiesas/3description.htm).

The entire East Side Access ("ESA")project is the largest single constructionprogram undertaken by the MTA in its en­tire history. The total capital constructioncost of this project is $3.7 billion. The tun­nel engineering portion encompasses theconstruction of new soft-ground tunnels inQueens that will connect to the existing63rd Street tunnel, and new hard-rock tun­nels under Manhattan 's west side leadingto Grand Central Terminal, as well as anew station in Sunnyside, Queens and newyards and maintenance facilities. Bechtel!DRS was engaged to assist the MTA inachieving its goal. Bechtel/URS's workinvolves program management of plan­ning, preliminary and final design as wellas construction phase services (www.mta.nyc.ny.us/planningiesas/3description.htm).

The LlRR is the busiest commuter rail­road system in the country operating atrain every 150 seconds into Penn Station,however, its only entry into Manhattan isPenn Station on the west side. Penn Sta­tion has reached its capacity and is con­strained for future growth. The East SideAccess project will ease congestion atPenn Station by offering direct service be­tween Long Island and east Midtown Man­hattan. Early studies determined that overone-half of the LlRR's customers workwithin Grand Central Terminal (GCT)area. Providing service to the terminalwill save nearly 100,000 commuters morethan 30 minutes commuting time each day(www .mta.nyc.ny.us/planningiesas).

The ESA project will be a complexconstruction effort. The overall route willconnect both LlRR's Port Washington

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6

ConstructionDispute Review

Board Manual by

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New CountryRepresentativesfor India and Aus­tralia and NewZealand An­nounced

Board member andInte rna tiona l Commit­tee chair Peter Chap­man has announcedselection of newCountry Representa­tives for India andAustralia and NewZealand.

The new representa­tive for India is Shri K.Subramanian. He re­places J im Nevillewho has taken a newposition in Paris.

Norman Re ich hasbee n na med to re­place T.J . "Max"McDougall as CountryRepresentative for

I Australia and NewI Zealand.

The DRBF than ks Jimand Max for thei r hardwork on behalf of the

IFoundation andwis hes each of themwe ll in their new en-deavors.D

FOUNDAT ION F ORUM

consider them one in the same. They arenot (Harmon, 200 1). A confli ct is defineda legitimate disag reement between theparties and includes, but is not limited to,additional or extra work, specifi cation re­qui rements disagreeing with i n :~. ) j r, ~ .;l ~ i () n

co ntained on the contract draw ings. lackof info rmation caus ing project ili"'Facts,the proper method of performi ng an itemof work, etc. A dispute is the esca lationof a confl ict to an emotional level and in­vol ves irrati onal behavior, which deterio­rate s the working relationship between theparties and inhibits the resolution of theconflict to the satisfact ion of both part ies.

Unreso lved disputes occurring duringthe co urse of construction can resu lt insign ificant out of pocket costs to both thecontractor and owner in term s of lega lfees, expert witn ess costs , and consultantfees. Other hidden financial costs resultto both parties as well , These costs arethe diversion of manpower from newwork to prepare for depositions, bring theattorney and/o r consultant up to speedco nce rning the problems of the projectand natu re of the work, and/or to be wit­nesses at the trial or arbitration . Mo reover,there is the emotional cost in the loss ofthe relationship between the parti es, aswe ll as the price esca lat ion of the con flicthas on the con struction process itself, interms of j ob satis faction by employees ofboth parties as well as the progress of theproject itself.

Large complex projects such as the in­dividual contracts being let for the ESAproject, and in particular, the tunnelingportions of the work can range in durat ionfro m 2 to 4 years or more, involve a num­ber of significant resources from both theperspecti ve of the Owner and the contrac­tor such as equ ipment, material, labor,risk, and costs . Therefore , any viablemeans to reduce the incidence of conflictsor disputes should have a positi ve effecton the outcome of the project, in terms ofactual and emotional costs. Moreover ,unresolved conflicts and the ir resultinglegal and consulting fees add no value tothe project itself. Unfortunately, the secosts are generally unrecoverable or at

9

best, though se ldom parti a lly recov era ble.

Dispute Review Board 'for the ESAOne main preventative technique that

the MTA cons idered for the ESA Project isthe use of a contractua lly mandated Dis­pute Review Board (ORB). The ORB is avehicle of the contract. Based on the pub­lished Eas t Side Access Genera l Te rms &Conditions, a three-member panel of ex­perienced industry neutrals will be formedby the parti es at the start of each majorconstruction contract, and will be kept in­formed of the con struction process and on­going issues via period joint meetings wit hthe contractor and MTA representati ves.The ORB ' s formation , mak e-up , and op­eration are detailed in the spec ificati ons.The OR B is empowered to prov ide recom ­mend ations on disputes brou ght to it by theparties.

Currently the MTA anticipates usingORBs on 14 of its contracts. These co n­tracts will cov er such work as major civiland structura l work, includi ng soft groundand hard rock tunnels, open cut excavatio n.as we ll as vent ilat ion plants and structure s .The Arch Street Yard Design/Build pro­ject, a negot iated procurement contract,also contains the ORB provisions. Propos­als are currently bein g rev iewed and co n­sidered for this work.

As any ex perienced industry profe s­sional will admit, the real ity is that mostdisputes are not open-and-shu t cases . Hav­ing a sitting ORB on these contracts forsuch vita l work encourages the parties torecogni ze that legit imate diff erences o fopinion will naturally arise duri ng thecourse of any business tra nsac tion, particu­larly one that involves as many parties andco mplex ities as does the Eas t Side Accessconstruction . In one sense, the presence o fa venerable OR B is intended to encouragethe parties to develop an interest-based ,rather than position-based discussion to re­so lve their differences. Moreover , thepresence of a ORB will enco urage theMT A and contractors to change their phi­losophy concerning disag reement s fromadversarial to cooperative. Th e MTA, in

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(Conunuedfrom page 9)

its deci s ion to choose the ORB processdemonstrates that it emphasizes open com­mun icat ion, ea rly iden tification of poten­t ial problems, and the timely reso lut ion ofthese problems . T he mo re the parties be-lieve that confl icts ca n be resol ved suc­ce ssfully, the grea te r the chance in pursu­ing reso lutio n as a goal (Mayer, 2000 ).

By shifting fro m the current confl ictreso lut io n parad igm in New Yo rk C itypublic infrastructure co nstruction, which isrecog nized in the indu stry as foster ing anadversarial dispute stance, to a new rnutu-

_ a lly coopera tive parad igm utilizing theORB process , the MTA sho uld rea lize areduction in the number and costs of dis­putes d ur ing the co nst ruc tion process.Th is sho uld a llow both the MT A and con­tractor ' s sta ff to conce ntrate on achievingthe goa l of a proj ect delivered on time andwithin ant icipated costs rather than takingha rd and fast positions concerning di s­putes.

In add it ion, w ith a resp ected ORBpan el, the parti es wi ll feel obligated to ap­pear reasonab le and respon sible and willnot put fort h frivolous or marginal claimsbeca use they are more concerned abouthow the ORB pan el of their choosing iseva luating the m then how the opponent is( Denning 1993; G ree nha lgh, 1999).

W ith the ESA project contracts, theDRB is not just a form of alternate disputereso lution, but it w ill fun ction as a vehicleto avo idi ng disputes, not merely resolvingthem. T he dec isions of the ORB w ill notbe bin d ing on the parties. Furthermore,ORB dec isions fo r th ese projects will notbe ad missib le in any litigation should thed isp ute rem ain unresolved. Nevertheless ,the co mbined w isdom of three figures re­spected in the ind ustry will be compellingan d may a llow both part ies to see their po­si tions as othe rs w ithin the co nstruct ioncomm uni ty w ill see them. W ith the his­tori cal ly s ign ificant succe ss of other ORBprojects, it is likely that the ESA proj ectw: Hrealize -d1 1~ same success.

Ne vert he.ess. havi ng the DRB provi­sion ;'1 the '::'SA contract s is not a panacea;it ' .~i j e :; m.l -' ..ara ntee that there will be no

FOUNDATION FORU M

ch anges , claims, or conflicts, which are notre sol ved by the end of the project. More­over, it does not requ ire the parties give upan y rights nor does it render any contractualprovision meaningless. The preliminarycontract changes and claims procedures willstill be adhered to. Only when disputes re­main unresolved after the contract claimsprocedure are the parties permitted to bebrought to the ORB . If the parties chose notto accept the ORB 's recommendation, what­ever judicial relief that was available in thecontract, is still available.

Th e ORB process in the ESA projects isa dispute resolution methodology which re­quires real efforts on the part of the partiesto change their mind-set from the traditionalus against them attitude to one of the winlwin outcome of a co llabo rat ive probl emsolving approach . It can bring the issues ofa conflict into better focus and refocus thelens through which the parties view the con­flict.

ConclusionProblems and disagreements are an in­

herent part of all construction projects.Wh en Owner, contractors, and architect!engineers do not deal effectively and di­rectly with these disputes, the y often esca­late into major conflicts. These major con­flicts are counterproductive to the progressof the project. Unresolved disputes becomecostly and often for ce the contractor to fi­nance the project. These disputes also havelong term negative effects. The MT A istaking an unprecedented step towards shift­ing this paradigm and working away from aus verses them mentality to a more collabo­rative, even handed dispute resolution ap ­proach utilizing the ORB process.

Alternate Dispute Resolution ("ADR")in the construction industry (e.g., arbitrationand med iation has been around for decades.Unfortunate ly, what individuals fail to real­ize is th at AD R is not a substitute for somebas ic d ispute reso lution techniques such aseffective and time ly co mmunication, timelyanswers to queries, c lear contract docu­ments, competent and consis tent co nstruc ­tion management, and the like wh ich sho uld

(Continued on page /2)

10

(Continued fro m page /0)

be utilized during the course of the proj ect.Mo reover, these traditional ADR mecha­nisms are not time ly in that they are gen erallyutilized at or after project completion ratherthan contemporaneous with the dispute itself.Therefore, they do not address the party'sneeds of resolving the conflict, maintain therelationship, and keep the project moving.

The EAS project is a high profile project.NYC and vicinity is known throughout thecontracting industry as a difficult work envi­

.ronrn ent due to crowding, unknown subsur-.ce conditions, etc. The MTA is testing the

ORB process on this important project. Inas­much as unresolved conflicts deteriorate theparties working relationship and create emo­tion and stress as well as financial costs, acontemporaneous dispute resolution processserves the interests of all the main parties(contractor, MTA and subsidiaries) as well assecondary parties (Federal government, etc).Projects which are not completed on timegenerally costs addition money not only inproject costs, but also ancillary costs to re­solve the dispute. Ancillary costs paid to at­torneys, consultants, expert witnesses, etc.are an unrecoverable cost of a dispute.Money spent on ancillary costs to resolve thedispute only benefit those who are in the in-

- dustry to resolve disputes, but do not add oneent of value to the project itself. Money

spent on attorneys, etc . to resolve a dispute ismoney not available for capital improve­ments that serve the public as a whole. Byusing the ORB process to resolve disputes ina fair and even handed manner, the MTA isseeking to add value to its projects to benefitthe traveling public.

ReferencesAugustine, M. J . (1994, December I).

Dispute prevention and resolution in the con ­struction industry. New York Law Journal, p...,oJ.

C legg, S. (1992). Contracts cause conflict,in construction confl ict: Management andresolution . In P. Fenn & R. Gameson (Eds.),pp . 128-44. London: Chapman & Hall.

C loke, K., & Goldsmith, J . (2000). Con­flict resolution that reaps great rewards. TheJournal for Quality and Participation, 23(3),27-30.

Brooker, P. (1999). Survey of construe-

FOUNDATION F O R UM

tion lawyer' s attitudes and practice in theuse of ADR in co ntractors ' d isputes. Con­struction Managem ent and Economics, 17(6) , 757-765 .

Brooker, P., & Lavers, A. (1997). Pe r­ceptions of alt ernate dispute reso lutio n asconstraints upon use in the UK construc­tion industry. Construction lvlanagementand Economics, 15(6), 519-526.

Denning, James (1993), More than anUnderground Success, Civil Engine ering,42, 12,42-45.

DiDonato, S. L., (1993) Alternativemethods to resolve contract disputes: Ap­proaches to effective prevention, manage­ment and settlement to construction con­tract claims. Transactions of the Ameri­can Association of Cost Engineers,G.2.1+.

Fenn, P., Lowe, D. , & Speck, C.(1997). Conflict and dispute in construc­tion. Construction Manag ement and Eco­nomics, 15(6), 513-518.

Greenhalagh, Leonard (1999),"Managing Conflict", reprinted in Nego­tiation, Lewicki, R.J., Saunders, D. M. ,Minton, J. M. (ed), Irwin/McGraw Hill ,New York.

Glyn, M. (1990). Concept and con­struction of the mount baker ridge tunneland Dr . Harvey W. Parker. Tunnels &Tunneling, 57-58.

Harmon, K.M.J . (200 I). ORB: Thepower to cure. The Forum, 5 (2), 1-9.

Jones, J.S ., (1995), Independent En­ergy, 25, 9, 50+ .

Kane, C. (1992). Mitigating construc­tion contract disputes. Public UtilitiesFort Nightly, 130(1), 11-12.

Keil, J . (1999). "Hybrid ADR" in theconstruction indu stry. Dispute ResolutionJournal, 54(3), 14-22.

Long Island Rail Road Access to Man­hattan=s East Side (Eas t Side Access).;http://www.fta.dot.gov/library/policy/ns /nyeast.html November 1998

Matyas, R. M. , Mathews, A. A., Smith,R. J ., & Sperry, P. E. (1996). ConstructionDispute Review Board Manual . NY:McGraw-Hill.

Mayer, B. (2000). The Dynamics ofConflict Resolution. San Francisco, CA:

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