Engineering, Construction and Architectural Management

Conflicts, claims and disputes in construction

MOHAN M. KUMARASWAMY
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 Engineering, Construction and Architectural Management 1997 4 | 2,95-111

Conflicts, claims and disputes in construction

MOHAN M. KUMARASWAMY
Department of Civil and Structural Engineering. The University of Hong Kong, Pokfulan Road, Hong
Kong
Paper submitted 8 January 1996; accepted for publication 31 July 1996; discussion open until
December 1997

Abstract It is necessary and useful to differentiate destructive from constructive conflict

and avoidable from necessary claims; and also to minimize disputes arising from unre-
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solved conflict and claims in construction projects. This paper analyses such needs and
proposes means of meeting them through an appropriate classification of construction
claims; an estimation of their relative significance in terms of magnitude and frequency;
and an identification of the proximate and root causes of the significant claims. A hier-
archy of such claims, proximate and root causes is presented, based mainly on data
collected from 61 projects and on 46 responses to questionnaires in Hong Kong. Mea-
sures of the relative significance of the claims categories are also presented. The results
are reinforced by observations from parallel studies in Hong Kong and elsewhere, as well
as from the literature. Strategies are suggested to avoid the avoidable and mitigate the
unavoidable or unavoided claims, through controlling the controllable causes. Manage-
ment focus is also recommended on controlling the causes of those categories of claims
and disputes that are seen to be significant in terms of higher impact and/or probability of
occurrence.

Keywords claims, conflict, construction management, disputes

INTRODUCTION

The proliferation of conflicts, claims and disputes in construction projects has

spawned specialists (whether self-professed or otherwise) in claims management
and dispute resolution. However, different approaches and differentials in ter-
minology used in contract documentation suggest the need to clarify the related
concepts, and to study the critical impacts on projects and the implications for the
industry itself.
A preliminary study by this author suggested a further need: to identify the
common sources of disputes in construction, so as to isolate and control the root
causes. An appreciation of such root causes will be useful in resolving any ongoing
and unavoidable disputes, and also in avoiding any avoidable disputes.
This paper thus aims to identify the relationships between conflicts, claims and
disputes, and to suggest some significant underlying causes of these as discerned

© 1997 Blackwell Science Ltd 95

 96 Kumaraswamy, M.M.

from an ongoing investigation. The interim conclusions presented here, are

derived from observations from the first two stages of this investigation. These
observations are consolidated from the analysis of detailed data from 61 recent
construction projects related to claims categories, and 47 replies to a separate
questionnaire designed to discern perceptions as to common sources of claims, in
Hong Kong. Supplementary observations from three completed M.Sc. project
investigations also contributed to and collaborated these interim findings. A
survey of the current literature supplemented this investigation and corroborated
the observations in general. A tabulated comparison of relevant conclusions from
a cross-section of this literature is als"o presented, to help in drawing parallels with
other studies and other countries.

NATURE, SOURCES AND USES OF CONFLICT

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Conflict has been defined (Collins 1995) as 'serious disagreement and argument
about something important' and also as 'a serious' difference between two or more
beliefs, ideas or interests'. Since conflict is 'inevitable in human relationships'
(Rhys Jones 1994), it is predictably preponderant in projects where human rela-
tionships proliferate, as in construction. Figure 1 illustrates the many interacting
potential sources of conflict in construction scenarios. Conflicts can arise both
within systems (such as A, B and C), as well as at the interfaces of such source
systems (such as D , E, F and G). Analysing further, conflicts may be discerned
within and between subsystems (e.g. B1 to B4, D1 to D4). The potential for
conflict is further magnified when incorporating the next layer of subsystems, such
as joint ventures and sub-contractors.
Despite the potentially unpleasant connotations and consequences of conflict,
beneficial aspects of conflict have also been recognized, and conflict management
has been said to be a major component in construction project management
(Gardiner & Simmons 1995). For example, a conscious shift of conflict occur-
rences from the construction to the conceptual design stage is seen to contribute
to more creative and constructive inputs, in comparison to what may have tran-
spired in the absence of such conflicting views. The cross-fertilization of ideas and
the consideration of more alternatives, through such constructive conflicts at the
design stage, would usually lead to 'better' designs as well. Figure 2 illustrates this
potential for properly managed conflicts to lead to improvements, say, in design or
construction methodologies, while other conflicts may result in self-destructive
disputes, either by themselves or through avoidable claims.

USES AND ABUSES OF CLAIMS

The Canadian Law Dictionary defines 'claim' as an 'assertion of the right to
remedy, relief or property' (Semple et al. 1994). Powell-Smith & Stephenson
(1993) also described a 'claim' as a general term for the assertion of a right to
money, property or a remedy. Construction claims themselves usually arise as

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 Conflicts, claims and disputes 97
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assertions for extra money or time. Claims on construction projects can be based
on the contract itself, a breach of contract, a breach of some other common law
duty, a quasi-contractual assertion for reasonable (quantum merit) compensation,
or an ex-gratia settlement request.
Some construction claims are unavoidable and in fact necessary, to con-
tractually accommodate unforeseen changes in project conditions or unavoidable
changes in client's priorities. While such claims may be settled amicably, the prior
presence of unhealthy conflict can trigger degeneration into unnecessary disputes.
Such scenarios can in turn generate unnecessary and/or unreasonable claims that
further escalate unhealthy conflicts and disputes. This possibility is also illustrated
in Fig. 2, which sets out the basic relationships between conflicts, claims and
disputes in construction scenarios. Disputes are taken to imply prolonged dis-
agreements on unsettled claims and protracted unresolved/destructive conflict.
Disputes may arise from different perceptions as to the legitimacy and/or the
quantum of the claim. Unhealthy tendencies to exaggerate claims - by contractors
who underprice and are seeking quick gains, or who anticipate resistance to any
claim - can be as damaging as over-protective rejection of claims by consultants

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 98 Kumaraswamy, M.M.
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who are apprehensive of being blamed for poor contract management, or for cost
increases. The consequential conflicts can lead to further claims and disputes. For
example, Jergeas & Hartman (1994) noted many avoidable claims on which
valuable resources are wasted.
It was thus considered useful to investigate the common sources of claims and
to differentiate the unavoidable/necessary from the avoidable/unnecessary claims.
In launching this investigation in Hong Kong in late 1993, it was felt necessary to
identify the root causes of claims as a necessary precursor to conclusions on their
avoidability or otherwise.

CLASSIFYING CLAIMS AND THEIR CAUSES

Categorization of claims
A classification of the 'common' categories of construction claims encountered in
a particular country can be influenced by the claim category heads that are
permissible and 'popular' under the prevalent conditions of contract. 'Popularity'
of usage of particular claim category heads, while supposedly based on justifiable
causes, is also enhanced by the perceived potential of 'success' in obtaining
compensation. This is borne out by anecdotal evidence of some claims being
shifted from one category that yields only 'extra time' compensation (say, for
diversion of utility lines) to another which grants both 'time' and 'cost' com-
pensation (say, for non-possession of site). However, the general categories and
causes of common and significant claims that were observed in the author's
investigations in Hong Kong, were similar to observations in other countries such

© 1997 Blackwell Science Ltd, Engineering, Construction and Architectural Management 4 | 2, 95-111
 Conflicts, claims and disputes 99

as by Semple et al. (1994) in Canada, Heath et al. (1994) in the UK, Rhys Jones
(1994) mainly in the UK, Conlin et al. (1996) also in the UK, Watts & Scrivener
(1992) in Australia, Hewitt (1991) in general and Diekmann & Nelson (1985) in
the USA.
Tables A1 and A2 in the Appendix list the categories of cost and time claims
initially envisaged in Hong Kong, based on the Hong Kong Government Con-
ditions of Contract, whether for Building Works or Civil Engineering Works; while
Table A3 illustrates the categorization of significant claims, disputes and their
causes, by the aforementioned cross-section of authors. While noting the general
similarities, specific differences are seen to arise depending on the particular
contract regimes. For example, cost claims based on unforeseen ground conditions
are generally precluded under Hong Kong Government Conditions of Contract,
the risk being transferred to the contractors (Kumaraswamy et al., 1995).
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Identifying significant categories of claims in Hong Kong

It was decided to collect data from claims on a cross-section of construction
projects in Hong Kong, in order to compare the significant categories and causes
of claims with those from other construction industries. A standardized data sheet
was developed and used to collect information from each project in the sample, as
to the 'cost' and 'time extension' claims. The classification of different claim
category heads, as listed in Tables A1 and A2, reflects the provisions of the Hong
Kong Government Conditions of Contract. The data was assembled in a database
for convenient quantification of the relative magnitudes and frequencies of claims
in the different categories.
Table 1 contains extracts derived from the database of the relative magnitudes
of cost claims made, based on data obtained from the first 61 projects in the first
phase of the Hong Kong investigation. All cost claims in a certain category in a
project were added together and the total value reflected as a percentage of ori-
ginal contract value (OCV), in respect of each project. Such standardization
facilitated comparisons of the relative magnitudes of grouped claims in a given
category, in relation to contract values, rather than in terms of absolute values
which may not indicate the relative impacts on the projects. A sample extract of
such indicators — of total claims under each category in respect of each project in
the database - is shown in the Table 1 to illustrate the results from this first stage
analysis of the collected data.
A similar procedure was followed in combining and comparing the values of all
'paid out' (settled) cost claims in respect of each category and in each project.
Similarly, all time claims (both made and granted) in a given category were
aggregated for each project and shown as a percentage of original contract period
(OCP).
Figure 3 and Table 2 summarize the relevant results of the second stage of the
analysis of this cost claim data. The averages and standard deviations in Fig. 3
indicate the relative magnitude and variability of claims in each category. It should

© 1997 Blackwell Science Ltd, Engineering, Construction and Architectural Management 4 | 2, 95-111
 100 Kumaraswamy, M.M.

Table 1 Extract a from table of 'total claimed/original contract value', as a percentage, against each project,
and under each cost claim category

Cost claim category b CC 1 CC 2 CC 9 CC 14 CC 17 CC 18

Contract code c Totald

C1 20.98 20.98
C2 13.32 25.09 41.42
B3 0.00
C4 3.65 3.65
C5 0.00
C6 3.29 3.29
C7 2.00 2.00
C8 0.10 0.34 15.43
C9 2.21 2.21
C10 4.78

Average(%) 1.79 1.68 3.68 1.44 19.79 7.65

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Standard deviation 1.62 0.51 3.87 1.12 38.60 9.60

a
Only 10 of the 61 projects analysed and only 8 of the claims categories are indicated, to illustrate a sample of these results.
b
Cost claims categories as described in Table A1. cContract codes are used for confidentiality (so as to avoid using contract/
project names). dThis 'total' represents 'total claimed/original contract value' as a percentage, for each contract (and
includes other cost claim categories that are excluded in this extract).

be noted that the 'average' values in each claim category are based only on the
number of projects on which they actually arose. Table 2 adds information (also
derived from the database) on the frequency of occurrence of such claims and also
on the frequency and relative magnitude of 'success' of the claims in each cate-
gory. Figure 4 and Table 3 convey similar information pertaining to the time
claims in each category.
The graphical presentation of the 'cost' and 'time' claims data in Figs 3 and 4
highlights the categories where claims of relatively high magnitude commonly
arise, for example in relation to 'variations' and 'delayed site possession'. The

© 1997 Blackwell Science Ltd, Engineering, Construction and Architectural Management 4 | 2, 95-111
 Conflicts, claims and disputes 101

Table 2 Selected 'indicators' of cost claims' and 'payments profile' in each cost claim category

Average f No. of projects No. of projects

Cost claim (claimed/ claimed/total paid/total Average
categorye OCV) (%) no. of projects no. of projects (paid/claimed)

CC 1 1.79 0.11 0.08 0.31

CC 2 1.68 0.07 0.02 1.00
CC 6 0.18 0.02 0.02 0.88
CC 7 1.11 0.03 0.05 1.00
CC 8 1.39 0.02 0.02 0.35
CC 9 3.68 0.15 0.15 0.34
CC 10 1.60 0.03 0.02 0.86
CC 11 2.35 0.02 0.00 0.00
CC 12 5.58 0.02 0.02 0.67
CC 14 1.44 0.03 0.03 1.00
CC 15 ^ 5.10 0.15 0.15 0.48
CC 16 1.30 0.02 0.02 0.93
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CC 17 19.79 0.08 0.11 1.32

CC 18 7.65 0.13 0.10 0.53
CC 18A+ 1.86 0.02 0.02 0.40
CC 18B 4.65 0.02 0.00 0.00
CC 18B+ 1.49 0.02 0.02 0.75
CC 18C+ 6.98 0.02 0.00 0.00
CC 19 5.17 0.43 0.39 0.83

e
Cost category descriptions are cited in Table A1 and Fig. 3. fAverages are derived from the database containing Table 1
(e.g. 'average' row at the bottom of Table 1). ^OCV = original contract value.

tabular presentation of the 'cost' and 'time' claims data in Tables 2 and 3 also
indicates categories where claims arise more frequently, as reflected in the column
'No. of projects claimed/Total No. of projects'. For example, 'variations' and
'inclement weather' appeared to be relatively frequent. The relative significance of
a claim category may then be assessed by combining the average magnitude with
the frequency. For example, 'variations' would appear significant, being high in
both magnitude and frequency.

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 102 Kumaraswamy, M.M.

Table 3 Selected 'indicators' of time 'claims' and 'extensions' profiles in each time claim category

Averagei No. of projects No. of projects Average

Time claim (claimed/ claimed/total granted/total (extended/
categoryh OCPj) (%) no. of projects no. of projects claimed)

TC 1 11.01 0.44 0.43 0.75

TC 2 0.45 0.21 0.20 0.97
TC 3 8.27 0.03 0.02 0.50
TC 4 22.51 0.30 0.30 0.64
TC 5 4.82 0.07 0.05 0.89
TC 6 19.19 0.13 0.13 0.92
TC 7 18.10 0.16 0.13 0.93
TC 8 7.02 0.15 0.00 0.00
TC 9 9.10 0.10 0.10 0.58
TC 11 1.60 0.10 0.08 0.90
TC 11A 5.38 0.15 0.02 1.00
TC 11B 5.29 0.02 0.03 0.61
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h
Time claim category descriptions are cited in Table A2 and Fig. 4. iAverages are derived from the time claims database,
similar to that containing Table 1. jOCP = original contract period.

These two indicators - magnitude and frequency - may theoretically be com-

bined to project an 'expected value' in terms of percentage of contract value (or
period) of a claim (or settlement) in a given category. However, this will not be
attempted until data from more projects is incorporated and the database is
classified into different types of projects such as roadworks and public sector
buildings, so as to provide more homogeneous subsamples.
Other information and pointers can be derived from the statistics in the tables.
For example, the fact that more was paid out than claimed on average, in cost
claim category CC 17, (average (paid/claimed) = 1.32) suggests that items
originally claimed under other categories may be eventually granted under this
category of 'Engineer's instruction to change', which is eventually classified under
variations.
The significance (S) of a claim category can then be considered to be a function
of the impact (I) on the project, as presently indicated by the average magnitude
expressed as a percentage of original contract value (or period); and of the
probability (P) of occurrence, as presently indicated by the frequency, i.e. S= f (I,
P).

Claims avoidability and management

Claims managers should focus not merely on the significant claims categories but
also on the avoidable ones, so as to minimize the damaging effects on a given
project. Thus the 'claims management focus' (M) required on a given claims
category can be said to be dependent on the significance (S) and the avoidability
(A), i.e. M= f (S, A). Significance may be assessed as in the previous subsection,
while avoidability may be estimated, say, on a scale from 1 to 10.
However, to avoid arbitrary estimates of 'avoidabilities' it was felt necessary to

© 1997 Blackwell Science Ltd, Engineering, Construction and Architectural Management 4 | 2, 95-111
 Conflicts, claims and disputes 103

identify the causes underlying different claims categories, on the premise that if
the causes are identified, their controllabilities and hence avoidabilities can be
assessed more realistically. Difficulties in such identifications arose from most
claims being generated from overlapping causes and/or cumulative cause-effect
cycles. Studies in the next phase of the investigation are aimed at unravelling the
network of principal cause-effect interactions leading to particular categories of
claims.

Common causes of claims and disputes

Meanwhile it is useful to present an overview of the causes identified as giving rise
to claims and disputes in general, based on the literature, the author's experiences,
interviews and a questionnaire survey. Figure 5 provides such an overview, with a
differentiation of the proximate (or immediately apparent) causes from the per-
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ceived underlying root causes that give rise to construction claims in general.
An appraisal of the root causes, for example, reveals the apparent controllability
of all except one - related to 'uncontrollable external events'. Apart from the
repercussions of this particular root cause, for example leading to 'changes by

© 1997 Blackwell Science Ltd, Engineering, Construction and Architectural Management 4 | 2, 95-111
 104 Kumaraswamy, M.M.

client', it appears that almost all the proximate causes are also controllable to a
certain extent. Of course it is unlikely that all potential causes can be adequately
controlled simultaneously, given the multiple interacting subsystems and vari-
ables in any project. However, further study is needed to trace and isolate the
critical causes that give rise to 'significant' categories of claims, so that manage-
ment attention may be focused on attempts to control the corresponding causes,
in order to avoid such 'significant' claims as discussed in the previous subsection.

Collaboration from parallel studies in Hong Kong

Three other 'mini-studies' were formulated to investigate the specific categories
and causes of claims and disputes in particular subsectors. These studies were
carried out by part-time M.Sc. candidates who are engineers engaged in the
specific subsectors themselves. Interestingly, the results corroborate the foregoing
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observations in general, while adding specific dimensions in particular subsectors.

For example, Cheng (1994) analysed the claims on 14 roadworks projects and
found that most cost claims in such projects arose from price escalations/
fluctuations, variations, and delays/disruptions/prolongations, while time claims
mostly arose from variations, quantity increases, inclement weather, and utility
line diversions. Chan (1994) studied claims on 24 drainage works projects, in
which 577 of the 1763 cost claims were granted, at least to some extent. Of those
granted, 76 claims arose from problems in the documentation, 182 from the
execution of the work itself, 146 related to time extension claims and 108 directly
to payments. Ng (1994) analysed in depth the disputes on two substructure
projects and found that they arose from lack of co-ordination of 'independent
work activities', communication breakdowns, ambiguous work standards/
specifications, differences in perception, problems with sub-contractors; and
delays/extensions of time.

Differing perceptions as to common causes of claims and disputes

One of the principal difficulties in tracing the cause-effect relationships between
given categories of claims, specific proximate causes and root causes, is the
different perspectives of project participants as to the sources of the problems. A
questionnaire was designed to discern such differences in perspectives. The
results of the initial survey, based on 46 completed questionnaires, are given in
Table 4. Table 4(a) includes only the top ten of the 'common categories' as
perceived by the respondents from among those suggested in the questionnaire.
Table 4(b) similarly incorporates only the top 10 of the 'common causes' as
perceived by the survey respondents. Further investigations, including case
studies, are needed to differentiate the root causes from the proximate causes of
claims and disputes.
Table 5 indicates the rank agreement factors (RAFs) and the percentage
agreements (PAs) between different groups of project participants, as derived

© 1997 Blackwell Science Ltd, Engineering, Construction and Architectural Management 4 | 2,95-111
 Conflicts, claims and disputes 105

Table 4(a) Perceived significance of common categories of construction claims, as perceived by con-
tractors, clients and consultants, and listed in descending order of overall perceived significance

General claim category Overall Contractors Clients Consultants

Rank Index Rank Index Rank Index Rank Index

Variations due to site conditions 1 58.2 1 67.5 2 48.6 4 58.6

Variations due to client changes 2 55.6 2 60.0 4 46.7 1 60.0
Variations due to design errors 3 54.4 3 47.5 1 57.1 3 58.6
Unforeseen ground conditions 4 49.0 4 45.0 5 41.9 2 60.0
Ambiguities in contract documents 5 43.0 6 30.0 3 47.6 9 51.4
Variations due to external events 6 40.6 5 37.5 7 40.0 10 44.3
Interference with utility lines 7 40.5 7e 30.0 6 40.0 8 51.4
Exceptional inclement weather 8 40.2 9 30.0 9 36.2 5 54.3
Delayed site possession 9 39.4 7e 30.0 10 35.2 6 52.9
Delayed design information 10 34.5 12 12.5 8 38.1 7 52.9

The 'overall' indices are weighted to account for different numbers in the three groups: 8 from contractors, 21 from clients
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and 17 from consultants; 'e' signifies equal rank with another, in which case the next rank is by-passed; maximum index
value = 100.

Table 4(b) Perceived significance of common causes of claims, as perceived by contractors, clients and
consultants, and listed in descending order of overall perceived significance

Cause Overall Contractors Clients Consultants

Rank Index Rank Index Rank Index Rank Index

Inaccurate design information 1 57.3 1 62.5 4 45.3 1 64.3

Inadequate design information 2 50.6 4 50.0 2 54.3 5 54.3
Inadequate site investigations 3 49.3 5 50.0 5 42.1 4 55.7
Slow client response (decisions) 4 46.9 3 50.0 11 37.9 6 52.9
Poor communications 5 45.7 10 40.0 12 35.8 2 61.4
Unrealistic time targets 6 45.0 2 52.5 7 41.1 12 41.4
Inadequate contract administration 7 44.6 15 30.0 3 45.3 3 58.6
Uncontrollable external events 8 44.1 12 35.0 1 51.6 10 45.7
Incomplete tender information 9 41.9 6 42.5 13 34.7 8 48.6
Unclear risk allocation 10 41.3 7e 40.0 6 41.1 11 42.9

The 'overall' indices are weighted to account for different numbers in the three groups: 8 from contractors, 21 from clients
and 17 from consultants; maximum index value = 100.

from their ranking of the top ten categories and the top 10 causes. The metho-
dology used in computing the RAFs and PAs is based on that described by Okpala
& Aniekwu (1988). Whilst a certain degree of agreement is noted as to common
claims categories, the general collective disagreement as to causes of claims and
disputes is not surprising, given the different vantage points if not the vested
interests of clients, consultants and contractors. If there was no such disagree-
ment, disputes would undoubtedly be fewer. What is interesting, though, is the
high degree of disagreement that reflects a larger 'bias' than expected by this
investigator, and therefore merits further investigation.

© 1997 Blackwell Science Ltd, Engineering, Construction and Architectural Management 4 | 2, 95-111
 106 Kumaraswamy, M.M.

Table 5 'Rank agreement factor' (RAF) and 'percentage agreement' (PA) between different project parti-
cipants as to the common categories of claims and common causes of claims

Common categories Common causes

of claims of claims
RAF PA RAF PA

Clients and consultants 3.0 40 4.6 8

Consultants and contractors 2.5 50 4.3 14
Clients and contractors 1.9 62 4.8 4

Since these results are from a pilot survey with small samples, the results are only indicative and not conclusive. The refined
questionnaire is being circulated. 'Rank agreement factor' and 'percentage agreement' were computed through formulae
(Okpala & Aniekwu 1988), based on the relative rankings by each group, as ranked in Tables 3 and 4.

DISPUTES AND THEIR MINIMIZATION

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Many construction disputes can be linked to claims or potential claims, although

disputes can also arise directly from unresolved conflicts, as indicated in Fig. 2.
For example, disputes as to the location or usage of certain site facilities may result
from personality clashes between consultants' and contractors' representatives.
Such unhealthy conflict and debilitating disputes can of course trigger further
misunderstandings, and so even more claims and further disputes.
The definition of dispute is itself 'in dispute' even in different construction-
related documents. For example, clause 66(2) of the sixth edition of the ICE
Conditions of Contract (ICE 1991) holds that a dispute is deemed to arise 'when
one party serves on the engineer a notice in writing stating the nature of the
dispute'; whereas rule 1 of the ICE Arbitration Procedure states that a dispute or
difference shall be deemed to arise 'when a claim or assertion made by one party is
rejected by the other party and that rejection is not accepted' (Eggleston 1993).
It is the latter interpretation of 'dispute' that is targeted by the burgeoning
'dispute resolution' and 'alternative dispute resolution' subindustries in
construction. It is not the purpose of this paper to explore the effectiveness or
efficiency of the different dispute resolution techniques, such as conciliation,
mediation, mini-trials, third party neutrals, adjudication and arbitration. How-
ever, it is necessary to note the perceptible shift towards dispute avoidance and
minimization strategies, through techniques such as partnering (AGC 1991)
dispute review boards (Denning 1993) and dispute resolution advisers (Wall
1994).
This perceived preference to avoid the avoidable disputes and minimize the
intensity and impact of unavoidable or unavoided disputes is a logical response to
the high costs of resolving disputes that have affected construction industries in
most countries. The Latham Report in the UK, for example, called for a reversal
of the adversarial relationships and practices that dominated the industry, and for
a replacement of these with 'teamworking', 'collaborative working' and 'part-
nership' between the multiple participants on a construction project (Latham
1994).

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 Conflicts, claims and disputes 107

CONCLUDING OBSERVATIONS
The identified need for collaborative working, teamwork and partnership, in
preference to entrenched adversarial relationships between project participants, is
reflected in the growing usage of nontraditional types of procurement. For
example, design and construct or project-management led types of construction
procurement are based on minimizing such adversarial friction and on facilitating
teamwork. Such systems should arguably be easier to implement and develop in
many Asian countries where traditional approaches to consultation, compromise
and consensus may be mobilized to reduce conflicts on construction projects.
Furthermore, extensive evidence of commercial/negotiated settlements of dis-
putes outside the dispute resolution machinery, corroborated the prevalence of
and preference for such approaches during the investigation in Hong Kong.
However, the conflicts, claims and consequential disputes that eluded such set-
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tlements still appear significant from the results presented in this paper. For
example, claims and disputes appeared to be particularly high in categories such
as 'variations' and 'delayed site possession', while they appeared particularly
frequent under 'variations' and 'inclement weather'.
The need to isolate the common root and proximate causes of such significant
claims and consequential disputes is confirmed. Addressing such causes should
minimize the occurrence and impact of avoidable claims and disputes. However, a
notable disagreement was found between different groups in the industry (clients,
consultants and contractors) as to their perceived common causes of claims.
Further investigations, including case studies, are felt necessary to isolate the real
root causes.
Meanwhile, the common categories and causes of claims, as identified in the
present investigation, provide a basis on which to investigate their avoidability.
Special management attention in minimizing potential disputes can then be
focused on those claim categories identified as particularly significant in terms of
magnitude and frequency, as well as on those causes considered particularly
significant and controllable, such as in resolving ambiguities in contract docu-
ments or in improving the quality of design information and project commu-
nications.
It is concluded that a useful follow-up exercise should attempt to link specific
groups of proximate and root causes to particularly significant claims categories.
Further analysis of the specific sources of significant claims categories themselves,
such as variations, will facilitate differentiation between the unavoidable com-
ponents arising, say, from unforeseen external events, and the controllable
components, say, from design errors or inadequate information provision.
Management focus can thus be more finely tuned to anticipate and avoid, or
provide for, common problem areas, thereby improving claims management and
facilitating more effective and efficient dispute minimization strategies.

© 1997 Blackwell Science Ltd, Engineering, Construction and Architectural Management 4 | 2, 95-111
 108 Kumaraswamy, M.M.

ACKNOWLEDGEMENTS
A grant from the Committee on Research and Conference Grants (CRCG)
enabled the use of a part-time senior research assistant for the data collection. Mr
Hari de Alwis, Mr Sam Chan and Mr C.B. Mak were all of considerable assistance
in this capacity. Research assistant Ms Joanna Molloy and Ph.D. research student
Mr Kumaru Yogeswaran also contributed to this aspect, while the latter played a
major role in the analysis and presentation of the collected data.

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APPENDIX
Table A1 Cost claim categories chosen in this investigation

Cost claim category Cost claim description

CC 1 Ambiguity in documents
CC 2 Construction method change due to engineer's comments (on contractor's
method statement)
CC 3 Error in setting out due to incorrect data shown on drawings
CC 4 Rectification of damage caused by excepted risks
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CC 5 Disposal of fossils
CC 6 Facilities provided to other contractors, in excess of those anticipated at tender
stage
CC 7 Additional tests (to verify compliance with specification, in excess of those
anticipated at tender stage)
CC 8 Uncovering of works for examination
CC 9 Delayed possession of works
CC 10 Acceleration of works
CC 11 Suspension of works
CC 12 Additional work (to other parts of the works) arising from repairs or defects
CC 13 Investigation of alleged defects
CC 14 Interest on claims due to their late valuation
CC 15^ Disruption to regular progress due to:
CC 15A late instructions
CC 15B variations
CC 15C opening for inspection
CC 15D delay caused by any person or organization employed by the employer
CC 15E late delivery of materials by the employer
CC 16 Employer's breach of contract
CC 17 Engineer's instruction to change
CC 18 Other reasons
CC 18A+ Delay caused by additional/unforeseen building ordinance office procedures and
late issue of consent
CC 18B Overbreaks on cutting slopes
CC 18B+ Delays caused by unforeseeable obstructions to foundations construction
CC 18C+ Delays due to variations
CC 19 Variations
CC minor To incorporate categories where claims were relatively 'minor'

© 1997 Blackwell Science Ltd, Engineering, Construction and Architectural Management 4 | 2, 95-111
 110 Kumaraswamy, MM.

Table A2 Time claim categories chosen in this investigation

Time claim category 'Extension of time' claim description

TC 1 Inclement weather
TC 2 Hoisting of storm signal no. 8 or above
TC 2 Instruction issued to resolve discrepancy
TC 4 Variation order
TC 5 Substantial increase in quantity of any work item not resulting from a variation
TC 6 Delayed possession of site
TC 7 Disruption to regular progress due to:
TC 7A late instruction
TC 7B variation
TC 7C opening for inspection
TC 7D delay caused by any other person or organization employed by the employer
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TC 7E late delivery of materials by the employer

TC 8 Suspension of works by the employer
TC 9 Delay caused by utility services organization
TC 10 Excepted risks
TC 11 Any other special circumstances
TC 11A Disruption to regular progress due to additional/unforeseen building ordinance
office procedures or late consent
TC 11B Disruption to regular progress due to unforeseeable obstructions

© 1997 Blackwell Science Ltd, Engineering, Construction and Architectural Management 4 | 2, 95-111
 Conflicts, claims and disputes 111

Table A3 Classifications of common construction conflicts, claims and disputes, as derived from a cross-
section of the literature

Researchers Context Findings

Hewitt (1991) General Six main types (categories) of claims: change of scope;
changed conditions; delay; disruption; acceleration; and
termination.
Semple et al. (1994) 24 projects in Six contract clauses commonly cited in claims. Six common
Western Canada categories of disputed claims: premium time; equipment
costs; financing costs; loss of revenue; loss of productivity;
and site overhead. Four common causes of claims:
acceleration; restricted access; weather/cold; and increase
in scope.
Conlin et al. (1996) 483 dispute events Six broad groups of causes of conflict: payment and budget;
on 21 projects in performance; delay and time; negligence; quality: and
the UK administration.
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Watts & Scrivener 72 judgments from 59 categories of disputes and 117 'sources' of disputes.
(1992) 56 construction Most frequent sources include, for example, claims arising
litigation cases in from: variations; negligence in tort; and delays including
Australia damages.
Heath et al. (1994) Survey of 28 Five main categories (types) of claims: extension of time;
quantity surveyors, variations in quantities; variations in specifications; drawing
and five case changes; others. Seven main types of disputes: contract
studies in the UK terms; payments; variations; extensions of time;
nomination; re-nomination; and availability of information.
Bristow & Ontario, Canada Five primary causes of claims: unrealistic expectations by
Vasilopoulous the parties; ambiguous contract documents; poor
(1995) communications between project participants; lack of team
spirit among participants; and a failure of participants to deal
promptly with changes and unexpected conditions.
Rhys Jones (1994) General survey of Ten factors in the development of disputes: poor
construction management; adversarial culture; poor communications;
industry and inadequate design; economic environment; unrealistic
lawyers tendering; influence of lawyers; unrealistic client
expectations; inadequate contract drafting; and poor
workmanship.
Diekmann & 427 claims on 22 Most common causes of contract claims (46%) were
Nelson (1985) (federally 'design errors' and another 26% were 'discretionary or
administered) mandatory changes'. Other specific claims types
projects in USA (entitlement issues) included: differing site conditions;
weather; strikes; and value engineering.
Sykes(1996) General Two major groups of claims and disputes: claim reasons
arising from misunderstandings - with eight specific
reasons/examples; and claim reasons arising from
unpredictability - with 17 specific reasons/examples.

© 1997 Blackwell Science Ltd, Engineering, Construction and Architectural Management 4 | 2, 95-111
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