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Session 5

Session 5. Dispute and Resolution. Outline. Nature of Construction Dispute Methods of Dispute Resolution Partnering Conflict Resolution Negotiation. Social organisation, authority & personalities differing perspectives, interest & agendas. Contractual

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Session 5

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  1. Session 5 Dispute and Resolution

  2. Outline • Nature of Construction Dispute • Methods of Dispute Resolution • Partnering • Conflict Resolution • Negotiation

  3. Social organisation, authority & personalities differing perspectives, interest & agendas Contractual disagreement in the interpretation of plans, specifications, site conditions, payment evaluation, etc. Disputes

  4. Main Causes of Disputes • Competitive & adversarial attitudes • Dissimilar perceptions of fairness • poor management • incorrect or bad advice • ambiguous contract documents

  5. Managing Construction Conflicts • Avoid adversarial situations • Minimise effects of conflict by providing mechanisms to resolve dispute e.g. integrate dispute resolution mechanism into contract documents provide a procedure for conflict resolution

  6. Dispute Resolution Processes • Litigation • Arbitration • Adjudication • Mini-trial • Independent Expert Appraisal • Conciliation • Negotiation

  7. Litigation • Cost • Slow in obtaining decision • Lack of understanding by judges of construction process • Business disruption and time consuming

  8. Arbitration • Commonly governed by an arbitration clause in construction contracts • Decisions by arbitrator/s binding except on question of law on which a party may appeal to the court • Biggest advantage is private nature of the proceedings

  9. Adjudication • Similar to arbitration but parties may choose to contest decision/s of the adjudicator • Adjudicator does not need to consider if his decision/s are acceptable to the parties but he must decide

  10. Mini-trial • Not a trial but a structured settlement negotiation • Voluntary, confidential and non-binding • Usually in the form of a one / two day information exchange for both sides to present case to a neutral advisor. This is followed by settlement negotiation

  11. Mediation • Voluntary process in which a mediator assist the parties to negotiate a settlement • Mediator assists to develop options which may accommodate need of both parties • The parties retain control of outcome of the exercise

  12. Advantages of Alternative Dispute Resolution • Impact on time and cost • confidentiality • control of resolution process • wide range of remedies available • more permanent solution • enhance/preserve relationship • multi-party involvement

  13. Dispute Prevention Mechanisms • Dispute Review Board • Partnering

  14. Dispute Review Board • Set up as part of a project management structure • Comprise normally 3 members, either 1 each plus a neutral or all 3 neutrals • Board periodically to review and resolve problems before they become disputes • recommendations of Board not binding though record admissible in litigation

  15. Advantages • Addresses issues before they become disputes • prevent adversary and hostility from developing • Close to the ground and timely recommendations, if adopted can prevent delay • prevent dispute from escalating

  16. Partnering • Principle is to foster an atmosphere of cooperation • Representatives of participants such as owner, designers, main contractors and other major contractors and suppliers get together for the purpose of identifying potential problems and developing solutions

  17. Advantages • Project executed in an atmosphere of openness, trust and cooperation • Problems may be predicted and hence solution more considered and readily available • Enhances relationship for long-term business • A procedure conceived in advance

  18. Conflict Resolution calls for the creation of a ‘win-win’ situation

  19. Factors influencing on the course of conflicts • Prior relationship • Nature of the conflict • Characteristics of the parties in the conflict • Estimation of success • Third party influence

  20. Approaches to Conflict Resolution • Avoidance - ignoring the conflict by disregarding them • Accommodation - play it down • Compromise • Competition - a win-lose situation • Collaboration - parties working through their disagreement

  21. Interaction among approaches

  22. Negotiation Based on :- • Purposeful Persuasion • Constructive Compromise

  23. Position-building Emphasis on bargaining Emphasis on linkage trading & movement Finalising the agreement Joint exploration Emphasis on discussion Emphasis on joint decision building Finalising the agreement Phases of Negotiation

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