Tuesday, November 17, 2009

Dispute Resolution System

Disputes are one of the many things that cannot be avoided in the construction industry. This happens due to the facts that there are many parties involve in a single construction project, no matter how small or big the project is. There are many ways to resolve conflicts in the construction industry. The method of resolving these conflicts is called Alternative Dispute Resolution. Listed below are the commonly used ADR methods:

1. Step Negotiation

2. Dispute Review Boards

3. Mediation

4. Arbitration.

But findings have shown that these methods are not effective enough to resolve conflicts. This happens when most of the time, the ADR methods that are going to be used for the project is justified in the standard form of contract. So it will be quite hard to settle the disputes when it happens. Certain ADR methods are only suitable for certain type of disputes only. Secondly, ADR methods are seen as standalone systems which only come into action when disputes happen.

In order to make ADR methods to work more effectively, a dispute resolution system is introduced. There are many ideas to this system. Slaikeau and Hassaon (1998) said that methods to resolve conflicts can be done through conflict avoidance, collaboration among the parties involve, resorting to higher authority and power plays. Their system main components include site based resolution, internal support, convening of external ADR methods and appealing to higher authority such as the government.

On the other hand, Groton (1997) suggested that there are four consideration that can be taken to design a dispute resolution system. They are:

1. Consider the unique nature of the construction process.

2. Even when problems turn into disputes, litigation should not be the method used to resolve them.

3. If participants commit in advance to use dispute resolution techniques when problems arise, they create an atmosphere conducive to solve the problem.

4. Many problems prevention and litigation avoidance approaches exist. These techniques are most effective when applied in the early stage of construction.

Other than that, what can be done in handling dispute is to create a layer of defenses. The first layer is carried out to prevent dispute from event happening. As a saying goes, prevention is better than curing. This goes as well with the disputes that happen in the construction industry. Some of the steps that can be taken to prevent disputes are as the following:

1. Risk assessment and allocation including detailed project scope definition.

2. Partnering that includes a set of common project goals.

3. Contract clauses that outline a flexible framework for dispute resolution.

The contract on ADR’s clause should be an approach that will reinforce the relationships of the parties when the problem arises. The goal of this layer of defense is to resolve a large percentage of disputes within the project organization thus it will reduce the cost, time and disruptive impacts of the project disputes.


The second layer of defense is done by allowing for flexible dispute resolution. According to this paper, most of the disputes that happen on a project can be negotiated and resolved by the project parties without any outside intervention. This layer is needed because no matter how good the first layer of defense is carried out, problems are always bound to happen in a construction project. This is where this layer starts to play its roles. In this second layer of defense, there is the introduction of the used of the convenor. The convenor is the person who is responsible to conduct informal meetings as needed to assist the parties to resolve any disputes that have arise. He will try to do it in a timely and efficient manner before the problem becomes worse.

The convenor is responsible in a number of ways. He will act as the dispute prevention advisor, mediator, early neutral evaluator and dispute resolution arbitrator. So, he should a person who is trusted by all the parties involved in the project. In order to have greatest effect on the project, the convenor should be a trained mediator who is an experienced with construction disputes and familiar with various ADR methods. He might not be a lawyer but a construction personnel with lots of construction related experience.

In conclusion, the dispute resolution system should allow the following to happen in a construction project:

1. Limits the cost and time required to resolve the conflicts

2. Allow targeted research, analysis, discovery and depositions

3. Provides continuity through the convenor

4. Emphasizes on ealy intervention

Posted by:

AHMAD FIRDAUS BIN ZAMRI (2008261138)

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