This document discusses various techniques for resolving construction contract disputes, including litigation, negotiation, arbitration, mediation, expert determination, dispute review boards, and rent-a-judge. It provides details on claims that commonly arise in construction projects and against owners or contractors. The best practices for preventing and resolving disputes involve using alternative dispute resolution methods like mediation early on and having a predetermined dispute resolution plan.

1. CONTRACT DISPUTE RESOLUTION
TECHNIQUES
LECTURE-5
1 11-04-2012

2. CONTRACT DISPUTE
RESOLUTION TECHNIQUES

3. Construction Claims
 Construction contracts are seldom ideal, and claims for
time extension or financial compensation often have to
be made by one party on another.
 Claim analysis has become an important issue for project
management
 Typical construction claims against owners
• Scope changes
• Change orders
• Work suspension and stoppages
• Site access or availability
• Strikes etc.

4.  Typical construction claims against the contractor
• Materials out of specification
• Defective work
• Property damage
• Contractor’s late completion

5. Disputes
 The best practices for resolving construction disputes
include a combination of: dispute prevention, flexibility,
early dispute intervention, use of alternative dispute
resolution methods, and a predetermined plan as to how
disputes will be handled.
Contract Dispute Resolution Techniques

6. Disputes
 The various types of dispute resolution methods
used in construction disputes are:
Tradition Techniques
 Litigation
 Negotiation
Alternative dispute resolution Technique
(ADR)
 Arbitration
 Mediation
 Expert determination
 Dispute Review Boards
 Rent a Judge
Contract Dispute Resolution Techniques

7. Litigation
 Most construction disputes are tried in one of the state
judicial systems.
 A particular state court gains jurisdiction over a case if
one of the parties is based in that state or if the project
itself is located in that state.
 If the two parties to the dispute are based in different
states, whichever party initiates the litigation chooses the
forum.

8.  Litigation usually refers to the process of
submitting matters for resolution to the courts of
the provinces, or in some instances, the federal
court system.
 Litigation usually occurs because:
 The amount of damages is large
 One or more parties refuses to negotiate a solution
 The issue is complex
 A court-ordered solution is the quickest solution
 Litigation will not affect the project schedule
Contract Dispute Resolution Techniques

9. DISADVANTAGES OF LITIGATION:
A complex construction dispute may take anywhere from
1 to 2 years before it reaches trial.
The prolonged and detailed process makes litigation very
expensive.

10. Contract Negotiations
 Another way of resolving construction disputes is by
holding negotiations
 Between the two parties without neutral party
 It is one of the most-tried methods and most-successful
too
 Negotiations are quite simple and can be done over the
telephone, by email or letters, at a meeting or even
through mediation which is, another form of alternative
dispute resolution.
Contract Dispute Resolution Techniques

11. Skills Necessary for a negotiator
 Preparation and Planning skills
 Knowledge of subject matter
 Ability to understand the interest of the firm
 Ability of persuade others
 Good listening skills
 Patience
 Ability to control emotions
 Ability to maintain flexibility
Contract Dispute Resolution Techniques

12. Arbitration
 In arbitration, each party in a dispute agrees to submit
evidence to a neutral third party to review and render a
judgment of responsibility.
 Arbitration is less costly and time-consuming than
litigation, but has fallen out of favor because it is still
more expensive and slower than mediation or
conciliation.
 Arbitration may be binding or non-binding, depending on
the contract provisions.
Contract Dispute Resolution Techniques

13. Mediation
 Mediation is a voluntary negotiation between the parties
in a dispute, aided by a neutral third party (the mediator).
 The mediator’s role is to assist the parties to find their
own solution.
 Mediation is mentioned as the desired form of problem
resolution in agreements, and is faster and less costly
than arbitration.
Contract Dispute Resolution Techniques

14. ADVANTAGES OF MEDIATION
Fast
Inexpensive
Conducted by experts
Confidential and convenient
DISADVANTAGES OF MEDIATION
 Mediation is non-binding
If an agreement cannot be worked out, the mediation
proceeding will have been a waste of time and money.

15. Expert Determination
 Some disputes are of such a nature that they can be
resolved through objective testing or the opinion of an
expert.
 Environmental and material testing issues are examples of
problems in which both parties may voluntarily conclude
that they will accept the judgment or report of an
independent agency.
Contract Dispute Resolution Techniques

16. Dispute Review Boards
 Dispute Review Boards
 The DRB method of dispute resolution was developed by the
committee on contracting practices of the underground
technology research council of ASCE.
 The DRB comprises three members: one selected by the
owner, one by the contractor, and a third selected by the first
two.
 All DRB members are impartial and experienced in
construction. They are appointed soon after the contract is
awarded
Contract Dispute Resolution Techniques

17.  DRB members are sent progress reports and visit the
project periodically.
 The DRB is not used for routine claims or differences of
opinion, but for the resolution of major problems.
 The recommendations of the DRB are not legally
binding, but are not likely to be reversed in litigation.

18. ADVANTAGES OF DISPUTES REVIEW BOARDS
The DRB hears disputes on an informal basis and can
provide recommendations for their timely resolution
before parties adopt hard positions leading to litigation.
The parties are comfortable with the recommendations of
the DRB since the selection of the DRB members is
controlled by the owner and the contractor.
 Because they meet periodically and they are sent
progress reports, the DRB members are familiar with the
elements of the project.


19.  Although the DRB recommendations are not binding on
either party, there is strong motivation to accept the
findings

20.  DISADVANTAGES OF DISPUTES REVIEW BOARDS
 The impartiality and conflict-of- interest portion of the
DRB specification is so tough that sometimes there are
not enough qualified people for the DRB.
 The project must be large enough, and the probability of
the occurrence of disputes throughout the course of the
project must be high enough to justify the expense of
retaining the services of the DRB members for the entire
duration of the project.

21. Rent-a- Judge
 Hire ex- judge or lawyer to give binding or non-binding
decision
Contract Dispute Resolution Techniques