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A Contractor’s Perspective on the Initial Decision Maker in Construction Contracts
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A Contractor’s Perspective on the Initial Decision Maker in Construction Contracts

April 22, 2024 Construction Industry Legal Blog

Reading Time: 3 minutes

In the ever-evolving realm of construction contracts, navigating the contractual dispute resolution procedures can pose significant challenges for contractors. Since the 2007 revision to AIA contract forms, the so-called Initial Decision Maker (IDM) process has become more common and is presenting new challenges for contractors. Thus, a basic understanding of the IDM process is essential for contractors seeking to navigate these complexities.

Scrutinizing the Initial Decision Maker:

Contractors should view the IDM as a double-edged sword, offering resolution potential but also posing challenges. Here are some aspects that contractors need to approach with caution:

    1. Navigating Speed vs. Thoroughness:

While the IDM process promises swift dispute resolution, contractors should be mindful of potential trade-offs. Quick decisions may prioritize speed over depth, potentially overlooking crucial details with implications for contractors.

    1. Expertise Alignment Assessment:

Contractors need to critically evaluate the IDM’s expertise. Does it align with the unique challenges and nuances faced by contractors in construction law and industry practices? This alignment is crucial for effective dispute resolution.

    1. Balancing Act in Relationships:

Recognizing potential biases in the IDM’s decisions is essential (keep in mind who butters the IDM’s bread). Contractors must remain vigilant to ensure that relationships with other stakeholders remain fair and impartial, even when the IDM’s decisions may sway otherwise.

Best Practice Considerations:

The IDM process should be considered by contractors during contract negotiations and during the project when issues arise. Here are some suggestions for improving your chances of success with IDM.

    1. Evaluating the Inclusion of an Initial Decision Maker (IDM) in Your Contract

The inclusion of an IDM requires a proactive stance from contractors, both during contract negotiations and project execution. Evaluating the decision to incorporate an IDM involves a comprehensive analysis of project complexity, size, historical dispute patterns, cost considerations, relationship dynamics, and alternative dispute resolution mechanisms. This strategic decision-making process ensures that the IDM aligns seamlessly with the project’s unique needs and goals.

    1. IDM as a Condition Precedent to Arbitration:

Contractors should be aware that an IDM often acts as a preliminary step before resorting to arbitration. In many construction contracts, parties are required to submit disputes to the IDM for an initial decision before proceeding to formal dispute resolution mechanisms, including arbitration.  Failure to implement the IDM could waive your right to enforce your arbitration provision.  See Leder v. Imburgia Constr. Services, Inc., 325 So. 3d 256, 259 (Fla. 3d DCA 2021).

    1. Understanding and Complying with the Process:

A crucial best practice involves contractors thoroughly understanding and complying with the dispute resolution process outlined in the contract. This includes adherence to timelines, submission requirements, and any specific procedures stipulated, ensuring a smooth and effective resolution process.

    1. Scrutinizing Independence:

Contractors must scrutinize the independence of the IDM. Any perception of bias or lack of impartiality warrants a close examination and potential objection to the IDM’s decision on that basis.

    1. Thoroughness of Submission and Pushing Back with Supplementation:

When submitting a claim to the IDM, a contractor should devote sufficient time to prepare a thorough submission, including all relevant documentation and detailed explanations of the issue, risks, and impacts of the various possible solutions.  If the IDM renders a decision that is less than desirable, a contractor should push back by pointing out flaws and providing supplemental information.

In conclusion, successful navigation of the IDM landscape requires contractors to be not only informed but strategic in their approach. By embracing best practices, understanding contractual nuances, and staying vigilant in the face of challenges, contractors can effectively manage disputes, foster positive relationships, and contribute to the overall success of construction projects in this complex contractual terrain.

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