Dispute Resolution in the Construction Industry in Ireland: A Move to Adjudication?

Dispute resolution in the construction industry in Ireland is about to change radically with the introduction of the new Public Works forms of contract. Traditionally, Ireland has had an image of being able to resolve disputes by the use of informal channels and recourse to formal dispute resolution was seen as something to be avoided. Will this now change? This paper reviews the forms of dispute resolution which have traditionally been used in Ireland and details the new form of dispute resolution which is to be introduced. The new form of dispute resolution is unique and does not fit easily into any standard dispute resolution category. How will this dispute resolution procedure operate in practice and how will it affect the ability of parties to resolve disputes? This paper intends to provide an insight into the answers to these questions.     

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.     

Perspective from the United States: Tensions between “Getting It Done” and “Getting It Right”

For over 2 decades, and in response to complaints that arbitration was too expensive and too time consuming, the American construction bar has been energetic and innovative in developing a broad array of dispute resolution tools for resolving construction disputes. These “tools” have included “partnering,” mandatory negotiations, interim decision making by design professionals, mediation, standing neutrals and dispute resolution boards, minitrials, early neutral evaluation, and expert determinations, all developed as alternatives to arbitration and litigation. More recently, in 2006, a voluntary “fast track” process for resolving construction disputes within 100?days has been proffered by the CPR Institute for Conflict Prevention and Resolution. Yet, there are certain dynamics or “tensions” inherent within, and associated with, all construction disputes that continue to resist efforts to speed up dispute resolution processes; these tensions must be reconciled or taken into account before any fast track or “adjudication”-type process will be generally accepted in the United States construction industry. Thus, for now and in the foreseeable future, there will continue to be a smorgasbord of dispute resolution processes for resolution of construction disputes. This is a good thing, because parties to construction disputes come with a great variety of appetites and needs. The focus of attention should be, not so much on development of the ideal or best dispute resolution tool, but having a willingness to select the “best tool for the job,” after the nature of the dispute is known.     

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.     

Insight into Resolving Construction Disputes by Mediation/Adjudication in Hong Kong

Resolving construction disputes using an adversarial approach is considered to be in opposition of the maintenance of a harmonious relationship between two parties. The modern arbitration process may emulate the litigation proceeding leading to delay and cost escalation. During the past decade, the Hong Kong Government has implemented a mediation clause as an alternative mode for settlement of construction disputes. In this paper, the experience and insight into resolving construction disputes by integrating mediation and then arbitration in Hong Kong are highlighted. The state-of-the-art modern mediation process and its philosophical origins are reviewed. The shortcomings of the present system are pinpointed. The success of the adjudication now practiced in the United Kingdom may suggest that there is a place for another process of dispute resolution, which may help improve the situation. The prospect of the proposed mediation/adjudication and then arbitration mechanism is discussed with particular reference to the construction industry in Hong Kong.     

International Construction Dispute Adjudication under International Federation of Consulting Engineers Conditions of Contract and the Dispute Adjudication Board

The role of institutional arbitration has become significantly less commercially viable in the international construction industry as a primary means of dispute resolution because of the uniqueness of the construction process. As a result, the construction industry has developed an innovative form of primary dispute adjudication called the Dispute Adjudication Board (DAB). This paper will show the need for an efficient dispute resolution process because of the globalization of the construction industry. It will focus on the standard contract forms of the Féderation Internationale des Ingénieures-Conseils (International Federation of Consulting Engineers) (FIDIC), which are widely used in international construction projects. The paper will then discuss recent developments in the FIDIC, including the development of the DAB to address the fundamental need for a commercially viable means of construction dispute adjudication.     

Disputes and Dispute Resolution Systems in Sino-Foreign Joint Venture Construction Projects in China

There has been a sharp increase in the number of Sino-Foreign Joint Venture (SFJV) construction projects in the People’s Republic of China since the 1990s. Despite the Chinese Government’s new measures for boosting foreign involvements, entering into the construction market remains problematic for many foreign contractors. One of the problems concerns construction disputes. In light of this, this paper reports a study on disputes and dispute resolution systems in SFJVs. A questionnaire survey of 41 practitioners in the field was carried out. The main purpose was to identify the most common sources of disputes and the most commonly used dispute resolution methods in SFJVs. Results show that the sources of construction disputes can be classified into three categories: contractual, cultural, and legal matters. The most commonly used dispute resolution methods are mediation and arbitration. These findings will give both Chinese and foreign contractors invaluable insights into disputes and dispute resolution systems in SFJV projects.     

Alternative Dispute Resolution Techniques: Design Professional's Perspective

Alternative dispute resolution (ADR) techniques offer members of the design‐construct community the opportunity to resolve disputes without having to resort to expensive and lengthy litigation. Disputes inevitably arise because elements of the design‐construct process, such as contracts, specifications, and personnel, are not perfect. Even with a qualified project team that is dedicated to the construction of a quality project, some disputes will occur. Knowing this, a project team's primary objective should be to anticipate circumstances which might generate a dispute and to develop proactive strategies for dealing with such circumstances. When a dispute does occur, internal negotiation should be tried first. This process involves decision makers—those involved financially and those who understand the ultimate impacts of the dispute on the quality and long‐term success of the project. Lawyers should not actively participate in internal negotiation except as a last resort. If this process does not generate a settlement, mediation and arbitration should be tried before commencing litigation proceedings. ADR is an approach to dispute resolution that may be less expensive and time‐consuming, and is more likely to yield “win‐win” settlements than other dispute resolution techniques.     

Adjudication outside Construction, Adjudication for Consumer Disputes

Adjudication is increasingly seen as the preferred means of resolving many construction and consumer disputes. As one party in dispute observed in a personal communication to the writer “It is a forum to finally express my woes. One can often feel helpless . . . in this situation and the process of adjudication has proved cathartic.” However, the differences between construction adjudication and consumer adjudication are not often understood or appreciated. This paper, first, explores some of those differences using, as an illustration of consumer adjudication, the Communications and Internet Services Scheme (CISAS) administered by IDRS Ltd. for the Chartered Institute of Arbitrators and approved by the Office of Communication which is the regulator for the U.K. telecommunications and Internet industry. Second, it looks forward to how the advantages of both may be combined to produce more effective dispute resolution with consistently high standards for resolving differences between parties, ensuring disputes are always effectively and efficiently investigated while streamlining procedures so that they are easy to use, transparent, and cost effective.     

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.     

Construction Claims and Disputes and the Business Culture of Construction in Japan

Increasing attention is today being focused on the issue of dispute resolution in the Japanese construction sector. Disputes were infrequent under the traditional contract agreement system. However, against the background of a shrinking construction market, owners, contractors, builders, engineers, subcontractors, and suppliers are seeking higher profits and are increasingly asserting their rights, resulting in the creation of an adversarial environment in the industry. It is not generally known outside Japan that the term “claim” has traditionally been used in the nation’s construction industry with an entirely different meaning to its use in other countries. This paper discusses unique characteristics of the implementation of construction work in Japan that are representative of this different use of terminology. These unique characteristics are considered as the result of a business culture that has developed through a combination of historical circumstance and the specific characteristics of Japan’s construction market. The paper also examines the mechanism of dispute resolution, and considers specific details and changing trends in construction disputes using relevant statistical data.     

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.     

Designing systems for resolving disputes in organizations.

Dispute systems design attempts to reduce the costs of conflict and realize its benefits by changing the way people handle their disputes. A dispute systems designer may suggest new dispute resolution procedures; organize procedures in a low-to-high cost sequence; work with the parties to help them acquire the motivation, negotiation skills, and resources to use new procedures; and even recommend changes in the broader organization that will facilitate the success of a dispute resolution system. This article draws on our experiences and those of other dispute systems designers, as well as current research on negotiations and dispute resolution, in discussing how principles of dispute systems design apply to intra- and interorganizational conflict. (PsycINFO Database Record (c) 2010 APA, all rights reserved)     

Innovations to Manage Disputes: DRB and NEC

How do we reduce conflict and litigation in the construction process? On one hand, some industry leaders focus their efforts on improving alternative dispute resolution mechanisms to resolve disputes. For instance, the American Society of Civil Engineers has introduced the Dispute Review Board (DRB) as a complementary provision to standard U.S. construction contracts and practices. On the other hand, other industry leaders focus their efforts toward making fundamental changes to the way construction contracts are written. The Council of the Institution of Civil Engineers in the United Kingdom has introduced the New Engineering Contract (NEC) to the construction industry as an alternative to presently used contracts. Both of these efforts have proved to be effective in improving communication, relationships, and the management and reduction of disputes. This paper explores the philosophy of the DRB and NEC and compares their success stories as approaches to combating adversarial relationships and rising litigation costs in the construction industry.     

Model for Understanding, Preventing, and Resolving Project Disputes

Based on the comparative analysis of 24 construction disputes, this paper presents a process model that explains the development of disputes. The model examines the combined effect of project uncertainty, contract, working relations, and problem solving effectiveness on the development of disputes. The model develops a classification of problem situations, and identifies the problem-solving requirements and the potential for dispute in each situation. The model indicates that the prevention of complex, high cost disputes depends more on the planning and problem solving ability of the project organization, and less on the contractual terms. The paper identifies the following actions that can reduce the number and severity of claims: reduction of project uncertainty, reduction of contractual problems, reduction of opportunistic behavior, increased the project organization's problem-solving ability, and use of alternative dispute resolution methods to reduce resolution costs.     

Adjudication: Temporary Binding and Tiered Dispute Resolution in Construction and Engineering: Hong Kong Experience

Hong Kong (under the “One Country Two Systems” Policy, Hong Kong, although an administrative region of the PRC operates a separate legal system, whose roots lie in the English common law system) has a justified reputation for being at the forefront of developments in techniques to avoid and resolve disputes in the construction industry. [This is illustrated by the adoption of the UNITRCAL Model Law by the Arbitration (Amendment) Ordinance 1996, specific powers given to Arbitral Tribunals under the Arbitration Ordinance (Cap. 341) including powers to consolidate, and the development of the dispute resolution adviser system. See the genesis, development and future use of the dispute resolution adviser system by Colin J Wall, Hong Kong Society of Construction Law dated November 17, 2004]. However, it has not, to date, seen the widespread adoption of adjudication as a means of resolving disputes. This article examines the history of the use of adjudication in Hong Kong, current trends, and offers some possible reasons for the limited adoption of adjudication.     

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.     

Case Study as to the Effectiveness of Dispute Review Boards on the Central Artery/Tunnel Project

The most prevalent use of the dispute review board (DRB) process in the United States to date is the central artery/tunnel project located in Boston. A DRB is a three-member panel jointly chosen by the contractor and owner that is present throughout the course of the contract, and whose responsibility it is to hear disputes contemporaneously with their occurrence. This paper reviews the efficacy of the DRB on the central artery/tunnel project answering such questions as to whether or not (1) there was any discernable bid savings between DRB and non-DRB contracts; (2) the DRB was successful in resolving all disputes prior to contract completion; (3) were there any barriers to the DRB’s effectiveness, concerning bid savings; and (4) the DRB reduced the costs of resolving disputes. The questions are timely and important in an industry that looks for new ways to reduce construction costs and values timely prevention and resolution to disputes.     

U.S. Evidence Laws and Their Influence on Mold Litigation Outcomes

The architectural/engineering/construction (AEC) industry has been inundated with disputes concerning excessive mold growth that arose from improper construction or maintenance of the built environment. Despite scientific evidence that shows that exposure to so-called toxic molds does not produce illness, costly legal disputes arise. This paper focuses on instances in which the outcome of mold lawsuits hinged on the jurisdiction where a claim is filed, because of differing expert witness testimony standards. A basic understanding of the implementation of U.S. evidence laws in federal and state courts is presented, select mold dispute cases from varying jurisdictions are summarized, and conclusions are drawn regarding the dispute-resolution trends in this area.