Conflict Resolution in Construction Disputes Using the Graph Model

A formal approach is presented for systematically resolving construction conflicts. Using an actual case study, a decision support system based on the graph model for conflict resolution (GMCR II), is employed to effectively investigate the strategic interactions that took place between an owner and a general contractor concerning the financing of a construction project. The conflict analysis process considers the decision participants, their decision options, and their relative preferences when modeling the dispute. GMCR II is then used to perform an in-depth stability analysis in order to ascertain the possible compromise resolutions or equilibria. In the case study, GMCR II correctly predicts the sequence of decisions that took place in the dispute and furnishes an array of useful strategic insights about the conflict. Moreover, a sensitivity analysis is executed to determine how changes in preferences can affect the equilibrium results. This conflict resolution procedure is useful for both researchers and practitioners to better deal with the dispute-prone nature of the construction industry.     

Effect of Delivery Systems on Collaborative Negotiations for Large-Scale Infrastructure Projects

In large-scale projects, collaboration is an essential key for the success of projects. Since different participants from different organizations try to work together in projects, competitive stresses exist in their relationships and as a result, disputes or conflicts may inevitably occur. This paper builds on Pea-Mora and Wang's collaborative negotiation methodology for facilitating∕mediating the negotiation process of conflicts. In order for that collaborative negotiation methodology to be more detailed for its implementation, it needs to account for the effect of project structures and delivery methods on the negotiation processes in large-scale projects. Because contracts define the temporary formal and informal relationships among the different parties in a project and subsequently, they define the framework of the negotiations of conflicts within that project, different delivery systems may be more or less effective in terms of conflict resolution. In this research, to study the effect of delivery system on negotiation of conflicts, first, several different project structures and delivery systems are studied in order to identify participants' roles, responsibilities, and relationships. Second, potential conflicts in relationships among project participants are examined to show that each delivery system has typical or pattern behavior that may affect the interrelationship among groups on negotiations. These patterns or characteristics of the groups and their relationship make possible to evaluate quantitatively and qualitatively the advantage or disadvantage of each delivery system in terms of conflict avoidance or dispute resolution. Then, indexes of negotiation effectiveness for each delivery system are developed in order to quantify the advantage of implementing the collaborative negotiation methodology in a large-scale project within a particular delivery system.     

MAUT-Based Dispute Resolution Selection Model Prototype for International Construction Projects

Disputes are common in international projects because of contractual, cultural, and legal factors. The dispute resolution methods currently adopted in international projects are varying, including litigation, arbitration, adjudication, mediation, expert-determination, dispute resolution board, and minitrial. The problem in question is on how to select the most appropriate resolution method that can fit nicely in the nature of the dispute and the disputing parties’ needs. A dispute resolution selection prototype (Model) based on the analytical hierarchy process and multiattribute utility technique (MAUT) is presented in this paper. The Model developed consists of five components: Selection factors, dispute resolution methods, utility factors, relative importance weightings, and user’s preferred weightings. These were based on the quantitative data provided by 41 experts in the field, who were barristers, arbitrators, mediators, and project managers. The Model is considered beneficial to the industry, as it provides construction professionals with a systematic and objective approach in the management of international project disputes.     

Computerized DSS for Construction Conflict Resolution under Uncertainty

Due to the inherent nature of construction projects, conflicts are unavoidable among the various parties involved. Such conflicts often delay projects and cause losses for all parties. This paper presents the development of a decision support system (DSS) to help in resolving construction disputes. The DSS integrates the elimination method to shortlist promising resolutions to a conflict, the graph model for conflict resolution to determine the best resolution that satisfies all decision makers’ preferences, and the information gap theory to consider uncertain decision preferences. A prototype system has been developed and a case study of a construction conflict used to demonstrate its features. The presented methodology for construction conflict resolution is useful for both researchers and practitioners to better deal with the dispute-prone nature of the construction industry under uncertainty and lack of information. In this paper, the proposed prototype successfully simulated and predicted the sequence of decisions that took place in the case study dispute, in the presence of uncertainty.     

Hybrid Model Incorporating Real Options with Process Centric and System Dynamics Modeling to Assess Value of Investments in Alternative Dispute Resolution Techniques

Project-specific dispute resolution ladders (DRLs) are typically implemented in construction projects to resolve issues arising between the project participants. The DRL typically consists of single or multiple alternative dispute resolution (ADR) techniques to address construction issues at the three levels of escalation: conflicts; disputes; and claims. However, a DRL requires significant investments to cover the direct costs incurred in-house by the project participants or, externally, if construction specialists and lawyers are recruited to assist in the resolution. Thus, the benefits of the DRL implementation in a construction project must outweigh its costs for the implementation to be worthwhile. This paper presents a methodology to study the effect of different resolution strategies on the value of the investment in a DRL using option/real option theories from financial engineering, process centric modeling, and system dynamics methodology. Of particular interest in this paper is the integration of these research methodologies into a computer model to support the evaluation of the DRL investment in a particular construction project by taking into account the characteristics of (1) the project and (2) the different ADR techniques chosen for the DRL implementation. Finally, an example is presented to illustrate the application of the computer model in a real construction project. The results of the simulation serve two main purposes. First, the results of the simulation are used to verify the intended model behavior in terms of proper integration of the three methodologies (i.e., real options, process centric, and system dynamics) in one computer system. Second, the model application to a real construction project using actual project data illustrates the potential of the model in providing the project participants with information related to the expected number of claims and change orders resolved at each level of the DRL, the change in the expected savings during the construction phase, and finally the value of the investment from the perspective of the project owner.     

Quantification of Costs for Dispute Resolution Procedures in the Construction Industry

The extent to which disputes affect the construction industry has been well-documented. There are a plethora of anecdotal stories, and even some data that explain how unresolved conflict can impact project cost, schedule, and quality. In response, many systems and procedures have been developed to address disputes and their resolution within the construction industry. However, no data exist that quantitatively compare these various alternatives and the real costs of resolving a dispute using methods other than litigation. This paper presents a framework for identifying and capturing the transactional costs incurred to resolve disputes throughout the full spectrum of resolution options. Transactional cost data from 46 recently completed construction projects, totaling over $2 billion of total installed costs, confirm that these sums can account for a large portion of the settlement/award amount, the original claim amount, and even the total contract value when using some dispute resolution methods. Furthermore, using dispute trend and cost data, a comprehensive dispute management system based upon the concepts of risk management is proposed, highlighting the overriding objective of promoting dispute avoidance/resolution in the most cost-efficient manner possible.     

Identification and Resolution of Work Space Conflicts in Building Construction

Numerous workers, equipment, material, temporary facilities, as well as permanent structures share the limited space during construction. Since space constraints may affect productivity and the critical path, it is essential to organize the available space efficiently and minimize space conflicts. This study considers space availability due to time and scheduling, productivity loss due to space constraints and path interference, as well as the possibility of alternative space to resolve these conflicts and optimize space usage. Herein, computer-aided design is integrated with scheduling software for the dynamic identification of space conflicts on the jobsite. Follow-up supplemental decision criteria are then provided for conflict analysis and resolution. A prototype decision support system that combines the criteria was developed to solve this significant and complex problem more efficiently and precisely. A case study demonstrates the use and development of this system, which is very helpful to engineers and project managers.     

Lessons Learned from Rigid Conflict Resolution in an Organization: Construction Conflict Case Study

Success in construction projects mainly depends on how well project managers handle conflicts. There are in general five conflict resolution approaches: withdrawal, compromise, forcing, smoothing, and problem solving. Conflict results are very relevant to the interaction of the approaches. Improperly managed, the interaction often generates psychological residue such as anger that ruins the project. The main objective of this research is, through a case study, to enhance the comprehension of the approaches, their interactions, and the psychological changeovers involved. Although conflict resolution among the contractual parties with privity has been studied widely, the conflicts among the parties either in an owner or in a contractor organization have been rarely researched, although they frequently cause destructive claims to the contractual parties. This research identifies a real construction conflict as the case study that occurred between two functional entities of a local Korean government. The case illustrates that a badly managed conflict in an owner organization causes undesirable claims between contractual parties. Based on the previous research regarding the five approaches and psychological transitions in a conflict resolution process, the case is analyzed to recognize the approaches and psychological changeovers absorbed. Useful lessons from the case are identified through a graduate class discussion.     

Arbitral Tribunal Proceedings Case Study: Egyptian Large-Scale Construction Project

This paper investigates how arbitration is used as a dispute resolution mechanism in Egyptian large scale construction projects and what are the types of issues that construction professionals should address when they encounter claims in the Egyptian construction market. To meet the goals and objectives of this study, a research project was conducted to study the arbitration process for a dispute that was in excess of $31 million, which arose out as a result of the proceeds of a large-scale project with an original contact price of $85 million that was constructed in Cairo, Egypt. This research project analytically investigated the background of the conflicts, the arbitral proceedings, and the award issued by the arbitral tribunal. Based on such thorough study, it was concluded that arbitration did not provide a timely and cost-effective resolution for the said dispute. Moreover, the same study has raised questions in relation to the overall management of megaconstruction projects in Egypt namely: (1) the impartiality of project managers; (2) the magnitude of change orders and consequent delays; (3) the magnitude of claimed amounts; and (4) the level of management and administration of claims and disputes. It is perceived that this paper would trigger professionals to think of other suitable dispute resolution mechanisms, such as dispute review boards, for settlement of claims arising from Egyptian large scale construction projects. Furthermore, this study would be of value for contractors and owners who intend to work in the Egyptian construction market.     

Case for Expanding the Claim Dispute Resolution Training of TxDOT Personnel

Texas Department of Transportation (TxDOT) currently uses general alternative dispute resolution and dispute management tactics to resolve construction claims. The successful application by TxDOT of project partnering methods, critical path management, and the Contract Claims Committee has resulted in a relatively low number of claims filed. However, one weakness in TxDOT’s current methodology is the lack of specific protocol for project-level personnel and administrators. The following survey of TxDOT dispute resolution methods emphasizes the importance of developing a personnel training catalog for Area Engineers in order to avoid costly claim dispute escalation. As the individual primarily responsible for resolving project and district-level disputes, the Area Engineer should be equipped with dispute resolution training if TxDOT wishes to improve the efficiency of its alternative dispute resolution protocol.     

Study of Real Options with Exogenous Competitive Entry to Analyze Dispute Resolution Ladder Investments in Architecture, Engineering, and Construction Projects

Architecture, engineering, and construction industry participants often find it pragmatic to implement a project-specific dispute resolution ladder (DRL) as a managerial tool to assist in the prompt resolution of claims and change orders (CCOs) that might arise during the project construction phase. This project-specific DRL consists of a single or multiple alternative dispute resolution (ADR) techniques that require capital expenditures to cover the expenses incurred by the owner’s/contractor’s employees and third-party neutrals. If a project-specific DRL is properly chosen, then the capital expenditures are outweighed by the expected benefits from the DRL implementation; namely, prompt resolution of the CCOs without incurring excessive cost overruns on an already financially stressed project budget, as well as avoiding the escalation of the claims to a dispute that requires long protracted litigation for final settlement. Typically, the decision as to which ADR techniques to include in the project-specific DRL is undertaken during the project planning phase prior to the actual occurrence of the CCOs. In this case, the project owner decide to invest in a DRL in exchange for the expected savings in the project. This decision regarding the project-specific DRL is usually done based on the experience of the project parties with the ADR techniques. However, such a decision needs to be guided by a financial tool that allows the project owner to evaluate alternative DRLs and choose the most economically feasible alternative based on the project and ADR characteristics. In this paper, a financial model is developed to evaluate DRL implementations in construction projects by drawing analogies from real option theory with exogenous competitive entry. More specifically, the occurrence of a given CCO will result in a reduction in the value of expected savings in the project due to DRL implementation. This is similar to the reduction in the gross value of a capital investment project in a commercial property due to competitive entry by another similar commercial property developer in the market. At the same time, the CCO resolution due to an effective DRL implementation will allow project owner to recover part of the losses in the expected savings in the project due to the DRL implementation. The model presented in this paper takes into account the characteristics of the various ADR techniques included in the project-specific DRL, and the characteristics of the CCOs occurring during the construction phase of the project. A case study of a real construction project is used to illustrate the practical implementation of the model. The results indicate that for this case project and from a financial point of view, the investment in the chosen project-specific DRL was not worthwhile because of the high uncertainty in the project, and the low effectiveness of the selected DRL. These conditions did not provide the owner with the anticipated advantage of the DRL implementation in reducing the value of the CCOs occurring in the project. At the same time the cost of the DRL implementation exceeded the actual savings attained in the project.     

Resolving interpersonal conflicts: An analysis of stylistic consistency.

In three experiments, we examined people's consistency in their styles of resolving interpersonal conflicts. In Experiment 1, 40 Yale undergraduates described recent significant interpersonal conflicts with a same-sex peer, an opposite-sex peer, and a parent, and their methods of resolving these conflicts. They then rated the extent to which each of seven styles of conflict resolution characterized their actual and ideal styles of conflict resolution. In Experiment 2, 40 Yale summer school subjects again described and rated their own methods for resolving recent significant interpersonal conflicts with a parent, a teacher, a roommate, and a romantic partner. They also rated styles of conflict resolution for hypothetical conflicts involving these same significant others. In Experiment 3, 40 Yale undergraduates rated actual and ideal styles of conflict resolution as they pertained to both sides of two real conflicts: one regarding a contract dispute between Yale University and Local 34, the union for clerical and technical workers, and the other between the United States and the Soviet Union over arms negotiations. Strong consistencies in styles of conflict resolution were observed within individuals across various interpersonal conflicts, and at the same time widespread differences were observed across individuals in preferred styles of conflict resolution. (PsycINFO Database Record (c) 2010 APA, all rights reserved)     

Influences of Chinese Cultural Orientations and Conflict Management Styles on Construction Dispute Resolving Strategies

Investigating styles of handling interpersonal conflict across multiple situations, this study explores the orientations of Hofstede’s cultural dimensions (power distance, individualism versus collectivism, femininity versus masculinity, uncertainty avoidance, and long-term versus short-term orientation) influencing the choice of dispute resolving strategies in construction industry. Combinations of the five conflict approaches (collaborating, dominating, compromising, avoiding, and accommodating) of the two concerns model are adopted to present the styles of handling conflict (or conflict management styles). Chinese residing in Taiwan are chosen as the focus group. 62 engineering students in universities and 64 engineers in industry practices, totaling 126, were interviewed, and their conflict management styles toward supervisors and equally ranked peers were assessed using Thomas-Kilmann Conflict Mode Instrument. The cultural orientations are detected and articulated by the degree of people’s style adjustment that switches from one’s preferable style to another style to handle conflicts with his/her supervisors and peers differently. The results of the investigation data show that the adjustment of styles facing different situations clearly demonstrates the influences of cultural orientations. Our findings on Chinese cultural orientations (high power distance, femininity, and high uncertainty avoidance) may partially explain why Taiwanese-Chinese engineers prefer handling disputes through cumbersome administration routes and why most filed disputes will eventually escalate up to the central governmental authority for final settlements.     

Mediation∕Arbitration: Alternative Dispute Resolution Process

Interest in alternative dispute resolution (ADR) techniques for the construction industry has grown in recent years. Traditional litigation has been criticized on several fronts. The traditional procedures are often cumbersome, expensive, and lengthy. The outcome of litigation is uncertain and often confusing. For certain cases, alternative procedures may be useful in quickly resolving disputes. Sometimes there is no alternative to litigation. Each case is unique, and the appropriate form of dispute resolution mechanism must be established for each project. This paper reviews the process of mediation∕arbitration, and compares that process to other alternative dispute resolution procedures.     

Analysis of Dispute Review Boards Application in U.S. Construction Projects from 1975 to 2007

Since their first successful implementation in 1975, dispute review boards (DRBs) gained popularity as a standing neutral alternative dispute resolution (ADR) technique, and were implemented on a number of high profile construction projects in the United States and worldwide. The purpose of this study is to present a review, trend analysis, and classification of U.S. construction projects that had DRBs for the period of 1975–2007. Thus, a total of 1,042 U.S. construction projects that had DRB as part of their contract provisions are extracted from the Dispute Review Board Foundation database and are analyzed. The results of this study are presented in two major sections. In the first section, results of trend analysis are reported as growth in number of projects with DRB since 1975, as well as the distribution of these projects in terms of construction type (i.e., building, highway, and tunnel), and construction volume category. On the other hand, the second section includes the results of the analysis undertaken to study the mechanics of DRB application in construction projects. In this context, the effectiveness of DRB as a preventive measure against the escalation of conflicts to disputes is first studied. For those projects that had disputes heard by a DRB panel, the data was further analyzed to determine the effectiveness of the DRB as an ADR technique that can help in the resolution of a dispute at the project level without further escalation to arbitration or litigation. The results of the study indicate that DRBs have been successfully implemented in all three construction sectors in the United States. The effectiveness of DRB as a prevention technique was observed on approximately 50% of the 810 projects where no disputes were ever heard through a DRB panel formal hearing. For the remaining 50% of the projects, the effectiveness of DRB as an ADR technique was found to exceed 90% when comparing the number of disputes that were settled due to DRB recommendation to those that were actually heard during a DRB hearing session. Finally, the paper concludes with a set of questions and hypotheses that may be undertaken to explain the recorded observations, and set the way for future research efforts in this area.     

Formalization and Automation of Time-Space Conflict Analysis

With increasing pressure for shorter delivery schedules, space is a critical resource at construction sites. Current industry practice lacks a formalized approach or tool to help project managers analyze spatial conflicts between activities prior to construction. Consequently, time-space conflicts occur frequently and significantly impact construction processes. Time-space conflicts have three characteristics that impede the detection and analysis of time-space conflicts prior to construction: (1) They have a temporal aspect; (2) they have different forms creating different problems; and (3) multiple types of spatial conflicts can exist between a pair of conflicting activities. This research formalizes time-space conflict analysis as a classification task and addresses these challenges by automatically (1) detecting conflicts in four dimensions; (2) categorizing the conflicts according to a taxonomy of time-space conflicts that is developed; and (3) prioritizing the multiple types of conflicts between the same pair of conflicting activities. This research extends previous research on construction space management by developing a taxonomy of time-space conflicts and by defining an approach for the analysis of time-space conflicts prior to construction.     

Computer-Supported Collaborative Negotiation Methodology

The development of large-scale civil engineering projects requires the collaboration of experts from different specialties. However, conflicts and disputes occur regularly during the entire life cycle of large-scale projects due to the complex structure of organization and the different types of expertise involved. If these disputes or conflicts cannot be resolved or addressed quickly and effectively, the collaborative mode of the participants can be affected, creating a hostile environment in which progress of the project will slow to a halt. Therefore, better methodologies are needed to improve the collaborative process and to create more effective, efficient, and sustainable solutions to conflicts. This paper presents a methodology for facilitating the negotiation of conflicts during the development of large-scale civil engineering projects. Two fundamental theories are used in this methodology: (1) game theory, which is the study of players' actions based on the premise that the decision of any player can affect the payoff of all players; and (2) negotiation theory, which is the study of the interactions between parties, designed to reconcile their differences and produce a settlement. The strong support given by these two theories to negotiators is highlighted in the following observations. First, people need to negotiate because of their conflicting interests. From the negotiator's point of view, expressing the interests of all participants is very important in conflict resolution and can be accomplished by following the principles outlined in negotiation theory. Once the interests have been expressed correctly, the influence of positions or of conflicting interests on the overall negotiation outcome is evaluated using game theory. Based on these two fundamental theories, this paper presents a collaborative negotiation methodology and a computer agent named CONVINCER, which incorporates that methodology to facilitate or mediate the negotiation of conflicts in large-scale civil engineering projects. Hypothetical case studies and resolution processes demonstrate the effectiveness of the CONVINCER agent in conflict resolution. Results of applying the methodology to different scenarios also show that the CONVINCER agent provides efficient, effective, and sustainable solutions, thus improving the conflict resolution paradigm in the A∕E∕C industry.     

Evolution of Statutory Adjudication as a Form of Dispute Resolution in the U.K. Construction Industry

This paper reports on the rapid growth in the use of this form of dispute resolution and its apparent decline. It considers how this novel form of dispute resolution has changed in nature from its original limited role of providing a speedy and inexpensive process of resolving disputes so that cash could flow in the industry and be of help primarily to those in the lower reaches of the subcontracting chain into a highly developed legal process which has increasingly been utilized for large and contractually complex disputes. Statutory adjudication is still used extensively in the U.K. construction industry as the method of choice to resolve disputes, many of which would previously have gone to court or to arbitration. Data for this study were provided by the Adjudication Reporting Center at Glasgow Caledonian University.     

Conflicts between Owner and Contractors: Proposed Intervention Process

The parties of a construction contract, the owner and contractor, are a society with a complex set of interrelated relationships requiring cooperation and collaboration to coordinate time, resources, and communication. The main goal of the parties involved in a project’s construction is to have a successful project constructed in accordance with the plans and specifications, within the time and cost originally anticipated. The success of a project depends on a number of variables, not the least of which is how the organizations approach problems and conflicts. However, the adversarial atmosphere that infects the industry can prevent the parties from reaching their goal. This paper proposes an intervention process, a combination of partnership and mediation, to prevent and resolve dispute prior to contract close-out.