DBIA Dispute Resolution and Claims Management 2 — Questions and Answers
Question 1: What is the primary purpose of a claims notice provision in a design-build contract?
- To limit the owner's liability for design errors
- To ensure timely notification so the owner can investigate conditions and mitigate damages (Correct answer)
- To automatically escalate disputes to arbitration
- To establish the D-B entity's right to stop work
Correct answer: To ensure timely notification so the owner can investigate conditions and mitigate damages
Claims notice provisions ensure the owner receives timely notification of potential claims so they can investigate, document conditions, and potentially mitigate damages before conditions change.
Question 2: How does the design-build delivery method typically reduce the frequency of disputes compared to traditional design-bid-build?
- By eliminating the need for written contracts
- By removing the gap between design intent and constructibility that often leads to disputes in traditional delivery (Correct answer)
- By requiring owners to assume all project risks
- By mandating government arbitration for all disputes
Correct answer: By removing the gap between design intent and constructibility that often leads to disputes in traditional delivery
Design-build eliminates the design-construction interface gap common in design-bid-build, reducing disputes about design intent, interpretation, and constructibility issues.
Question 3: What constitutes a 'differing site condition' that may give rise to a claim in a design-build project?
- Owner-requested design changes after contract execution
- Physical conditions at the site that materially differ from those indicated in contract documents or from what is ordinarily encountered (Correct answer)
- Subcontractor disputes about scope of work
- Delays caused by weather events
Correct answer: Physical conditions at the site that materially differ from those indicated in contract documents or from what is ordinarily encountered
A differing site condition is a physical site condition that differs materially from what is described in contract documents or from normally expected conditions, potentially entitling the D-B entity to additional compensation.
Question 4: What is the legal distinction between a 'claim' and a 'dispute' in design-build project delivery?
- They are legally identical terms used interchangeably
- A claim is a formal demand for compensation or time, while a dispute arises when that claim is rejected or not resolved (Correct answer)
- A dispute is filed in court while a claim is resolved through arbitration
- Claims apply to design issues while disputes apply to construction issues
Correct answer: A claim is a formal demand for compensation or time, while a dispute arises when that claim is rejected or not resolved
A claim is a formal demand by one party for adjustment to compensation or schedule, which becomes a dispute only when the other party rejects or fails to adequately respond to the claim.
Question 5: In DBIA standard documents, which party typically has initial authority to resolve disputes before formal ADR proceedings begin?
- A third-party arbitrator
- The Owner's Representative and the Design-Build Entity's Project Manager through direct negotiation (Correct answer)
- A government oversight agency
- The lead designer on the project
Correct answer: The Owner's Representative and the Design-Build Entity's Project Manager through direct negotiation
DBIA documents establish that the Owner's Representative and the D-B entity's project manager should first attempt direct negotiation to resolve disputes informally before escalating.
Question 6: What is 'force majeure' as it applies to design-build contract claims?
- A clause that allows the owner to terminate the contract without cause
- Events beyond the parties' control (such as natural disasters or government actions) that excuse delay or performance (Correct answer)
- A pricing escalation clause for material cost increases
- A provision requiring mediation before arbitration
Correct answer: Events beyond the parties' control (such as natural disasters or government actions) that excuse delay or performance
Force majeure refers to unforeseeable events beyond either party's control that excuse delay or non-performance, typically entitling the affected party to a time extension but not additional monetary compensation.
Question 7: What is the purpose of including a 'no damages for delay' clause in a design-build contract?
- To ensure the D-B entity cannot claim additional time for owner-caused delays
- To limit the owner's exposure to monetary damages for delays, though the D-B entity may still receive time extensions (Correct answer)
- To prevent the D-B entity from terminating the contract due to delays
- To automatically trigger liquidated damages if milestones are missed
Correct answer: To limit the owner's exposure to monetary damages for delays, though the D-B entity may still receive time extensions
A 'no damages for delay' clause limits the owner's financial exposure by restricting the D-B entity's remedy for delays to time extensions only, excluding monetary compensation.
DBIA Dispute Resolution and Claims Management 2
What is the primary purpose of a claims notice provision in a design-build contract?