When contractors and property owners have disputes on a project, an Initial Decision Maker typically serves as the resolution facilitator. Prior to 2007, the American Institute of Architects (AIA) contract documents tasked the architect with initial decision responsibilities for project claims, which put an inordinate amount of pressure on the architect and left them in a tenuous position of having to mediate discussions while being seen as biased, since architects are paid by the owner.
American Institute of Architects Guidelines for the Initial Decision Process
In 2017, the AIA finally defined the term “Initial Decision Maker” in the AIA A201 as “The Initial Decision Maker is the person identified in the Agreement to render initial decisions on Claims in accordance with Section 15.2. The Initial Decision Maker shall not show partiality to the Owner or Contractor and shall not be liable for results of interpretations of decisions rendered in good faith.”
The current AIA guidelines allow the owner and contractor to select any independent, neutral third-party to serve as the Initial Decision Maker (IDM), but if one is not selected, the architect must assume the role by default to make the initial decisions on disputes between the owner and contractor of a project.
Once the IDM is named, their initial decision is “a condition precedent to to mediation, and mediation is a condition precedent to to any binding form of dispute resolution.” This initial decision can be one of 4 options according to the AIA’s General Conditions:
- Suggesting a compromise between the two parties to create an agreeable conclusion
- Approve the claim in favor of one party
- Reject either the entire claim or part of the claim
- Advise the two parties that more information is needed to properly evaluate the claim and render a decision
How to Mitigate Your Risk as an Architect in Construction Disputes
The first strategy in mitigating your risk is to insist that an independent IDM be named for all disputes, removing yourself entirely from the equation. Since architects aren’t generally seen as impartial by contractors given they are paid by the owner, and since architects can sometimes be perceived as part of the issue that initiated the dispute, it is better to bring in a third-party to get quick and efficient dispute resolution.
Serving as a project expert on a settlement team, providing information and analysis on what caused the dispute to the third-party IDM is a better use of the architect’s expertise and time. By taking a position of information dissemination, an architect can maintain neutrality and good relations with both the owner and contractor.
In the event no third-party IDM is named, as an architect you can mitigate your risk by thoroughly evaluating all documentation and claim information, requesting the assistance of outside professionals such as auditors, accountants, or other professionals with specialized knowledge to render a well-informed decision, which protects the architect from accusations of bias.
Use Available Resources to Mitigate Risk
By thoroughly evaluating all claims and carefully investigating all information, an architect can make a decision in good faith, which protects you under the AIA General Conditions, as an IDM is “not liable for the results of interpretations or decisions rendered in good faith,” should you be tasked to serve as an IDM.However, the simplest way of mitigating your risk as an architect is to ensure other parties are chosen to be an IDM, and the attorneys at Furukawa Castles can review your contracts for you to ensure that clause is included to help you mitigate your risk.