Last edited 26 Jun 2019

Dispute resolution

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Construction projects are usually long-term operations with high uncertainty and complexity, and it is impossible to resolve every detail and foresee every contingency at the outset. As a result, situations often arise that result in disputes between the parties to the contract.

The likelihood of disputes arising can be reduced by:

Where disputes occur, the parties to the contract should first attempt to resolve them amongst themselves, as this is likely to be the fastest and least expensive solution, allowing the project to continue without disruption and maintaining good working relationships.

Where this is not possible, it may be necessary to seek a third party to resolve the dispute.

However, taking disputes to the courts can be expensive, complex, adversarial and time consuming. This may not be appropriate on construction projects, where a quick resolution may be needed so that the works can proceed and where it is important that the parties to the contract maintain a good working relationship.

As a result, construction contracts usually include provisions for the resolution of disputes by agreed alternative dispute resolution procedures (ADR). These are typically less formal than court proceedings and should be faster, less expensive and less times consuming, allowing the parties to maintain a good relationship.

Construction contracts are also subject to statutory schemes, such as the Housing Grants, Construction and Regeneration Act, which impose ADR in the absence of appropriate contractual terms.

ADR typically involves procedures such as mediation, adjudication, arbitration, or a combination. Large or complex projects may have additional tiered dispute resolution procedures (with obligations to negotiate in good faith), dispute resolution boards, steering committees and partnering meetings. For more information see: Alternative dispute resolution.

Where court action is necessary, the Technology and Construction Court (TCC) is a specialist court, which deals principally with technology and construction disputes. However, in many cases, there will be a compulsory Pre-Action Protocol to encourage the frank and early exchange of information about the prospective claim and any defence to it. This can enable the parties to avoid full court proceedings by agreeing a settlement before commencement. It also supports the efficient management of proceedings where full court proceedings cannot be avoided.

In the event of a dispute arising, the contract administrator may:

The Global Construction Disputes Report published by Arcadis in 2019 found that the UK remains the jurisdiction with the shortest average length of time to solve a dispute at 12.8 months, and that the average value of disputes in the UK has fallen 47% to US$ 17.9 million. Negotiation remains the preferred method of resolution. https://www.arcadis.com/en/united-kingdom/our-perspectives/2019/june/global-construction-disputes-report-2019/

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Comments

Possibly worth adressing substantially in this article as a core issue towards reducing the likelyhood of disputes arising is what would be at the source of the factors listed in the article existing in the first place as significant concerns to address. The list mentions "Properly assessing risks" while it should possibly actually say "Properly managing risks". At the source of most disputes features prominently project sponsors and/or participants to manage project risks primarily by transfer to others and by systematic converstion of the nature of risks into financial terms. Unintelligent/unreasonable risk transfers (downloading the responsibility to manage risks to entities that can not materially nor be reeasonably expeected to exercize the level of control and authority commensurate to the nature and/or importance of any given risk) is often the direct reason why the means to reduce disputes listed in the article fail to be implemented or even provided for. Managing risks by essentially evacuating them by transfer is a fundamentally delusional strategy. Transferring risks mostly produces downstream risk transfer chains, certain to fail at the weakest link. In fact, wholesale transfer of project risks merely creates a new risk, often cruelly underestimated in terms of probability and impact if at all actually assessed : failure of the risk transfer strategy. Failures in risk transfer strategy (including where everything is converteed into financial compensaiton) always occur after harm has been done to the project and damages incurred and, predictably, disputes having been triggered.