CONSTRUCTION DISPUTE

TABLE OF CONTENT

DEFINITION OF DISPUTE

THE GENERIC TYPES OF CONSTRUCTION DISPUTES

CRITICAL FACTORS AFFECTING THE USE ADR PROCESSES SSPECIFIC SOURCES OF CONSTRUCTION DISPUTE HIERARCHY DISPUTE RESOLUTION PROCESSES

DEFINITION OF DISPUTE
i. Dispute is a misunderstanding between two parties, either contractual or non- contractual (Oxford Dictionary) Definition of the dispute may be circumscribed it may inevitably involve resolution of other matters which may not specifically have been raised into separate or discrete disputes.

ii.

iii. The judicial development of the definition of dispute required to give an adjudicator threshold jurisdiction has been instrumental in encouraging the Parties to exchange views and facts which support their case, but it can be a rather blunt instrument for reducing dispute and far short of a preadjudication protocol (Construction Law Handbook, 2007).

OTHER DEFINITIONS DISPUTE

Example: It involves disagreement over issues capable of resolution by negotiation, mediation or third party adjudication
Example: The designer would not agree when they have made a blander in their designs but there will always put the blame with the contractor, claiming he is failing to do his work.

Example: i. Contract Documents ii. Agreement

Dispute is unable to eliminate because the nature of the construction is full risk. (Thomas 1995)

A dispute defined as a class or kind of conflict, which manifests itself in distinct, justifiable issues. (Brown and Marriot (1993)).

A dispute will not exist until a claim is asserted by one party which is disputed by the other party (Bachner (1988))

VISULIZE ACTIVITIES WITH TIMELINES!

CAUSES OF DISPUTE BY STAKEHOLDERS

CLIENT

CONTRACTOR

CONSULTANT

Causes of Construction Dispute by Clients

Deficient management supervision

Failure to respond in time

Poor communication

DISPUTE

Lowest price menitality in engagement of contractor

Failure to appoint project manager

Discrepancies in contract documents

Causes of Construction Disputes by Contractors

Delay suspension of work

Failure to plan and execute the changes of works

Reluctance to seek clarification

DISPUTE

Inadequate CPM scheduling and update requirement

Lack of understanding and agreement in contract procurement

Failure to understand and correctly bid or price the works

Causes of Construction Dispute by the Consultants

Failure To understand its responsibilities under the design team contract
To request for information late information delivery and cumbersome appoarch Over design and understanding the costs involved

DISPUTE

Incompleteness of drawing and specification

Design and specification oversight and errors or omissions from specialists

Varistions due to design errors

THE GENERIC TYPES OF CONSTRUCTION DISPUTES

i. Whitfield (1997) who identifies as the more common cause such as misunderstandings and poor communications, personal and cultural values and professional ethics, diverging interest and personalities of individuals. The complexities of the design and construction process, the customary practices and relationships that are created on a project. Others are formed through the constraints or influences of people and organization external to the client and project team example end users, planning and building authorities, adjoining owners and utility undertaking.

ii.

In Table, Fenn et al (1997) provides a synopsis of the findings of nine frequently cited studies of the sources of disputes.

RESEARCH Bristow and Vasilopoulous (1995)

SOURCES OF DISPUTE Six areas: Unrealistic expectations, ambiguous contract documents, poor communication, lack of team spirit and changes Six areas: payment, performance, delay, negligence, quality and administration Three areas: people, process and project Seven areas: contract terms, payment, variation, time, nomination, renomination and information Six areas: Changes of scope, changed condition, delay, disruption, acceleration and termination Two areas: root causes and proximate causes Ten areas: management, culture, communication, design, economics, tendering pressures law, unrealistic expectations, contract and workmanship Four areas: acceleration, restricted access, weather and changes of scope Two areas: misunderstanding and unpredictability

Conlin et al. (1996) Diekmann et.al (1994) Health et.al (1994)

Hewit (1991)

Kumaraswarmy (1996) Rhys Jones (1994)

Semple et al. (1994) Sykes (1996)

Many types of construction disputes, including: 1. Owner's failure to pay for work or lacks funds to continue work:
We work with contractors find legal relief where an owner has failed to pay. From extending the substantial completion date (SCD), pursuing a claim for increased costs (including the cost of mobilization and de-mobilization) seeking change orders or and enforcing liens, we can assist you in getting the amounts you are owed.

2. Unforeseen site conditions:

Many issues can arise during the course a project, such as disputes with neighbors during foundation work, hitting water or having insufficient personnel on the job, can cause significant and costly delays. We will advise you about the legal action you can take to protect your rights if you encounter a situations not anticipated in the contract.

3. Stop work orders issued by the Building Department:

Stop work orders can be issued for a variety of reasons, from safety issues on the job site to failing to protect adjacent property and failing to have proper controlled inspections to working without proper permits. We are experienced in handling these types of delays and will work with the Building Department to resolve the matter as promptly as possible. Helping you move forward with project completion is our goal.

4. Breach of contract by any party:

When a party fails to perform their contractual obligations, we will help you seek enforcement of the contract or compensation for damages. Whether the dispute is over payment, the quality or scope or work performed, failure to correct defective work, liens filed by subcontractors or suppliers, or wrongful termination of the contract, rely on us for assertive and experienced representation.

A survey of more than 300 construction dispute in the USA leads to the conclusion that their causes can be largely traced to five sources (H. Murray Honds 1979): i.Errors, defect or omissions in contract documents ii.Underestimation of the cost by the client, the construction or both iii.Changes in conditions e.g. unforeseen ground conditions iv.Claims from end-users (legal right of the owners and tenants) v.People involved in construction process

Research

Sources of Dispute Project Uncertainty; Contractual Problem; Opportunistic Behavior; Contractors financial

Mitropoulos

position ad cost of conflict and culture

Ambiguous contract documents; competitive/adversarial attitude and dissimilar perception of Spittler fairness by the participants

Booker Sheridan

Payment, delay, defect/ quality and professional negligence Valuation of variations; valuation of final account and failure to comply with payment previous

Variations; ambiguities in contract Document; inclement weather; late issue of design information; delayed possession of site; delay by other contractors employed by the client and Yate postponement of part of the project

Change of Scope, Change Conditions, Delay, Disruption, Acceleration & termination. Hewit

PAYMENT

LACK OF COMMUNICATION

VARIATION

SOURCES OF CONSTRUCTION DISPUTES

INCONSISTENCIES IN CONTRACT

DETERMINATION OF
CONTRACT

CRITICAL FACTORS AFFECTING USE ADR PROCESS

SETTLEMENT AGREEMENT

BENEFIT

NATURAL OF PROCEEDING

OUTCOME OF THE PROCESS

PROCESS OF PROCEEDING

CRITICAL FACTORS AFFECTING USE OF ALTERNATIVE DISPUTE RESOLUTION PROCESSES

SIGNIFICANT
a) Bindingness of the decision (Bindingness) b) Enforceability of the decision (Enforceability) c) Obtaining fairness (Fairness)

1. SETTELEMENT AGREEMENT

2. BENEFIT

a) The cost involved (Economy) b) Preservation of relationship (Relation) a) Confidentiality of the process (Confidentiality) b) Privacy of the proceeding (Privacy) a) Obtaining creative remedies ( Remedy) b) The width of the remedy ( Remedy)
a) The parties ability to control over the proceeding (Control) b) Flexibility of the proceeding ( Flexibility) c) The duration of the proceeding (Spped)

3. NATURE OF PROCEEDING

4. OUTCOME OF THE PROCESSES

5. PROCESS OF PROCEDING

The three attributes as extracted significant: Factors 1 are: 1.Bindingness 2.Enforceability 3.Fairness Factor 2 consists of the:
1.Attributes 2.Economy 3.Preservation of Relationship
Address the benefit that result from a successful ADR process

To the settlement Agreement obtained in ADR process

Factor 3 includes:
1.Confidentiality 2.Privacy
Relate to the nature of the proceeding to avoid dispute becoming know to public

Factors 4 are: 1.Remedy 2.Creative Solution

attributes extracted

Factor 5 consists of three attributes: 1.Flexibility 2.Control 3.Speed

HIERARCHY OF DISPUTE RESOLUTION PROCESSES

LITIGATION

BINDING RESOLUTION

NON-BINDING RESOLUTION

STANDING NEUTRAL NEGOTIATION