CONSTRUCTION DISPUTES

AND SETTLEMENTS
CONSTRUCTION DISPUTES
 DEFINITION OF CONSTRUCTION
DISPUTES

CONSTRUCTION DISPUTES comes from a

variety of problems that can be faced during the
construction process. Construction disputes usually
arise during the building process or after the work is
completed.
OTHER DEFINITIONS DISPUTE

Example: Example:
Example: It involves The designer would not
disagreement over agree when they have
i. Contract issues capable of made a blander in their
Documents resolution by designs but there will
ii. Agreement negotiation, mediation always put the blame with
or third the contractor, claiming he
party adjudication is failing to do his work.

Dispute is unable A dispute defined A dispute will not

to eliminate as a class or kind exist until a claim
because the of conflict, which is asserted by
nature of the manifests itself in one party which
construction is full distinct, justifiable is disputed by the
risk. issues.” other party
(Thomas 1995) (Brown and (Bachner (1988))
Marriot (1993)).
VISULIZE ACTIVITIES WITH TIMELINES!
CAUSES OF DISPUTE BY STAKEHOLDERS

CLIENT CONTRACTOR CONSULTANT

Causes of Construction Dispute by Clients

Failure to
Deficient respond in Poor
management time communication DISPUTE
supervision

Lowest price Failure to Discrepancies in

menitality in appoint contract
engagement of project documents
contractor manager
Causes of Construction Disputes by Contractors

Failure to
Delay plan and Reluctance
suspension of execute the to seek
work changes of clarification DISPUTE
works

Inadequate Lack of Failure to

CPM scheduling understanding understand
and agreement and correctly
and update
in contract
requirement bid or price
procurement
the works
Causes of Construction Dispute by the Consultants
Failure To To request for Over design
understand its information late and
responsibilities information understanding
delivery and the costs
under the design
cumbersome
DISPUTE
involved
team contract appoarch

Incompleteness Design and

specification Varistions
of drawing and due to
specification oversight and
errors or design errors
omissions
from
specialists
Many types of construction disputes, including:

1. Owner's failure to pay for work or lacks funds to continue work:

We work with contractors find legal relief where an owner has failed to pay. From extending the
substantial completion date (SCD), pursuing a claim for increased costs (including the cost of
mobilization and de-mobilization) seeking change orders or and enforcing liens, we can assist you in
getting the amounts you are owed.
2. Unforeseen site conditions:
Many issues can arise during the course a project, such as disputes with neighbors during
foundation work, hitting water or having insufficient personnel on the job, can cause significant and
costly delays. We will advise you about the legal action you can take to protect your rights if you
encounter a situations not anticipated in the contract.
3. Stop work orders issued by the Building Department:
Stop work orders can be issued for a variety of reasons, from safety issues on the job site to failing
to protect adjacent property and failing to have proper controlled inspections to working without
proper permits.
4. Breach of contract by any party:
The party fails to perform their contractual obligations, such as the project is over payment, the
quality or scope or work performed, failure to correct defective work or wrongful termination of
the contract.
CONSTRUCTION
SETTLEMENTS
DEFINITION OF SETTLEMENT

Settlement is a resolution between disputing

parties about a legal case, reached either
before or after court action begins
CRITICAL FACTORS AFFECTING USE ADR PROCESS

NATURAL OF
SETTLEMENT BENEFIT PROCEEDING
AGREEMENT

OUTCOME
OF THE PROCESS OF
PROCESS PROCEEDING
CRITICAL FACTORS AFFECTING USE OF
ALTERNATIVE DISPUTE RESOLUTION SIGNIFICANCE
PROCESSES

a) Bindingness of the decision (Bindingness)

1. SETTELEMENT AGREEMENT b) Enforceability of the decision (Enforceability)
c) Obtaining fairness (Fairness)

2. BENEFIT a) The cost involved (Economy)

b) Preservation of relationship (Relation)

a) Confidentiality of the process

3. NATURE OF PROCEEDING (Confidentiality)
b) Privacy of the proceeding (Privacy)

a) Obtaining creative remedies ( Remedy)

4. OUTCOME OF THE PROCESSES
b) The width of the remedy ( Remedy)

a) The parties ability to control over the proceeding

(Control)
5. PROCESS OF PROCEDING
b) Flexibility of the proceeding ( Flexibility)
c) The duration of the proceeding (Spped)
The three attributes as extracted significant:

Factors 1 are:
1.Bindingness To the settlement Agreement
2.Enforceability obtained in ADR process
3.Fairness

Factor 2 consists of the:

1.Attributes Address the benefit that
2.Economy result from a successful ADR
3.Preservation of Relationship process

Factor 3 includes:
1.Confidentiality Relate to the nature of the proceeding
2.Privacy to avoid dispute becoming know to public
Factors 4 are:
1.Remedy
2.Creative Solution attributes extracted

Factor 5 consists of three attributes:

1.Flexibility
2.Control
3.Speed
 HIERARCHY OF DISPUTE RESOLUTION PROCESSES

LITIGATION

BINDING RESOLUTION
e.g.: Arbitration

ADR METHODS
NON-BINDING RESOLUTION
e.g.: Mediation, Mini trial, Adjudication

STANDING NEUTRAL e.g.: Adviser, Dispute Review Board

NEGOTIATION

Favorable DRS Adverse DRS

 The stair step of Figure above depicts the dispute
resolution methods currently commonly used in the
construction industry.
• The hierarchy start with the prevention techniques. The
use of prevention techniques aims at creating teamwork and
harmony, thereby preventing dispute from arising.
• Equitable risk sharing and incentive for cooperation are
usually initiated by client, whereas the success of partnering
relies on contributions from all parties involved in the
construction process.
• Prevention techniques do not guarantee total dispute
elimination. Problems cropping up during construction still
need to be resolved.
Step 1:
Resolving construction problems start with negotiation
between the disputes. In negotiation, the parties have
absolute freedom with respect to the form, process and
type of agreement. Negotiating construction problems
demand cooperatives effort from the disputants.
Step 2:
If negotiation fails, the disputants may choose to seek
assistance from a neutral third party. There are two
possible formats, the standing neutral and non- binding
resolution. The standing neutral concept involves the
participation of a neutral person adjunct to the
construction phase of a project, solving problems at the
sources.
Step 3:
Alternative Dispute Resolution techniques such as
mediation, mini-trials and adjudication are typical
examples of non-binding resolution. Beyond this stage,
position become more polarised and costs to both
parties begin to mount.
Step 4:
If the dispute not resolved amicably through ADR
procedures, next step is refer the dispute to a third
party for a binding decision. Typically is a giant step,
involving formal identification of opposing position and
issues. These require considerable preparation by the
parties, with assistance of lawyers, consultants and
expert witnesses. Arbitration is by far the most
commonly used method to resolve construction dispute.
Step 5:
The top end of the stair step is litigation. Litigation is a
rigidly regulated process, the process is subject to the
rules and procedures set out by the court. By adopting
the litigation route, the parties surrender their control
over the process and the outcome will be imposed by
the third party.
 IMPACT OF CONSTRUCTION DISPUTES

Additional expense in
management and Possibility of litigation
administration cases

IMPACT

Loss of company Time delays and costs

reputation overruns

Loss of profitability and

perhaps business viability
THANK YOU!!!
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