Developing a framework to avoid disputes in construction projects : a perspective of project characteristics

Abstract

Disputes continue to exist in the construction industry for several decades and affect the cost, time and quality of the projects. Worse still, it results in severe consequences such as abandonment of projects and bankruptcy of contractors. This encouraged the construction industry to step towards dispute prevention with the viewpoint of the causes of disputes. It is evident that the root causes could be well addressed through project characteristics at the early stage of a construction project. Further, disputes are more frequent in project contexts such as large scale, highly complex and traditionally procured. In addition, the dispute avoidance strategies such as allocating fair risk contracts and team building could be related to the procurement method. Therefore, this study aimed at developing a strategic framework to avoid disputes in the Sri Lankan construction projects from the perspective of project characteristics. A mixed approach was adopted where a questionnaire and projects which experienced disputes were surveyed to collect data. Initially, questionnaires were administered to a sample of 78 experienced professionals including quantity surveyors, project managers, adjudicators and arbitrators who dealt with disputes in construction projects. Subsequently, a total of 44 building projects which experienced disputes and referred to alternative dispute resolution methods of either negotiation or adjudication or arbitration were studied by referring to relevant project documents such as contract documents, project summary reports, arbitration and adjudication referrals, claims documents and other project correspondences. Additionally, semi-structured interviews were conducted among experts who involved in the resolution of disputes of the said projects. The data collected were analysed using descriptive statistics and content analysis. The questionnaire survey offered 32 causes and 9 project characteristics which significantly contributed to disputes in general. Consistently, both questionnaire survey and detailed investigation into projects revealed that the salient causes of disputes are payment delays, ambiguities in documents, and scope changes while project characteristics that significantly contribute to disputes are the degree of design complexity, time constraints, procurement method, size of the project, type of client, site factors, standard form of contract, source of funding and project cost. In addition, the study revealed that the strategies such as drafting dispute resolution provisions in the contract, practice of negotiation, standing adjudication, proper documentation and early contractor involvement could minimise disputes in construction projects. The survey of projects revealed that payment delays can be influenced by the type of client, cost/size of project and source of funding while ambiguities in the document can be correlated with the standard form of contract. The research further offered that the scope changes are critical in projects where high design complexity, design & build procurement method and large scale are in place. The findings revealed that the dispute avoidance strategies of drafting dispute resolution clauses, practice of negotiation, provision for standing adjudication and proper documentation can be correlated to the use of standard form of contract whereas early contractor involvement and third-party review of design can be correlated to procurement method. Thus, the research recommends the project stakeholders to adopt appropriate avoidance strategies by giving due consideration to project characteristics of the given context.