Introduction to construction dispute resolution
Creators: name: Pena-Mora, Feniosky A.
name: Sosa, Carlos E.
name: McCone, D. Sean
Publisher: name: Columbia University
Year: 2003
Subjects: Dispute resolution (Law)
Arbitration and award
Construction contracts
Engineering

description: Leading construction experts have identified Productivity, Innovation, Cost Control, Safety, and Litigation Expenses as critical areas in need of improvement in the construction industry of this next century. In the United States alone, $60 billion are spent every year on lawsuits, of which the construction industry accounts for nearly $5 billion. The fact that these construction litigation expenditures have increased at an average rate of 10% per year for the past ten years is one of the primary motivations for this book. This reality has generated the need to develop new Dispute Avoidance and Resolution Techniques (DART) with the aim of curving this cost spiral and improving productivity. Fueled by this need, and as projects throughout the world continually achieve higher levels of complexity, the field of construction dispute resolution has exploded with innovative ways to prevent conflict and resolve disagreements. Companies have found that in highly competitive markets, the resolution of disputes has become a key to forging stronger and longer-lasting relationships with their clients. As a result, the construction industry has been in the forefront of the development of DART. This book presents and reviews a significant number of new and innovative ways to promote collaborative environments and resolve disputes in construction. This includes some practical applications of DART in the construction industry throughout a number of nations. The aim is to provide the reader with data to support the successes or failures of these techniques in multiple cultures.
In effort to ground the material in this book, some examples are presented of how the material relates to current construction projects. These examples will be referred to as cases. Not all the information specific to the project has been presented, as they are only included to correlate theory with practice. They are also not included to illustrate either effective or ineffective handling of dispute avoidance and resolution procedures. In addition, some names or facts may have been changed for confidentiality reasons. Each of the relevant chapters will open up with an introduction of facts to the case and leave the reader with some questions to ponder while reading the chapter. At the end of each chapter the case is revisited relating the chapter information to the project situation.
This introductory book is divided into 12 chapters. The first chapter describes the construction industry, focusing on its size, structure, relationships and sources of conflicts. Chapter 2 presents a background for the evolution of construction DART. It also presents a brief review of the reasons behind the apparent large number of disputes in the construction industry, and identifies characteristics that make the construction process adversarial in nature. The final section of Chapter 2 looks at two different proposals for the organization of DART in the construction industry. It selects the concept of the “Dispute Resolution Ladder” (DRL) to organize and present different techniques found being used around the world.
Chapters 3 through 9 present the state of the art review of DART in the construction industry following each of the stages of the DRL defined in Chapter 2. Chapter 3 reviews techniques in the Prevention Stage with examples of mechanisms that can mitigate and discourage disputes during the construction process. This chapter highlights the role the owner plays in the introduction of dispute avoidance and resolution clauses in construction contracts and as a promoter of honest communications between the parties to the project. Chapter 4 reviews the concept of Partnering. Although not a Stage in the Dispute Resolution Ladder (DRL), Partnering was developed to change the adversarial approach to the construction process, with the aim to improve job performance and reduce conflict and confrontation. This concept integrates dispute resolution with other communication and collaboration techniques that have resulted in a significant reduction in the number of conflicts in those projects in which it is fully implemented. This chapter introduces the essential phases of the system, and its key components.
Chapter 5 examines the Negotiation Stage in the process of dispute resolution in construction. This chapter offers three different approaches to improving the outcomes of negotiations: Step Negotiations, Structured Negotiations, and Facilitated Negotiations. The introduction of neutral third parties begins in Chapter 6, with the Standing Neutral Stage; a concept based on the incorporation of an unbiased, knowledgeable party as an instrument to resolve disputes efficiently and effectively as soon as they develop. Chapter 7 examines the Non-Binding Phase of the DRL, covering Mediation, Advisory Opinion, Fact-based Mediation, Minitrial, Summary Jury Trial, and Voluntary Settlement Conference as the available DART techniques. A significant acceptance of non-binding dispute resolution mechanisms is reflected in the number of variations that have developed, as these procedures represent the last stage of the DRL in which the parties have control over the outcome of the dispute.
Chapter 8 examines approaches where a third party issues a final award to settle the dispute. These approaches correspond to the Binding Dispute Resolution Stage in the DRL. Arbitration, the most common form of binding resolution procedure, is reviewed, together with three other developments that can prove advantageous to a project that might be inclined to minimize arbitration. Finally, as part of this review of DART in construction, Chapter 9 looks at Alternative Litigation and Litigation as the last Stage in the DRL. This Stage corresponds to a dispute resolution procedure of “last-resort,” and is examined together with three techniques that can help reduce the amount of resources spent on court proceedings (i.e., time and money).
Chapter 10 presents the concept of a Conflict Management Plan for projects. In all arenas of construction, conflict is evident, but being able to quantify the degree of conflict is challenging. Taking into consideration, the causes and results of the most common conflict situations, a conflict management plan can be designed from the DART presented in the previous chapters. The probability of conflict occurring is assessed along with the impact that each conflict may have on the project. A preventative strategy is developed to reduce the probability of conflict occurring and a resolution strategy is planned to minimize the impact of conflict if it does occur. The resulting Conflict Management Plan will help owners and contractors to evaluate the interactions among participants and actively involve everyone in the dispute resolution process.
Following the presentation of all the material in the book, Chapter 11 analyzes a light rail transit project in San Juan, Puerto Rico. This case study is included to promote discussion on the methods to avoid claims and resolve disputes used in the project. This project made use of preventative measures such as Partnering as well as a predefined dispute resolution system. Analyzing this project allows the reader to envision how new and innovative techniques can be implemented into the industry.
Finally, Chapter 12 gathers the conclusions of the book. First, it summarizes the DART techniques. Second, it highlights the importance of alternative dispute resolution in construction worldwide and how cultural conditions have affected the selection of the DART, based on the examples presented throughout the book. Finally, this chapter suggests areas for further study in the field of construction conflict, dispute avoidance, and alternative resolution methodologies.