Anatomy of Construction Disputes

Sai On Cheung, F.ASCE1; and Karen Hoi Yan Pang2

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Abstract: Disputes have been identified as one of the epidemics of the construction industry. Many studies have found that risks, uncer-
tainties, inadequate contract documentation, and behavioral factors are notable dispute sources. Many have described disputes with reference
to the subject matter. This approach is pragmatic but has not yet lead to any form of conceptualization. The study contributes to the con-
struction dispute research domain in (1) proposing an anatomy of construction disputes, (2) identifying the key factors contributing to the
happening of construction disputes, and (3) providing an example on the use of the anatomy through a dispute occurrence likelihood evalu-
ation exercise. The proposed anatomy distinguishes two types of construction dispute: contractual and speculative. Contract incompleteness
is the root cause and underpins both types of construction disputes. In addition, task and people factors fuel contractual and speculative
disputes, respectively. The proposed anatomy is arranged under a fault-tree framework whereby the events are linked by logic gates. In this
format, construction participants could understand how these events contribute to the occurrence likelihood of disputes. As an illustration, a
web-based assessment tool was developed to collect occurrence likelihood assessments of dispute artifacts. The fuzzy occurrence likelihood
of construction disputes was then computed. The dispute occurrence likelihood evaluation exercise supports the observation that construction
disputes are inevitable. DOI: 10.1061/(ASCE)CO.1943-7862.0000532. © 2013 American Society of Civil Engineers.
CE Database subject headings: Construction industry; Dispute resolution; Risk management.
Author keywords: Construction dispute; Fuzzy occurrence likelihood; Web technology.

Introduction development of the anatomy is then detailed. An evaluation of

Construction projects face enormous uncertainties and the contract
is unavoidably incomplete in terms of the inability to incorporate
provisions to deal with all the possible contingencies. Joint efforts
are needed in such situations to solve the problems that may arise.
Any unresolved issue arising there, which may become a dispute, is
one of the most damaging relationship destroyers in construction
contracting. In addition, the commonly used competitive tendering
system encourages awarding contracts to the lowest bid. Very often,
the contractor behaves opportunistically in an attempt to recoup the
deficit stemming from the cutthroat bids through postcontract
claims. Furthermore, it is not uncommon for clients to refuse to
give fair compensation to contractors even though there are legiti-
mate causes, thus offering the perfect recipe for a dispute. Many
have described disputes with reference to the subject matter. This
approach is pragmatic but does not lead to any form of conceptu-
alization. This study aims to provide an alternative approach to
describe construction disputes by proposing an anatomy. This
paper is organized as follows: A functional analysis of construction
contracts is first outlined to highlight the role of dispute resolution
in construction contracts. The fault-tree (FT) methodology that
is used to frame the proposed anatomy is introduced. The
1
Professor, Construction Dispute Resolution Research Unit, Dept. of
Civil and Architectural Engineering, City Univ. of Hong Kong, 83 Tat
Chee Ave., Hong Kong (corresponding author). E-mail: saion.cheung@
cityu.edu.hk
2
Member, Construction Dispute Resolution Research Unit, Dept. of
Civil and Architectural Engineering, City Univ. of Hong Kong, 83 Tat Chee
Ave., Hong Kong.
Note. This manuscript was submitted on April 27, 2011; approved on
January 20, 2012; published online on September 16, 2012. Discussion
period open until June 1, 2013; separate discussions must be submitted for
individual papers. This paper is part of the Journal of Construction Engi-
neering and Management, Vol. 139, No. 1, January 1, 2013. © ASCE, ISSN
0733-9364/2013/1-15-23/$25.00.
occurrence likelihood of construction disputes is used to illustrate
an application of the proposed anatomy.
Functional Analysis of Construction Contracts
In its most basic form, a contract serves to restate the intentions
of the contracting parties. That includes setting out the proce-
dures to facilitate accomplishing the project intents (Hughes and
Greenwood 1996). Moreover, to deal with the uncertainties during
the construction stage of projects, conditions of contract have be-
come more and more complex and highly elaborated with the aim
of having provisions to deal with all possible contingencies and
their effects. In this regard, contract clauses can be analyzed in
terms of their functions. As presented in Fig. 1, concentric circles
are used to illustrate the evolving and progressive relationships
among the essential provisions of construction contracts.
The innermost circle of Fig. 1 represents the core of all construc-
tion contracts: stipulating the obligations of the contracting parties.
Changes are considered necessary and unavoidable in all construc-
tion projects. To plan for such eventualities, provisions for instruct-
ing variations, acceleration, and postponement together with the
corresponding time and monetary adjustments have to be incorpo-
rated. Thus the layer next to the central core is the adjustment layer.
The dotted line is used to reflect the adjustment characteristic.
According to Macneil (1975), planning for performance should
take care of the obligations, ways to facilitate, and recognize such
completion. Measures such as supervision, inspection, testing,
surety, and insurance are meant to control and facilitate the accom-
plishment of the project intents. Certificates are used to signify the
successful discharging by the contractor of its obligations. Control
and approval reside on the third layer from the center. The outer-
most layer is for the remedies available to the contracting parties for
default of performance. Thus circumstances on which the parties
can determine the contract are typically listed together with the

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J. Constr. Eng. Manage., 2013, 139(1): 15-23

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Fig. 1. Functional analysis of construction contract

respective rights and obligations. Moreover, determination by The second and third columns of Table 2 list the dispute factors
either party is seldom unchallenged. One common contention in and the references for step 2. This study employs a fault-tree
such disagreement is the interpretation of the stipulated perfor- methodology to frame the proposed anatomy. An FT model uses
mance requirements. The dispute resolution provision is in place a bottom-up approach to analyze failure. In an FT model, basic
for such a gap-filling function (Macneil 1975). Although dispute events are at the bottom of the tree and need no further develop-
resolution is often regarded as a stand-alone provision, its use is ment; the top event represents the final result from the combina-
in fact intrinsically related to the operations of the provisions in tion of events at various levels and linked by logic gates; AND and
the preceding layers. OR are the common logic gates used to depict the possible com-
bination and sequences of events that contribute to the undesired
top event. Therefore, with a fault-tree methodology, the relation-
Methodology ships between events can be systematically arranged with respect
to hierarchical causal order. Fault-tree analysis serves to identify
There are three methodological steps involved in the development the weakest part of a system and in this study provides an
of an anatomy of a construction dispute: analytical way to identify the critical components contributing
1. Identifying dispute artifacts; to the occurrence of a construction dispute. In construction,
2. Conceptualizing the identified artifacts into an anatomy of fault-tree analysis has been applied in performance assessment
construction dispute; and (Pan 2006) and construction method selection (Pan 2008). Step
3. Validating the anatomy. 3 involved the input of the expert panel in refining the anatomy.
The authors completed the first two steps and came up with an The panel offered advice on eliminating duplications and noncriti-
initial anatomy that was then commented on by an expert panel cal artifacts as well as adding back omissions. The anatomy of a
composed of 24 experts including experienced lawyers, claim construction dispute in an FT format that has been endorsed by the
consultants, and senior construction professionals (Table 1). All expert panel is shown in Fig. 2.
panel members have at least 10 years of working experience in the
construction industry; indeed, the majority have over 20 years of
working experience. Collectively, the panel provides a balanced
Toward an Anatomy of Construction Disputes
perspective of major key stakeholders in construction. In this re-
gard, the wealth of knowledge possessed by the panel contributes The bottommost level of a fault tree lists the basic events
significantly to the authenticity of the proposed anatomy. (i.e., dispute artifacts) and the top event is the failure (i.e., construc-
For the identification of dispute artifacts (step 1), most literature tion disputes). Forty-six dispute artifacts are retained at Level 5.
on construction discusses dispute at the factor level (Level 4, Fig. 2). These are arranged in eight factors at Level 4 and further organized
as three factor groups (Level 3). Construction disputes (Level 1) are
categorized as either contractual or speculative (Level 2).
Table 1. Characteristics of Expert Panel Most literature on construction disputes discusses dispute-
Company Number contributing factors (Level 4). Working down the FT structure,
these factors are further operationalized by incorporating observ-
Construction law firm 6
able artifacts to enrich the anatomy. Working up the FT structure,
Claim consultant 2
Developer 3 it is proposed that these eight factors can further be categorized
Engineering consultant 2 into factor groups. Each of these factor groups is discussed
Quantity surveying consultant 5 subsequently.
Contractor 6
Working experience Number
Over 25 years 10 Contract Incompleteness
20–25 years 7 Contract incompleteness is one of the three factor groups of con-
15–20 years 3 struction dispute contributors. Risk allocation in a construction
10–15 years 4
contract is inequitable when the client shifts all or most risks to

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J. Constr. Eng. Manage., 2013, 139(1): 15-23

 Level 1 Level 2 Level 3 Level 4 Level 5
Top Event Category Factor Group Factor Artifact

TR1

TR2
Risk &
uncertainty
TR8

Task factor
TC1
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TC2
Collaborative
conflict
TC8
Contractual
dispute CA1

Ambiguity CA2

CA3

CF1
Deficiency
Contract CF2
Construction
dispute incompleteness
CC1

Inconsistency CC2

CC3

CT1
Speculative Defectiveness
CT2
dispute

PO1

PO2
Opportunistic
behavior
PO10

People factor PA1

PA2
Affective conflict

PA10

Fig. 2. FT model for a construction dispute

Table 2. Factor and Factor Groups of Construction Disputes

Factor group Factor References
Task factor Collaborative conflict Hewit 1991; Diekmann et al. 1994; Heath et al. 1994; Semple et al. 1994; Bristow and Vasilopoulous
1995; Conlin et al. 1996; Kumaraswamy 1997; Acharya et al. 2006
Risk and uncertainty Semple et al. 1994; Bristow and Vasilopoulous 1995; Diekmann and Girard 1995; Kumaraswamy
1997; Mitropoulos and Howell 2001; Acharya et al. 2006
People factor Opportunistic behavior Mitropoulos and Howell 2001; Rooke et al. 2003; Rameezdeen and Gunarathna 2003; Yates 2003;
Beach et al. 2005; Acharya et al. 2006; Chen and Chen 2007
Affective conflict Diekmann et al. 1994; Sommerville and Langford 1994; Semple et al. 1994; Diekmann and Girard
1995; Mitropoulos and Howell 2001; Belout and Gauvreau 2004; Acharya et al. 2006
Contract Ambiguity Bristow and Vasilopoulous 1995; Heath et al. 1994; Kumaraswamy 1997; Yates 1998; Mitropoulos
incompleteness and Howell 2001
Deficiency Kumaraswamy 1997; Yates 1998; Acharya et al. 2006
Inconsistency Kumaraswamy 1997; Yates 1998
Defectiveness Kumaraswamy 1997; Yates 1998; Acharya et al. 2006

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J. Constr. Eng. Manage., 2013, 139(1): 15-23

 the contractor (Cheung 1997). While some of these risks are
beyond the controllability and foreseeability of the contractor,
many are even beyond the contractor’s manageability if they
materialize. In addition, the clients or the consultants are boundedly
rational in foreseeing the extent of uncertainty and risk involved
(Simon 1961). Decision makers are bounded by their ability to
estimate consequences, understand implications, and make com-
parative judgments on complex alternatives (Simon 1979). The
behaviors of decision makers are intendedly rational, but only limit-
edly so (Simon 1961), and directly associated with uncertainty and
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complexity (Williamson 1975). Rationality reaches its limits under
the conditions of uncertainty and complex circumstance because
decision makers do not and are not able to process complete infor-
mation (Masters et al. 2004). Furthermore, Williamson (1981) elab-
orated the implication of bounded rationality and suggested that
economic organization fails to anticipate eventualities due to
bounded rationality, and contracts are unavoidably incomplete.
An incomplete contract is a platform of construction claims. In this
context, contract incompleteness is the key element leading to both
contractual and speculative disputes.
Task Factor
Ambiguities of contractual agreements may cause interpretational
difficulties, in particular with the incompatible interests of the con-
tracting parties. Accordingly, most claims are somehow related to the
divergent views on rights and responsibilities arising from the tasks
(Jergeas 2001). This is particularly problematic when the tasks are
associated with risk and uncertainty. Furthermore, when a task re-
quires the collaborative effort of the parties, the effect of divergent
interests is particularly significant. For instance, the consultants fail
to provide adequate drawings; the owners make changes frequently;
and the contractors delay work. This type of occurrence may become
a dispute if not addressed appropriately and timely. Hence, contrac-
tual disputes are triggered by risk and uncertainty as well as the col-
laborative conflict of a construction project.
People Factor
Conflict can also stem from cognitions, behaviors, and emotions of
the people involved (Garcia-Prieto et al. 2003; Jehn 1997).
Cognitive conflict refers to the collaboration problems encoun-
tered during the construction stage. The bottlenecks that result
negatively influence project implementation and thus project suc-
cess. Behavioral conflict describes the opportunistic strategies in
construction claims. The contractors may bid opportunistically in
competitive tenders (Ho and Liu 2004). The clients may reject
contractors’ claims sinuously. Williamson (1975) described such
behavior as opportunism defined as behaviors of “self-interest
seeking with guile” or “calculated efforts to mislead, distort,
disguise, obfuscate or otherwise confuse.” Contracting parties be-
have opportunistically by seeking their own interests and benefits
under the conditions of asymmetrical information and uncertainty.
Emotional conflict delineates the personal and interpersonal
affective conflict among project team members. It often fuels
arguments and impedes efforts to seek optimal solutions for con-
flicts and claims.
Types of Construction Disputes
Construction disputes can either be contractual or speculative.
Rooted in an incomplete contract, risks, uncertainties, and collabo-
rative conflicts would evoke contractual dispute. Likewise, also
rooted in an incomplete contract, speculative dispute emerges with
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J. Constr. Eng. Manage., 2013, 139(1): 15-23
opportunistic behavior or affective conflict. Fig. 2 presents the
proposed anatomy in a fault-tree framework.
Use of the Anatomy: A Case of Assessment of
Occurrence Likelihood
Diekmann and Girard (1995) and Molenaar et al. (2000) employed
logistic regression and applied discrete choice modeling to develop a
dispute potential index. The index reflects the degree of proneness of
a project having disputes. Both metric and ordinal data were used in
the modeling. The result is an overall view of the dispute potential.
With the proposed anatomy and by evaluating the occurrence
likelihood of the dispute artifacts, the occurrence likelihood of the
other nodes of the fault tree will be automatically calculated on
the basis of the logic relationships. Thus the individual nodes can
be evaluated. In the following sections, the applications of a fuzzy
membership function and a mathematical expression of logic gates
are described.
Fuzzy Sets and Membership Function
Zadeh (1965) has used the fuzzy sets theory to address the subjec-
tivity associated with human judgments. In fuzzy sets, the degree
of belief of every fuzzy subset is represented in a membership
function (MF) with values in [0, 1]. As a management decision
support tool, the evaluation should be easy to apply and relate
in a business sense. Thus, linguistic-based fuzzy evaluation is
proposed. Triangular MFs were employed to study performance
improvement (Juan 2009) and project cost contingency estimation
(Idrus et al. 2011). Triangular MF with uniformly distributed lin-
guistic variables is the most appropriate membership function for
use in fuzzy control systems (Zhao and Bose 2003). Wang and
Kerre (2001) used seven fuzzy set assessments for system-failure
evaluation. Likewise, Zhao and Bose (2003) compared the perfor-
mance of symmetrical membership functions for all the variables
and found that seven fuzzy sets (N ¼ 7) is the optimal case of the
symmetrical distribution of the triangular membership function.
Singh and Tiong (2005) and Pan and Wang (2007) have applied
seven linguistic variables to the study of contractor selection
and bridge failure, respectively.
Linguistic variables define natural languages in words that
are characterized by a universe of discourse of fuzzy sets. Seven
linguistic variables, namely, very low, low, fairly low, average,
fairly high, high, and very high, are used to evaluate the occurrence
likelihoods of the dispute artifacts. In the example of inclement
weather, the occurrence likelihood is to be assessed by seven
linguistic variables represented by a scale of 1 to 7, respectively.
The triangular MFs and linguistic variables used in the scoring sys-
tem are shown in Table 3.
Aggregation on fuzzy parameters averages the respondents’
preferences into group preferences (Singh and Tiong 2005). The
aggregated value can be expressed as


1
A~ j0 ¼ ⊗ ða~ 1
a~ 2
• • •
a~ p Þ for j ¼ 1; 2; : : : ; p ð1Þ
p
where a = first fuzzy parameter of selected linguistic variable; and
p = number of respondent;


1
B~ j0 ¼ ⊗ ðb~ 1
b~ 2
• • •
b~ p Þ for j ¼ 1; 2; : : : ; p ð2Þ
p
where b = second fuzzy parameter of selected linguistic variable;
and p = number of respondent; and
 Table 3. Linguistic Variables in Triangular Membership Functions Y
n
P~ OR
γ ¼ 1− Pi ð6Þ
Linguistic Fuzzy parameter
i¼1
score Interpretation (a, b, c)
where Pi ¼ ðA~ j0 ; B~ j0 ; C~ j0 Þ is the aggregated fuzzy parameter of
Very low Involved event is avoidable. (0.00, 0.10, 0.30)
the input event (Chanda and Bhattacharjee 1998; Dunyak
Low Involved event is partially likely (0.00, 0.20, 0.40)
to occur. et al. 1999).
Fairly low Involved event is rarely likely to occur. (0.20, 0.35, 0.50) Data for the occurrence likelihood assessment was collected
Medium Involved event is occasionally likely (0.30, 0.50, 0.70) through an online system. The conceptualization of construction
to occur. disputes in this study was first introduced. Respondents first iden-
Fairly high Involved event is somewhat frequently (0.50, 0.65, 0.80) tified a project for which they wish to evaluate the occurrence like-
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likely to occur. lihood of a construction dispute. Project particulars including the

High Involved event is most frequently (0.60, 0.80, 1.00) nature of works, procurement method, consultant performance, and
to occur. contractor competence were first input by the respondents. The re-
Very high Involved event is almost inevitable. (0.70, 0.90, 1.00) spondents then assign the fuzzy occurrence likelihood of 46 dispute
artifacts. For this exercise, a total of 116 responses were received

 from senior construction professionals who are members of (1) a
1 panel of arbitrators and accredited mediators of the Hong Kong
C~ j0 ¼ ⊗ ðc~ 1
c~ 2
• • •
c~ p Þ for j ¼ 1; 2; : : : ; p ð3Þ
p International Arbitration Centre, (2) companies listed on The Hong
Kong Institute of Architects, The Hong Kong Institution of Engi-
where c = third fuzzy parameter of selected linguistic variable; and neers, The Hong Kong Institute of Surveyors, or The Hong Kong
p = number of respondent. Construction Association, and (3) registered authorized person
After the aggregation of fuzzy parameters, defuzzification of listed in the Building Department, The Government of the Hong
fuzzy parameters represents the expected value of selected linguis- Kong Special Administrative Region. By profession, the respond-
tic variables (Shaheen et al. 2007) or the degree of satisfaction of ents include construction lawyers (30%), claim consultants (9%),
the aggregated fuzzy parameters (Kales 1998). The defuzzified architects (19%), engineers (10%), quantity surveyors (12%), and
value equals the mean values of triangular probability distribution project managers (20%).
(Shaheen et al. 2007) that can be expressed as Following the concept indicated in Eqs. (1)–(4), the aggregated
fuzzy parameters and defuzzified values of dispute artifacts are
e ¼ ðA~ j0 þ B~ j0 þ C~ j0 Þ=3 ð4Þ presented in Tables 4–6.
For comparison purposes, all fuzzy occurrence likelihood values
where A~ j0 , B~ j0 , and C~ j0 = aggregated fuzzy parameters. are kept with four decimal places at the factor level (Level 4). First,
The occurrence likelihood of the top event (i.e., construction the occurrence likelihood of dispute artifacts indicates that late
dispute) and intermediate events (i.e., two types of dispute and information and instruction from consultants and unreasonable
three dispute contributors) are calculated based on the logic rela- client’s requirement are significant collaborative conflicts in con-
tionships arranged for the anatomy. The expression of the fuzzy struction projects; inconsistent and insufficient drawing details
probability of the AND and OR gates are as follows: are the common manifestations of contract incompleteness and
Y
n rejection of contactor’s claims, and overclaims by contractors are
P~ AND
γ ¼ Pi ð5Þ common speculative behaviors in construction contracting. The
i¼1 defuzzified values of these artifacts are above 0.6.

Table 4. Occurrence Likelihood of Task Factor

Dispute artifacts Aggregated fuzzy parameters Defuzzified value
Task factor (0.9986, 1, 1) 0.9995
Risk and uncertainty (0.9409, 0.9942, 0.9998) 0.9783
TR1 Inclement weather (0.35, 0.53, 0.71) 0.5294a
TR2 Change of government policy (0.21, 0.38, 0.56) 0.3833
TR3 Strike (0.11, 0.27, 0.45) 0.2758
TR4 Fluctuations in material price (0.41, 0.59, 0.77) 0.5905a
TR5 Fluctuations in labor cost (0.35, 0.53, 0.70) 0.5262a
TR6 Shortage of labor (0.29, 0.47, 0.65) 0.47
TR7 Shortage of materials (0.30, 0.47, 0.65) 0.4727
TR8 Uncertain ground condition (0.32, 0.50, 0.68) 0.5002a
Collaborative conflict (0.9758, 0.9983, 1) 0.9914
TC1 Contractors employed directly by the client delays in works (0.33, 0.50, 0.68) 0.5021a
TC2 Nominated subcontractor delays in works (0.31, 0.48, 0.67) 0.4871
TC3 Nominated supplier delays in works (0.27, 0.44, 0.62) 0.4436
TC4 Architect fails to issue instruction within time (0.44, 0.62, 0.79) 0.6140b
TC5 Engineer fails to provide adequate site investigation details (0.36, 0.53, 0.70) 0.5260a
TC6 Consultant fails to give information within due time (0.46, 0.63, 0.80) 0.6307b
TC7 Client requests acceleration unreasonably (0.37, 0.55, 0.73) 0.5522a
TC8 Client requests change unreasonably (0.42, 0.60, 0.78) 0.6015b
a
Defuzzified values above 0.5.
b
Defuzzified values above 0.6.

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 Table 5. Occurrence Likelihood of Contract Incompleteness
Dispute artifacts Aggregated fuzzy parameters Defuzzified value
Contract incompleteness (0.9904, 0.9996, 1) 0.9967
Ambiguity (0.6970, 0.8759, 0.9665) 0.8465
CA1 The scope of work is unclear (0.34, 0.51, 0.69) 0.5129a
CA2 The specification is unclear (0.37, 0.54, 0.71) 0.5373a
CA3 The rules to evaluate star rate are unclear (0.28, 0.45, 0.63) 0.4532
Deficiency (0.5946, 0.7904, 0.9205) 0.7694
CF1 The rules to evaluate substantial change in quantity of works are not addressed (0.31, 0.49, 0.66) 0.4869
0.5904a
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CF2 The drawings provide insufficient details (0.41, 0.59, 0.76)

Inconsistency (0.7684, 0.9136, 0.9801) 0.8874
CC1 The quantity of the same items in the contract bills are substantially different to (0.35, 0.52, 0.69) 0.5213a
the actual quantity
CC2 Some items are missing from the contract bills (0.39, 0.56, 0.73) 0.5599a
CC3 The drawings contradict with the specification (0.41, 0.59, 0.76) 0.5888a
Defectiveness (0.6591, 0.8371, 0.9483) 0.8148
CT1 The details in the drawings are inconsistent (0.45, 0.63, 0.80) 0.6257b
CT2 The drawings are inconsistent with the contract bills (0.38, 0.56, 0.74) 0.5616a
a
Defuzzified values above 0.5.
b
Defuzzified values above 0.6.

Table 6. Occurrence Likelihood of People Factor

Dispute artifacts Aggregated fuzzy parameters Defuzzified value
People factor (0.9998, 1, 1) 0.9999
Opportunistic behavior (0.9895, 0.9996, 1) 0.9964
PO1 Contractor purposely fails to notify omission of items in the contract bills of (0.33, 0.50, 0.68) 0.5004a
quantity
PO2 Contractor purposely works below the specified standard (0.30, 0.47, 0.64) 0.4699
PO3 Contractor purposely fails to notify the substantial difference in quantity (0.30, 0.47, 0.64) 0.4695
between contract bills of quantity and actual quantity
PO4 Client rejects outright extension of time claim submitted by the contractor (0.41, 0.59, 0.77) 0.5921a
PO5 Client rejects outright monetary claim submitted by the contractor (0.45, 0.63, 0.80) 0.6228b
PO6 Contractor overclaims costs for progress acceleration (0.47, 0.65, 0.82) 0.6433b
PO7 Contractor purposely fails to disclose the specification of the materials used (0.31, 0.48, 0.65) 0.4777
PO8 Contractor purposely does not provide invoice for the materials used (0.29, 0.46, 0.64) 0.4657
PO9 Client orders extra without providing proper cost reimbursement (0.38, 0.56, 0.74) 0.5629a
PO10 Client orders extra without granting justified extension of time (0.40, 0.58, 0.75) 0.5753a
Affective conflict (0.9811, 0.9991, 1) 0.9934
PA1 Psychological distress such as fear, sadness, anger, and guilt are displayed (0.33, 0.51, 0.69) 0.5088a
by member(s) of the project team
PA2 Emotions such as dominance, assertion, bullying, and forcefulness are (0.36, 0.54, 0.72) 0.5414a
displayed by member(s) of the project team
PA3 Intellectually curious, behaviorally flexible, and liberal in their attitudes and (0.30, 0.48, 0.66) 0.4785
values are qualities displayed by member(s) of the project team
PA4 Hostility, callousness, and cynicism are manifested by member(s) of the (0.32, 0.50, 0.68) 0.4993
project team
PA5 Excessively neat or overly exact attributes are displayed by member(s) of the (0.28, 0.46, 0.64) 0.4624
project team
PA6 Certain member(s) of the project team find it difficult to relax (0.33, 0.51, 0.68) 0.5075a
PA7 Certain member(s) of the project team are nervous (0.31, 0.49, 0.66) 0.4858
PA8 Certain member(s) of the project team are upset or agitated (0.33, 0.51, 0.69) 0.5075a
PA9 Certain member(s) of the project team are irritable or overreactive (0.33, 0.51, 0.69) 0.5109a
PA10 Certain member(s) of the project team are impatient (0.37, 0.54, 0.72) 0.5412a
a
Defuzzified values above 0.5.
b
Defuzzified values above 0.6.

Second, ambiguity, inconsistency, and defectiveness of contract
incompleteness are the most significant dispute contributors.
Their dispute artifacts all have defuzzified values greater than
0.5. Moreover, majority dispute artifacts of collaborative conflict,
opportunistic behavior, and affective conflict have defuzzified val-
ues greater than 0.5. Thus these three factors are detrimental factors
in construction projects.
Third, the occurrence likelihood evaluation at the factor group
level shows that contract incompleteness (defuzzified value of
0.9967) is a pernicious structural problem in construction con-
tracting. Similarly, opportunistic behavior (defuzzified value of
0.9964) appears to happen quite readily in construction contracting.
Opportunism is undesirable because it would trigger mistrust and
drive irrational decisions.

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 Finally, the fuzzy occurrence likelihood of task factors, contract
incompleteness, and human factors by using the concept of Eq. (6),
the equation of the fuzzy occurrence likelihood of task factors, con-
tract incompleteness, and people factors, are expressed as Eqs. (7),
(8), and (9), respectively. With reference to Fig. 2, either risk and
uncertainty or collaborative conflict would result in a task factor
(i.e., task factor ¼ risk and uncertainty ∪ collaborative conflict);
either ambiguity, deficiency, inconsistency, or defectiveness
of a construction contract would cause contract incomplete-
ness (i.e., contract incompleteness ¼ ambiguity ∪ deficiency ∪
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inconsistency ∪ defectiveness); and either opportunistic behavior
or affective conflict would stimulate the people factor
(i.e., people factor ¼ opportunistic behavior ∪ affective conflict).
The fuzzy occurrence likelihood of the three factor groups
(Level 3) are close to 1. Again for comparison purposes, four deci-
mal places are kept. The results indicate that contract incomplete-
ness is the root cause of contractual dispute. External risk and
uncertainty are found to be less detrimental in construction projects
than internal collaborative conflict and contracting behaviors. Con-
struction contracts usually address compensation on force majeure,
inclement weather, and strikes. It could limit the implications from
risk and uncertainties. Previous studies identify that claims and dis-
putes mostly involve the people factor, such as arguments and in-
compatibilities (Tsai and Chi 2009; Diekmann and Girard 1995).
The findings also indicate that opportunism is relatively more
Y
3 Y
2 Y
3 Y
P~ C ¼ 1 − ð1 − P~ CAi Þ ⊗ ðP~ CFi Þ ⊗ ð1 − P~ CCi Þ ⊗
i−1 i−1 i−1
¼ 1 − ½1 − ð0.6970; 0.8759; 0.9665Þ ⊗ ½1 − ð0.5946; 0.7904; 0.9205Þ ⊗ ½1 − ð0.7684; 0.9136; 0.9801Þ ⊗ ½1 − ð0.6591; 0.8371; 0.9483Þ
¼ ½1 − ð0.3030 × 0.4025 × 0.2316 × 0.3409Þ; 1 − ð0.1241 × 0.2096 × 0.0864 × 0.1629Þ; 1 − ð0.0335 × 0.0795 × 0.0199 × 0.0517Þ
¼ ½1 − ð0.0096Þ; 1 − ð0.0004Þ; 1 ¼ ð0.9904; 0.9996; 1Þ
i.e., defuzzified value ¼ ð0.9904 þ 0.9996 þ 1Þ=3 ¼ 0.9967.
Fuzzy Occurrence Likelihood of People Factor
People factor ¼ opportunistic behavior ∪ affective conflict:
Y
10 Y
10
P~ p ¼ 1 − ð1 − P~ PAi Þ ⊗ ð1 − P~ POi Þ
i−1 i−1
¼ 1 − ½1 − ð0.9895; 0.9996; 1Þ ⊗ ½1 − ð0.9811; 0.9991; 1Þ
¼ 1 − ð0.0105; 0.0004; 0Þ ⊗ ð0.0189; 0.0009; 0Þ
¼ ½1 − ð0.0105 × 0.0189Þ; 1 − ð0.0004 × 0.0009Þ; 1 − ð0 × 0Þ
¼ ð1 − 0.0002; 1; 1Þ ¼ ð0.9998; 1; 1Þ
i.e., defuzzified value ¼ ð0.9998 þ 1 þ 1Þ=3 ¼ 0.9999.
The fuzzy occurrence likelihood of a contractual dispute
is expressed as contractual dispute ¼ task factor ∩ contract
incompleteness, as shown in Eq. (10), where contractual dispute
is the intersection of task factor and contract incompleteness.
The fuzzy occurrence likelihood of a contractual dispute is
P~ CD ¼ P~ T ⊗ P~ C ¼ ð0.9986; 1; 1Þ ⊗ ð0.9904; 0.9996; 1Þ
¼ ð0.9986 × 0.9904; 1 × 0.9996; 1 × 1Þ
¼ ð0.9890; 0.9996; 1Þ
i.e., defuzzified value ¼ ð0.9890 þ 0.9996 þ 1Þ=3 ¼ 0.9962.
JOURNAL OF CONSTRUCTION ENGINEERING AND MANAGEMENT © ASCE / JANUARY 2013 / 21
J. Constr. Eng. Manage., 2013, 139(1): 15-23
damaging. Contracting parties are generally self-interest-seeking
(Williamson 1985). It is difficult for all construction participants
to have common goals and values. As such, incompatibilities usu-
ally exist in construction contracting. The tight tendering bidding
period and short construction period are primers for stress and ten-
sion on project team members.
Fuzzy Occurrence Likelihood of Task Factor
Task factor ¼ risk and uncertainty ∪ collaborative conflict:
Y
8 Y
8
P~ T ¼1− ð1− P~ TRi Þ⊗ ð1− P~ TCi Þ
i−1 i¼1
¼1−½1−ð0.9409; 0.9942; 0.9998Þ⊗½1−ð0.9758; 0.9983; 1Þ
¼1−ð0.0591; 0.0058; 0.0002Þ⊗ð0.0242; 0.0017; 0Þ
¼½1−ð0.0591×0.0242Þ; 1−ð0.0058×0.0017Þ; 1−ð0.0002×0Þ
¼ð1−ð0.0014Þ; 1; 1Þ¼ð0.9986; 1; 1Þ ð7Þ
i.e., defuzzified value ¼ ð0.9986 þ 1 þ 1Þ=3 ¼ 0.9995.
Fuzzy Occurrence Likelihood of Contract Incompleteness
Contractincompleteness ¼ ambiguity ∪ deficiency ∪ inconsistency ∪
defectiveness:
2
ð1 − P~ CT i Þ
i−1
ð8Þ
Similarly, the fuzzy occurrence likelihood of a speculative dis-
pute is expressed as speculativedispute ¼ contractincompleteness ∩
peoplefactor, as shown in Eq. (11).
The fuzzy occurrence likelihood of a speculative dispute is
P~ SD ¼ P~ C ⊗ P~ P ¼ ð0.9904; 0.9996; 1Þ ⊗ ð0.9998; 1; 1Þ
¼ ð0.9904 × 0.9998; 0.9996 × 1; 1 × 1Þ
¼ ð0.9902; 0.9996; 1Þ ð11Þ
i.e., defuzzified value ¼ ð0.9902 þ 0.9996 þ 1Þ=3 ¼ 0.9966.
ð9Þ In this study, the fuzzy occurrence likelihoods of contractual and
speculative disputes are 0.9998 and 0.9966, respectively. This is
virtually equivalent to 1, i.e., certainty. These assessments echo
the perception that construction disputes are inevitable in construc-
tion projects. In this regard, the proposed anatomy allows evaluat-
ing the impact of dispute factors including uncertainty, cognitive
issues, contract incompleteness, behavioral problems, and affective
conflicts in construction.
Limitations and Suggestions for Further Study
ð10Þ
This study employs the conventional FT framework to frame con-
struction disputes. The assumption of independent basic events
 without repetition is the main limitation to be noted. In the pre-
sented form, occurrence likelihood evaluations had been provided
by construction professionals. In a way, this suggests the work-
ability and understandably of the proposed anatomy by the indus-
try. The FT-based conceptualization supplements qualitative,
anecdotal-based analysis of construction disputes. For further
study, a Bayesian network that can take into account a priori
probably of the basic event can be considered (Khakzad et al.
2011).
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Concluding Remarks
This study contributes to the study of construction disputes in a
number of ways. First, an anatomy of a construction dispute is pro-
posed. The proposed anatomy distinguishes two types of construc-
tion disputes: contractual and speculative. Contract incompleteness
is the root cause of both types of construction dispute. In addition,
the task factor and people factor underpin contractual and specu-
lative disputes, respectively. These three factor groups are further
elaborated into eight dispute factors: risk and uncertainty, collabo-
rative conflict, ambiguity, deficiency, inconsistency, defectiveness,
opportunistic behavior, and affective conflict. These factors are
operationalized by their respective artifacts. This arrangement
offers an alternative approach to describe construction disputes
other than the conventional subject matter approach. Second,
the proposed anatomy is arranged under a fault-tree framework
whereby the events in the fault tree are linked by logic gates. In
this format, construction participants could understand how these
events contribute to the occurrence likelihood of disputes. As an
illustration, a web-based assessment tool was developed to collect
occurrence likelihood assessments of dispute artifacts. The fuzzy
occurrence likelihood of construction dispute was computed. With
this anatomy and the evaluative tool, construction project managers
can identify the dispute-inducing artifacts and instigate appropriate
preventive strategies. An incomplete contract is the common cause
of contractual and speculative construction disputes. Moreover,
having a complete contract is resource laden (Hart and Moore
1988). Williamson (1975) further opined that a contract is inevi-
tably incomplete due to bounded rationality and information asym-
metry. As such, construction dispute minimizing efforts can focus
on noncontractual mechanisms such as building commitment and
trust. These endeavours are not easy but would positively alleviate
the task and people factors.
Acknowledgments
The authors are thankful for the constructive comments of the
reviewers. The work described in this paper is fully supported
by a HKSAR Research Grant Council General Research Fund
(Project No. 111606).
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