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Conflict is a state of discord caused by the actual or perceived opposition of needs, values and interests
between people. Conflict can take much form in an organization. Organizational conflict occurs due to
disagreements among individuals, departments, and between unions and management. There are subtle
forms of conflict involving rivalries, jealousies, personality clashes, role definitions, and struggles for
power and favor. There is also conflict within individuals — between competing needs and demands —
to which individuals respond in different ways.
Virtually all organizations operate in an environment that is characterized by constant change and a need
for constant adaptation. Trying to eliminate conflict requires tremendous amounts of energy, and even it
can be done. It will usually also suppress any positive outcomes that may come from disagreement, such
as improved decision-making and innovation.[1]
Conflict can have both positive and negative outcomes so is divided as functional or dysfunctional.
Functional conflict helps in increasing creativity, better decision making and better understanding. On
the other hand dysfunctional conflict can lead to mistrust among employees and disputes which cannot
be solved by a third party.
Conflict can be treated as a series of episodes which includes stages of latency (within antecedent
conditions), feeling (at the affective level), perception (at the cognitive level), manifestation (at the
behavioral level) and aftermath (impact upon relationships between organizational parties and between
the organization and its environment).
The function or dysfunction of conflict is evaluated by following value systems such as : productivity in
terms of quantity or quality, stability in terms of cohesiveness or solvency and adaptability in terms of
learning and improved performances or adaptation to internal & external pressures.


Conflict is an unavoidable aspect of an organization. Regardless of where you work, conflict is

inevitable because of the wide varieties of backgrounds, and cultures.[2]Each individual sees things
different and that diversity is one of the many pleasures of life. We all have different backgrounds,
incomes, cultures, family, training, and personalities. No two people are the same and each person will
react differently to any given situation
Although conflicts are of an inevitable aspect of a team development, conflict can provide the basis for
Constructive and beneficial outcomes by identifying and managing conflict effectively. The best way to
deal with conflict is to learn how to have effective and positive conflict. Top managers accept that
conflict comes with the job and should take the time to master resolving differences and working
through the important issues.
The influences of conflict have significant impact on the organization and may result in either negative
or positive outcomes. Conflict is recognized as the underlying power that stimulates innovation, but it is
a force with enormous destructive potential [3]
The various factors supporting that conflict is inevitable:
Conflict is omnipresent. Even though the signs and symptoms may not be recognized, conflict will be
present. In any organizational setting, individuals consciously or subconsciously are involved in roles of
conflict as they compete for resources, recognition and rewards.[4]

“A project is a unique, transient endeavor undertaken to achieve a desired outcome.”-as stated by The
Association for project management-Body of Knowledge.

It can also be stated that commercial project is a unique, transient endeavor to achieve monetary profits.
The profit may be monetory, personal, political or resource based. Never it is a surprise that every
Endeavour of humans is driven by a pursuit of profit and the same applies to commercial projects. So,
we can state that commercial project encompasses construction, infrastructure,IT projects etc.

The main situations that can result in conflicts in an organization are:

• Incompatible goals and horizons:

Different groups in an organization have differing goals and focus which can cause
difference within a group and result in a conflict.
• Overlapping authority:
Two or more managers claim authority for the same activities which leads to conflict
between the managers and workers.
• Task interdependencies:
One member of a group or the whole group fails to finish a task that another member or
group depends on, causing the waiting worker or group to fall behind.
• Incompatible Evaluation or reward system:
A group is rewarded for achieving a goal and if there are some biasness in the group or
among individuals in the evaluation or rewards then it leads to conflict.
• Scarce resources:
Too often the employees feel they have to compete for available resources in order to
their job. In a resource scarce environment this can lead to conflict. Managers can come
into conflict over allocation of these resources.
• Status inconsistencies:
Some individuals and groups have higher organizational status than others which lead to
status inconsistencies. This power struggle either ends in a victory or defeat with a
continuing state of tension.[4]


• Interpersonal conflict:
This arises when two people have incompatible needs, goals, or approaches in their relationship.
Communication breakdown is often an important source of interpersonal conflict and learning
communication skills is valuable in preventing and resolving such difficulties.” personality conflict”
refers to very strong differences in motives, values or styles in dealing with people that are not
resolvable. The potential causes of personality conflict in a work place include:
o Misplaced loyalties.
o Comparisons of performance ratings.
o Longstanding grudges.etc
• Intergroup conflict:
This occurs between collections of people such as ethnic or racial groups, departments or levels of
decision making in the same organizations, and union and management. Competition for scarce
resources is a common source of intergroup conflict, and societies have developed numerous
regulatory mechanisms, such as collective bargaining and mediation. Social –psychological
processes are very important in intergroup conflict.[6]
• Intragroup conflict:
This occurs between people within the same group working in an organization. This could be
because of distribution of powers, scarce resources etc.
• Interorganizational conflict:
This occurs between different organizations due to competition among organizations which leads to

Role conflict, role pressures and communication lapses are among the more tangible of organizational
parameters instrumental in conflict arousal.[7]


The manifestation of role conflict is determined by the:

• Degree of ambiguity the focal person experiences.
• Response pattern of the focal person to cope or comply.
• Role expectations and role pressures.
• Personality factors and social beliefs.
• Other extraneous social factors.
Fig 2:Model for generation and perpetuation of conflict[8]

The Table 1 illustrates the basic relationships between role pressures and conflict causing parameters.
This relationship indicates that it is good to steady and stable for the managers to continuously apply
weak role pressures on their subordinates.

Fig 2 illustrates that frustrations can arise when emotional feelings are trampled repeatedly and when
justice and recognition are not provided to the individual or a group. These frustrations can result in
conflict within an organization. Dissatisfactions of remunerations, status, authority etc are some of the
major causes of frustration. If these frustrations are not resolved then it leads to conflict within an


As stated that conflict is inevitable because of the wide varieties of background and culture, it can have
both positive and negative effects in an organization. Research has shown conflict to be
multidimensional [16]So one dimension of conflict enhances decision while other attenuates consensus
and affective acceptance. So, Conflict can be: functional (which is generally task oriented and focused
on judgmental differences) and dysfunctional (which has a negative impact on the organization and is a
kind of dispute).
Conflict can be divided as:
Emotional conflict:
This is personal, defensive and resentful [17] and is based on anger, personality clashes, ego and tension.
This occurs when individuals interest overpowers the interest of the team as a whole. It interferes with
the effort of the team towards resolving the problem as a whole.

Cognitive conflict:
This arises when team members voice different ideas [17].It is inevitable in top management teams. This
is based upon the arguments about the merits of ideas, plans and projects. It is not based on personal
feelings. This diversity leads to conflict over how best to accomplish an organizations objective.[18]
Cognitive conflict contributes to decision quality.

This figure explains that cognitive conflict emerging during decision making enhances decision making,
quality, commitment, understanding and affective acceptance.

Affective conflict:
When conflict is dysfunctional, it tends to be emotional and focused on personal incompatibilities and
disputes [19]This type of conflict is called affective conflict. Affective conflict in top management is
perceived as personal criticism.
Constructive conflict:
It helps team to resolve problems and helps in uncovering of new solutions to old issues in a productive
manner.[17]It allows a team to change and grow within a team environment. It results in a positive
environment and helps in proper decision making.
Destructive conflict:
This results in dysfunction and a lack of common agreement which disrupts the working of the
individuals and the team members as a whole. It does not result in any problem solution and only results
in a dispute between the opposite parties. It only creates mistrust among the employees in an


Organizational politics are the activities in which the managers, and other employees in the firm are
engaged in order to gain more power which in turn helps them achieve their goals.

This can be one of the major sources of conflict if used negatively. As in every organization there
exists politics it makes conflict inevitable. The political strategies, which are the specific tactics
used to increase power, can be both negative and also a positive force. This also helps the managers
overcome resistance and acceptance of their ideas among the subordinates. So politics can be
negative if managers act in a self interested ways for their own benefit or it can be positive by
bringing about the needed change.[20]


• Controlling uncertainty:
Managers who can reduce uncertainty for the firm gain power over others.
• Being irreparable:
By developing valuable special knowledge or skills the employee can become irreplaceable as
this knowledge makes him more wanted in the firm and hence increases his power. The
knowledge and skill gives him an upper hand over others.
• Being in a central position:
Having decision making control over the firms crucial decisions, activities and resources brings
the person in the central position and also gives the authority which is supreme over others.
• Generating resources:
Managers who can hire skilled people or find financing when needed in a firm can generate
power in the firm.
• Building alliances:
Managers who can develop mutually beneficial relations with others inside and outside the
organization generate more power than others.


• Relying in an objective information:

Providing impartial or incorrect information about projects causes others to feel the manager’s
course of actions is correct. This causes others to believe that whatever decisions manager has
taken are correct and should be followed.
• Bringing in an outside expert:
It lends credibility to managers proposal when the expert agrees.
• Controlling the agenda:
This influences issues included from the decision process.

• Make everyone a winner:

Making everyone a winner whose support is needed benefits personally from providing that

So organizational conflict can either result in positive activities or can lead to negativity among the
employees and hence result in a conflict.[20]

Disputes are ‘a conflict which of which both parties are conscious and which is the subject of
altercation in them’ (The glossary of terms, Mediation UK)

Fenn and Gemeson (1992) summarized the sources of dispute into six broad categories:
 Determination of agreement:
The failure to act according to the agreement to which the parties have agreed upon can be any
kind of overruling in terms of delaying of progress, inefficient performance etc.

 Payment:
Finance plays a very important role in a project and any variation in terms of payment or
expenditure can lead to disputes. This is one perception which can arise from clients side also.

 The site and execution of work:

The way different attributes of a project are handled on a site can influence the pathway leading
to disputes and influences the overall performance of a project.

 Time:
Delay causes an indirect impact on the parties involved in the project. The time delays may be
due to unavailability of material, machine and human resources.

 Negligence and nuisance:

Negligence and nuisance although small can lead to huge issues later in the project. These
disputes can also be the results of claims from other affected individuals or organizations.

 Final certificate and payment:

This is the quintessential “Operation successful, but the patient died syndrome.

The major question that arises is whether conflict should be avoided or not. Conflicts have been a source
of both negative and positive outcomes. Filley (1975) suggested that when conflict arises, it leads to
people discussing the matter to find a probable solution to it, thus preventing a bigger conflict in later
stages of the project.
Kerzbom (1992) states that there are seven common sources of project conflict. A comparison between
those sources for the project conflict and whether they can be avoided are as follows:


All the facts stated above about the conflict make it very clear that conflicts are inevitable and hence
form an important aspect for the running of an organization.

Conflicts thus can be concluded to have both positive and negative impact on an organization depending
on how they are handled and how they arise. They become functional when they are productive and
stimulate members of the organization to increase their knowledge and skills. Productive conflict
contributes to the organizational innovation and productivity. The key to organizational success does not
lie in structure, clarity and orderliness, but in creativity, responsiveness and adaptability.
The functional view of conflict also provides people with a clear feedback about the working of an
organization and provides the opportunity to improve.

Rather than trying to eliminate conflict, or suppress its symptoms it should be managed so that it
enhances people and organizations, rather than destroying organizations. The negative can only happen
if the employees try to eliminate or suppress situations resulting in a dispute or conflict and show little
interest in working towards common goals, but spend more time in protecting their self interests.
Any project before initiation has to be agreed, written and specified by all the parties involved in the
project. These agreements or contracts are very time consuming so to avoid wastage of time standard
forms of contracts were introduced. These standard forms of contract include all the general details for a
particular kind of project and can be customized to suit the needs of those involved. The JCT forms of
contract, The New Civil Engineering contract(Institute of civil engineers),ICE conditions of contract
(Institute of Civil Engineers, The Association of Consulting Engineers, The Civil Engineering Contracts
Association) etc are a few examples of the types of standard forms of contract.


Fenn in Lowe eds (2006) gives us the following dispute resolution methods that are included in the
standard forms of commercial contracts:
1) Conflict avoidance
2) Negotiation
3) Mediation
4) Conciliation
5) Dispute review board
6) Neutral evaluation
7) Expert determination.
8) Mini Trial
9) Adjudication
10) Arbitration
11) Litigation

Negotiation is a dialogue intended to resolve dispute, to produce an agreement upon courses
of action, to bargain for individual or collective damage, or to craft outcomes to satisfy various
interests. [21]
This is generally seen as the first step of resolution which does not involve any kind of agency of law. In
this the parties in the dispute have a face to face meeting and discuss the issues that have led to the
dispute and eventually come to an amicable solution.
Some negotiation styles include accommodating( accommodators are individuals who enjoy solving
other party’s problems),avoiding, collaborating, compromising, competing [22]
Its advantages include:
o Speed
o Cost saving
o Confidential
o Preservation of relationships
o Control of process and outcome.


This includes dispute resolution process and techniques that fall outside the government or judicial
process. The prominent procedures of this kind are:

Mediation aims to assist two or more disputants in reaching an agreement. The parties themselves
determine the conditions of any settlements reached rather than accepting something imposed by a third
Mediation, in a broad sense, consists of a cognitive process of reconciling mutually interdependent
opposed terms. Mediators use appropriate techniques to open or improve dialogue between disputants.
Mediator conducts discussions with the intent to coming to an agreement between the parties. He acts as
a facilitator to communication or a deal maker. The proceedings and the agreements are confidential but
the decisions are not bound by law.[25]

Conciliation is a process where the parties to a dispute agree to utilize the services of a conciliator who
then meets with the parties separately in an attempt to resolve their differences. He does this by lowering
tensions, improving communications, interpreting issues, providing technical assistance, exploring
potential solutions and bringing about a negotiated settlement.
Conciliation differs from arbitration in that the conciliation process, in and of itself, has no legal
standing, and the conciliator usually has no authority to seek evidence or call witnesses, usually writes
no decision, and makes no award. Conciliation differs from mediation in that the main goal is to
conciliate, most of the time by seeking concessions. In mediation, the mediator tries to guide the
discussion in a way that optimizes parties needs, takes feelings into account and reframes

It is used to test the strengths of the legal points in the case and can be particularly useful when the
dispute turns on a point of law. A third neutral party gives a confidential opinion as to what the outcome
of a trial would be. The opinion can then be used as a basis for settlement for further negotiation.

In this the parties agree to be bound by the decision of an expert in the field of dispute. This can be
useful when the dispute is about a technical matter.

Adjudication is the legal process by which an arbiter reviews evidence and argumentation including
legal reasoning set forth by opposing parties or litigants to come to a decision which determines rights
and obligations between the parties involved. Three types of disputes are resolved through this:
 Dispute between private parties such as individuals or corporations.
 Dispute between private parties and public officials.
 Dispute between public parties or public bodies.

The procedure of adjudication is statutory where any party to a construction contract has a
right to have a dispute decided by an adjudicator. [23]. Introduced
by the Housing Grants, Construction and Regeneration Act in 1996, it is now the standard
method of resolving differences between parties to a construction contract.
This process is speedy and cost efficient and the decision of the adjudicator is final binding until
and unless the dispute is finally determined by legal proceedings.

Arbitration is a legal technique for the resolution of disputes outside the courts wherein the parties to
dispute refer it to the arbiter by whose decision they agree to be bound. It is a settlement technique in
which a third party reviews the case and imposes a decision that is legally binding for both sides.[24]The
arbitrator’s job is to decide disputed facts using the evidence established by the parties or an enquiry.
Then the arbitrator applies the decided facts to the rules or laws applicable to the parties relationship. It
is referred to as a higher step to adjudication and is used when either party is dis-satisfied with the ruling
of the adjudicator. Arbitrator must be completely neutral and have no financial interests in or from either
parties and must be chosen with the agreement of both the parties.
o Possible cost saving over litigation
o Resolution is guaranteed.
o Decisions are legally binding and enforceable.
o Confidentiality.

Litigation is a process where the dispute is brought before the court of law and a trial is held. The judge
decides the legal action required and the ruling is final and binding. This decision is enforced by the law
of state specified in the contract. It is usually not preferred as it is both time and money consuming and
the issues do not remain private.
o Possibility of bringing an unwilling party into the procedure.
o The solution is enforceable without further agreement.
o Potentially lengthy and costly.
o The outcome is in the hands of a third party, the judge
Negotiation is a dialogue intended to resolve dispute, to produce an agreement upon courses of action,
to bargain for collective or individual damage, or to craft outcomes to satisfy various interests.[21]

Negotiation is a procedure used in the preliminary stages of the dispute resolution to resolve the
differences so as to avoid losses in time and money.

The concept of principled negotiation was the alternate solution for the traditional positional negotiation
so that people could deal more constructively with conflicts. It was first coined by Fisher & Ury in 1977.
The four basic points of principled negotiation include:
 Separate the people from the problem.
 Focus on interests not position
 Invent options for mutual gain.
 Select among options by using objective criteria.

Indian construction industry and problems with conventional litigation:

India being a developing nation there is a huge demand for infrastructure and construction projects and
the demand grows every year by leaps and bounds. The construction industry is the second largest
industry after agriculture in India. As the number of projects increase, the number of conflicts and
disputes also rise. Unfortunately the conventional method of litigation in India is a futile effort since the
judicial takes a very long time. The other reason for conflicts in the industry is finance based resulting in
delayed or non payment of bills.

Feasibility of principled negotiation in the Indian construction industry:

The main advantages of the principled negotiation include maintenance of relationships, satisfactory
agreements, are flexible and address power imbalances. Its disadvantages includes time consumption
and impact on expenditure.( Fenn 2008).
The two factors that rule out the feasibility of principled negotiation are:
Time & Complexity:
The time is considered as a drawback for Indian judicial system because the litigation process takes long
for dispute resolution. Principled negotiation makes it hard to compete as an alternative solution to
litigation as it takes a long time to reach a cordial agreement. It is not used as an alternative when there
is a strong presence of arbitration. This disadvantage has quite an impact on the minds of the parties
involved in choosing the parties.
In major cases even after the court rules the decision on the parties, the decision is not entirely carries
out by the parties due to inter-interference. When such is the case, we cannot assume that the negotiation
between the parties will be carried out to the extent agreed to and this leads to further proceedings, such
as arbitration or adjudication which is an extra expenditure to the company and the losses in time are
also considerable. The other side may not play fair and use psychological warfare, or deliberate
deception tactics which proves the point that trust dose not exist in negotiation until it is established by
credible actions. The negotiator needs to remember that there is a mandate for ethical behaviour and
there are gains also. There are no judges or referees and the assumption that an opponent will play by
your ethical and principled rules is unwarranted. Trust may never be a conclusion but it may be an

As India is rapidly developing to be the world’s third largest economy by 2030AD, there is a rapid
evolution of business relations in which construction is the biggest of all. This rapid evolution of
business would result in a definite increase in number of disputes and conflicts. This would definitely
require negotiations and principled negotiations. But the positive effects of principled negotiations need
to be appreciated by the people in the industry.

Not much information on disputes using principled negotiation in the Indian construction industry was
found which may be because of the probability that negotiation is efficient in keeping the disputes a
private affair. However, the feasibility of principled negotiation does not seem to be techno- economical
until the mindset of every person in the construction industry from top level staff to site engineers adapt
to appreciate its benefits.

Negotiation is neither a war, nor a cause for antipathy. With proper skills we can protect our interests
and make decisions that reduce the probability of disputes and conflicts and encourage collective effort
as it would establish the foundations of the firm and result in long lasting partnerships.[27]