Introduction
Being a complete industry, construction projects are often agreed upon subject to a legally binding contract, heavy capital investment, and multiplied performance stages, all of which are considered disruptive enough to hinder the timely or adequate compilation of the project. Situations like these lead to complex disputes that traverse different locations, parties’ sizes, or even values. The UK domestic Market has relied on arbitration as the primary method of construction dispute resolution for decades, alongside other ADR techniques, adjudication, and litigation subject to pre-action protocols. Regardless, the classical dispute resolution mechanism for a dispute generally has been adjudication carried through court proceedings where an independent judge applies existing legal norms through adversarial trial and thus arrives at a judgment where one party is found on the right and another on the wrong.
This essay aims to define and critically evaluate the forms of dispute resolution in project management. The analysis examines the range of conflict management mechanisms available to pirates during project management. Conflict resolution’s various stages and processes focus on merits and demerits relating to enforceability, fairness, cost, time, and practicability. The suitability of dispute resolution methods for specific construction disputes is also examined.
Dealing with Conflicts in Project Management
Project management offers contracting parties to elaborate the route taken in achieving the results expected of a construction contract during a specified time frame, with listed resources and the application of the constructor, knowledge, skill, and techniques to meet the project’s expected end (Ohlendorf, C. 2001, p2003). Construction project management relies heavily on time, cost, and goal achievement to the employer’s expectation and timely delivery. Thus based on these definitions, conflict during the performance of such a contract will likely arise concerning matters of delay in completion, substandard performance, non-performance, or breach of terms of the construction contract.
Nature of Conflicts in Construction Contracts
There are common disputes that emerge from construction contracts. However, each conflict is often unique to a specific project, and the process of fast-tracking that resolution for such disputes (Campbell, P, 1997). However, the nature of conflicts can be reduced to a few common problems that may evolve into full-blown conflicts. The following are some of the significant sources of construction contract disputes.
Contractual Defects
Contractual term issues are one of the primary causes of construction agreement conflicts given that most contracts are only sometimes accurate to the latter. Sometimes the contractual dispute arises due to both parties’ need for adequate knowledge about the nature and functioning of terms or innocent mistakes made during the contracting phase. These mistakes may be in the form of errors or omissions relating to altered details which may result in the constructor, employer, and project managers being on different footing as to the execution of the contract. In extreme omissions, errors, or mistakes, the project manor may need help to complete the project resulting in conflicts effectively.
Contractual disputes also result from a lack of comprehensive understanding of the contractors and their agents or employees’ terms, conditions, and warranties, leading to the non-performance of the contractor’s obligations. This means that the project needs to be executed or executed correctly, leading to employer dissatisfaction. Unsubstantiated or incomplete claims are also a significant cause of dispute which arises where the contracts need to be better drafted.
Time
The Second edn of the Protocol sets out the 22 Core principles that guide critical project timelines. Time provides for the terms on the express completion date, which can either be fixed, measured within a reasonable duration,[1] Alternatively, it can be extended to re-fix the completion date. Time requires the contractor to complete a section or the whole part within a given date or duration with due expedition and without delay.[2] according to the dictum in SABIC UK Petrochemicals Ltd v Punj Lloyd Ltd,[3] Time requires a duty on the contract to act diligently through the industrious execution of the project to achieve efficiency expeditiously.
Failure to comply with the contract terms as to time places the contractor in breach and results in a conflict, given that timely completion is of great essence to the contract.[4] This is so when the time breach goes to the root of the contract discharging the other party from their obligation.[5]
Delays are, however, commonplace in construction projects. Thus given the cause or nature of the delay, parties. Thus the employee can avoid neglecting his obligation due to time breaches and provide time extensions. Where the employer’s action causes the delay, an extension can be extended to extend the commencement date pursuant to express contractual power.[6]
Place of Dispute Resolution
The choice of seat and law of dispute resolution is also a cause of conflicts in construction contracts as the choice of seat or law may condemn contractors to face sanction or proceedings under the law as a foreign state. The conflict may arise because the laws governing construction contracts may vary significantly from country to country, especially those laws relating to liens, claims, and dispute resolution rules.
Modes of Dispute Resolution
Alternative Dispute Resolution (ADR)
In the UK, mediation was majorly premised on family and domestic issues but has since gained traction in the construction industry.[7] Despite the overreliance on court-based adjudication, parties often agree that it is the most suitable means of dispute resolution but a process only ideal as a last resort. Therefore preference has been returned to the alternative dispute resolution (ADR) mechanism that allows settlement out of court (Fenn, p. 2002).
Negotiations
Negotiations give parties a simple solution guided by the parties themselves using preferred dispute resolution techniques. Negotiations are considered voluntary engagements which are not binding. Sprites can introduce the services of experts and advisers during direct communications.
Mediation/Conciliation
Mediation is a confidential process relying on informal procedures where the parties appoint a neutral mediator to oversee the settlement of the dispute. The difference between mediation and negotiation is that a neutral party is introduced to the conflict. However, the mediator is not responsible for decision-making as the decision remains the responsibility of the employer and the contractor(Gregory et al., 2016). The work of mediation is to initiate communication between parties, thereby creating a path for adequate settlement. Conciliation is similar to mediation, only that the latter is facilitative. At the same time, the former involves the third parties’ direct intervention through evaluating the dispute and offering recommendations as to the suitable outcome.
The Pros of ADR
Time, Cost, and Relationships
Unofficial dispute settlement methods have been recognized as good cultivators of business relations between the employer and the contractor. Mediation can, for example, mend already broken relationships and allow parties to arrive at and complete the project. ADR mechanisms are also time-saving and can last for a few days to a few months compared to arbitration or litigation, which may take years to complete. ADR mechanisms are also less costly than arbitration or litigation as they are shorter and do not require the services of legal experts, which may drive the cost of the settlement higher.
Enforcement OF Awards, Practicability
ADR methods are primarily informal, meaning that parties can keep information they may not want to leak into the public or to other parties confidential, unlike in litigation and arbitration, where proceedings may be in public. Additionally, ADR modes are highly reliable as it does not impose any rights or obligation on the pirates. Most ADR settlements give primacy to the parties’ interests and aim to achieve every parity’s needs. Parties are often urged to adopt commercial socials suitable for the reasonable cause. Finally, awards granted through ADR are considered more satisfactory and easily enforceable as they are generally acceptable to both parties than arbitration or litigation awards which have a winner and loser. Arriving and consensual settlement is often very satisfactory to both pirates.
Cons of ADR
ADR modes may be considered impracticable and hard to enforce due to parties’ concerns about information confidentiality. Such information can be taken over by the opposition and used to the disclosing party’s retirement in another dispute resolution system. ADR also places parties under intense pressure to settle, leading to burnouts which may hamper adequate settlement agreements.
Dispute Adjudication
Given that most disputes do not have laws sheltered through alternative processes without resulting in litigation or arbitration, the last two modes of dispute resolution are considered at the top of the pyramid of construction dispute resolution. Adjudication generally refers to the process where neutral adjudicators decide on the dispute. The decisions arrived at are binding on both pirates but can be appealed through arbitration or litigation. Adjudication is non-statutory, whereas construction contracts refer to using commercial adjudicators when a dispute arises. Adjudicators’ authority is limited to the powers offered under the contract. The Latham Report (1994) recommended the inclusion of adjudication clauses in standard contracts of construction(Akintoye et al., 2000, p. 159). The report is supported by the Housing Grants Construction and Regeneration Act (HGCRA) of 1996. Thus parties must meet the minimum requirements of statutory adjudication.
Process of adjudication
The HGCRA in section 108 provides the procedures for statutory adjudication, including the provision of notice at any time of their intention to seek adjudication. Parties are required to appoint adjudicators within seven days after notice. The adjudicator is responsible for deciding the matter in 28 days, with an extension only allowed upon mutual consent among disputants. The adjudicator is required to uphold fairness and impartiality while investigating and applying the law to the dispute. The adjudicator’s decision is enforceable on both parties as it is binding as a matter of law.
Arbitration
Arbitration is a statutory procedure where disputes are addressed under formalized institutions and rules but by private tribunals chosen by disputants. The arbitrator often is a qualified judge. Arbitration is provided by the Arbitration Act (1996). The decisions of the arbitrators are binding on either party and can be enforced through a court of law. Arbitration has been described as flexible, allows for the expeditious decision of commercial disputes, and is confidential. But arbitration has been criticized for the immense costs of arbitrators and facilities while the enforcement of awards may be limited.
Process of Arbitration
Arbitration follows four steps which begin with the adoption of the arbitration agreement.[8]The agreement provides expressly that parties will submit all their disputes to arbitration.[9]
Alongside the construction contract. Arbitration in London is conducted under the ICC arbitration rules (Safinia, 2014). The arbitrator’s appointment is through parties’ agreements or by the institution to which the contract is submitted. In other instances, the court may appoint the arbitrator. Proceedings are provided under Article 33 of the Arbitration Act and require fairness while submitting the dispute to suitable procedures regarding the circumstances. Award and enforcement are often thorny issues for arbitrators, given that they must act fairly and impartially and not go beyond their authority. The aggrieved party first sends a notice of dispute and refers the same to arbitration. Procedures follow with submitting documents, full and short hearings, and the arbitrator may award the documents alone. The award is final and binding on parties, and the disputing party may go to court for enforcement with limited avenues for appeal.
Litigation
Disputes may be referred to litigation where the dispute has become too complex, and a judge’s opinion is necessary. Courts often act similarly as arbitrators with powers to amend the contract, imply terms and enforce awards.[10] This may claim it relates to construction disputes, award enforcement, engineering defect, claims against personnel, scope changes, or workmanship issues. The aggrieved party often begins with a claim to a Technology and Construction Court (TCC). The court then fixes hearing dates after the filing of notices. Then the respondent has to file their defense (Morgan B, 2008).
Due to complexities, the court may often require the services of experts in the industry to help in the discovery of facts. Courts often follow specific schedules called ‘Scot Schedules’ where multiple matters are handled in stages. Litigation in construction is often costly, even in cases where the disputed sum is lower, making it a last-resort avenue of dispute resolution.
Preferences of Dispute Mechanism
Some construction projects are condemned to adhere to statutory adjudication due to the requirements of the HGCRA that condemn contracts like architectural design, surveying contacts, decoration, and engineering contracts. Claims like those against local governments relating to location development, design issues, claims against a neighbor, and account issues are often submitted before a judge in a court of law due to their complex nature.
Conclusion
Both significant modes of dispute resolution are used in construction contract dispute resolution. However, ADR methods have gained favor among parties because of the benefits of their time-saving nature, low costs, and ease of enforcement since settlements are mutual agreements between parties. Arbitration and litigation are costly and time-consuming modes that destroy the relationship between parties due to their winner-loser approach to dispute resolution.
References
Case Laws
Aughton Limited v M.F. Kent Services Limited [1991] 57 BLR 1
Dodd v Churton [1897] 1 QB 562 CA
Lombard Plc v Butterworth [1987] QB 527 CA at 53
North Regional Health Authority v Derek Crouch) [1984] QB 644 CA
SABIC UK Petrochemicals Ltd v Punj Lloyd LtdEWHC 2916 (QB); [2014] BLR 43 at [19]
Urban I (Blonk Street) Ltd v Ayres [2013] EWCA Civ 816; [2014]1 WLR 756
United Scientific Holdings Ltd v Burnley Council [1978] AC 904 HL at 944
Statues and Legislation
Arbitration Act Sec 6(1)(2)
Dispute Resolution Guidance at http://www.ogc.gov.uk/documents/dispute resolution.pdf accessed on 19/03/2023
Housing Grants Construction and Regeneration Act (1996)
Articles, Books
Akintoye, A., McIntosh, G. and Fitzgerald, E., 2000. A survey of supply chain collaboration and management in the UK construction industry. European journal of purchasing & supply management, 6(3-4), pp.159-168.
Campbell, P. ed., 1997. Construction Disputes: Avoidance and Resolution. Whittles Publishing.
Fenn, P., 2002. Introduction to Civil and Commercial Mediation. Chartered Institute of Arbitrators, Workbook on Mediation.
Gregory-Stevens, J., Frame, I. and Henjewele, C., 2016. Mediation in construction disputes in England. International Journal of Law in the Built Environment, 8(2), pp.123-136.
Morgan, B 2008., Dispute Avoidance (a non-confrontational approach to managing construction contracts, RIBA publishing.
Ohlendorf, A., 2001. Conflict resolution in project management. Retrieved February2, p.2003.
Safinia, S., 2014. A review on dispute resolution methods in the UK construction industry. International Journal of Construction Engineering and Management, 3(4), pp.105-108.
[1]Urban I (Blonk Street) Ltd v Ayres [2013] EWCA Civ 816; [2014]
1 WLR 756.
[2] Infrastructure Conditions of Contract Cl.41(2) and FIDIC Red Book (London: RICS Publishing,
1999) Cl.8.1.
[3] [2013] EWHC 2916 (QB); [2014] BLR 43 at [19].
[4]United Scientific Holdings Ltd v Burnley Council [1978] AC 904 HL at 944.
[5]Lombard Plc v Butterworth [1987] QB 527 CA at 535
[6]Dodd v Churton [1897] 1 QB 562 CA.
[7] Dispute Resolution Guidance at http://www.ogc.gov.uk/documents/dispute resolution.pdf accessed on 19/03/2023.
[8]Aughton Limited v M.F. Kent Services Limited [1991] 57 BLR 1.
[9] Arbitration Act Sec 6(1)(2).
[10]North Regional Health Authority v Derek Crouch) [1984] QB 644 CA.
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