Effectiveness of alternative dispute resolution methods in civil engineering contracts

Abstract

The Construction industry is a key driver of national economic development. In Sri Lanka, the expansion of large-scale infrastructure projects many funded by foreign investors has intensified industry completion and increased the involvement of international contractors. Although theses development contribute significantly to economic growth, they also create complex contractual environments with multiple stakeholders, often leading to disputes related to quality, time and cost. Civil Engineering projects are inherently complex due to their scale, technical requirements and the diversity of parties involved. When claims arise and remain unresolved, they frequently escalate into formal disputes and legal proceedings. Traditional litigation is often time consuming, costly and adversarial, potentially damaging professional relationship and delaying project completion. Therefore, the effectiveness of dispute resolution mechanisms plays a critical role in determining the success or failure of construction projects. Alternative Dispute Resolution (ADR) methods such as negotiation, mediation, Adjudication and Arbitration offer more efficient and flexible approaches for managing disputes in civil engineering contracts. Compared to Litigation, these mechanisms can reduce resolution time, minimize costs and preserve working relationships. However, the selection and effectiveness of ADR methods largely depend on the perspectives and interests of different stakeholders, particularly contactors and consultants. This study aims to identify the primary causes of disputes in civil engineering contracts in Sri Lanka, examine the factors influencing the selection of dispute resolution methods, and evaluate the most effective ADR mechanism from the viewpoints of key stakeholders. The research was conducted in three phases. First, a comprehensive literature review was undertaken to explore the ADR framework within the Sri Lankan Construction industry. Second, three detailed case studies were analyzed, focusing on claims associated with quality, time and cost. Third, in depth interviews were conducted with professionals representing contractors, Consultants and Clients. The findings from the case studies and interviews were analyzed to identify significant differences in stakeholder perceptions regarding dispute causes and ADR selection. The results provide valuable insights in to the origins of construction claims and the decision making processes behind ADR method selection. This research contributes to improving dispute management practices and offers practical recommendations for construction professionals, policy makers and researchers seeking to enhance dispute resolution effectiveness in Civil engineering Contracts in Sri Lanka.