Evaluation of alternative dispute resolution routes the contractors can take
The construction industry has been characterized by disputes that have become a widespread problem. Over the past few decades, the main approach to solving construction disputes has been through the litigation process. Even though it has been helpful, litigation has been associated with delays, adversarial relationships, and attendant costs. Also, some parties in the construction contracts seem to be aggressive and simple mistakes have the capacity of a fomenting conflict. The observations of simple matters causing huge conflict were first stated in the case of (McAlpine Humberoak Ltd v McDermott International Inc, 1992) where the judge said that through a hyperbole that there was a tendency in constructions where a party would prepare for a suit whenever in dried from the contract document.
Alternative Dispute Resolution (ADR) is an old practice in common law traditions. Its origin can be traced from the English legal developments during the time of Norman Conquest (Rabban, 2013). The English citizenry was instituting actions against private wrongs, and the process was presided by highly esteemed men a community at informal levels. At higher levels, the king was also utilizing the respected men and would adopt their decisions in the highest authoritative judgments. ADR is currently employed as a convenient method of dispute resolution that focuses on saving time and restoring the original relationship of the parties. The modern life is changing rapidly involving complexities with some issues appearing in law at their first time (Bailey, 2011). For instance, collaboration in the web is a new development where construction officials can collaborate on an effective project delivery. When such new developments appearing in court at their first time, their complexity becomes a burden to the legal systems where formality prevails. And since the law has never dealt with such an issue before, the legal system becomes inadequate in its efficacy in solving that issue which then causes delays as the legal system consults the best way to include such matters into its formalities.
On the other hand, for ADR uses fewer formalities and involves different innovative mechanisms that suit each scenario. Unlike litigation where parties are compelled to participate, the fewer formalities of ADR give room to voluntary participation, neutrality, collaboration, privacy, speed, less costs, flexibility, and the preservation and repair of the business relationships (Dragos & Neamtu, 2014). The most common methods of dispute resolution in construction projects are the mediation, adjudication, and arbitration.
The basic reason why disputes in constructions occur is the interaction between the key individuals that happen in some way and opinion differs both at technical and legal level. Disputes start with conflicts due to incompatible objectives. The altercations of these conflicts make some individuals become intransigent especially when the main source of the argument lies within justiciable rights (Bailey, 2011). While construction disputes are sometimes inevitable, approaches to the resolutions are can contribute to either escalation or solution of the disputes (Yaskova & Zaitseva, 2017). Below are the major ADR methods that contractors can take.
Negotiation
Negotiation simplest ADR route. It is a voluntary method where the involved parties meet and talk the matter among themselves as the first attempt at resolving the differences. The process does not involve a third party, and it can solve either matter of the construction and preferably matters that may require the variation of a contract (Dragos & Neamtu, 2014). Negotiation is simple, can happen anytime and anywhere, less costly, very informal, quick, confidential and private.
Unlike negotiation, conciliation involves a third party who is a neutral person. The role of the neutral person is to listen to the disputing parties separately, take their points, and then explain the points to each of those parties (Bailey, 2011). Basically, it is just clarifying the views of each party to the other. The neutral person helps the parties to reach a solution by encouraging them to understand the other’s opinion (Dragos & Neamtu, 2014). The neutral person does not make any recommendation, he or she lets the parties agree among themselves to align the differences, and then he/she summarizes the agreement in writing. Conciliation is simple less costly, less formal, quick, confidential and private.
Unlike conciliation, the third party plays a larger part in mediation. Like the conciliator, the mediator remains neutral and meets with the involved parties independently. The mediator then calls the parties together to resolve their disputes. While the mediators do not make any decision, their participation involves making recommendations to aid the parties to reach a solution (Kubba, 2012). Mediation is like a ‘higher level’ conciliation. Like other methods, mediation is less costly, less formal, quick, confidential and private. The JCT Standard Building Contract includes a clause that requires each of the disputing parties to consider the requests made by the other party to engage in mediation (Dragos & Neamtu, 2014). Even though this does not make mediation compulsory, some English courts strongly recommend the parties to use mediation, and they even introduce cost sanctions to the party that objects a call to mediate (Kubba, 2012).
Adjudication is a dispute resolution route recognized in all UK written construction procurement contracts. In (Housing Grants, Construction and Regeneration Act, 1996), the section 108(1) creates the provision of the statutory rights to adjudication. Adjudication was first used in the UK in 1970s (Maiketso & Maritz, 2012). However, its application was first restricted to solving disputes between the main contractors and the domestic subcontractors. Adjudication routed involves calling a third party, the adjudicator, who aids in solving the dispute (Chern, 2016). Many construction contracts provide clauses for the appointment of an adjudicator (Chern, 2016). The advantages of adjudication are rapid dispute resolutions and his or her decision is binding to the parties unless challenged by arbitration or a litigation. Under JCT, the rules and the process of adjudication are provided under clause 9.2
Conciliation
Arbitration serves as the main alternative when parties want to avoid litigation yet get a resolution equivalent to the court’s system. Unless parties had agreed in the contract that a party can compel the other to submit the dispute for arbitration, there are no provisions that can compel the parties. However, once a party has decided to solve the dispute through arbitration, they cannot withdraw the matter and take it to legal proceedings before the conclusion of the arbitration process. Arbitration is preceded by one neutral third party, or it can be preceded by a board of arbitrators (Ling & Leong, 2012). The arbitrators’ decision is termed as an award. In England, arbitration is provided in Arbitration Act 1996.
Design and build is a procurement strategy where the owner contracts one entity or and awards it the contractual responsibilities of designing and executing the construction part of the project (Turina, et al., 2008).the The choice the design and build strategy follows the usual process. The strategy starts with the owner engaging the contractor instead of going for a designer. Some owners may also prefer the architect to complete about 50-60% of the design and then request proposals for design and build. The main motivation for choosing the design and build procurement strategy is that it eliminates conflicts that can come between the contractor and the contractor (Ling & Leong, 2012). Other reasons are that it saves costs, greater completion assurance, and higher quality of performance.
The design and build strategy have some main features which are also adopted my JCT approach. The main features include the employer’s requirements, the price and the roles and other responsibilities to be carried out in the process (Turner, 2014).
Design and build projects start with the client’s approach to the contractor. The clients explain the requirement of the project to the contractor and the contractor replies with a proposal. The proposal may include the design work, sketches, price, and other project information (Turner, 2014). The process may then extend to negotiations until the requirements and the proposal match both parties’ contemplation.
There is a common trend for design and build contracts to include a guaranteed maximum price (GMP). In JCT, the design and build price is administered through the contract sum analysis (CSA) as opposed to the bills of quantities. Conferring with JCT’s advice, the parties should work on the CSA so that it can reflect the design content with its estimated value and all the variations (Turner, 2014).
Mediation
Design and build strategies are characterized by the absence of independent supervisor. These contracts have neither an architect nor a contract administrator who can supervise work or settle differences in case they arise between the involved parties (Klee, 2015). Besides, there are no other professionals like independent quantity surveyors for preparation of tenders. However, the main advantage of these is the close contact between the client and the contractor.
There are numerous reasons why project owners may opt for a design and build strategy. Apart from the saving cost and time of completion, other major advantages are such as the fact that the higher level of contractor’s involvement (Chappell, 2008). The close involvement makes the contractors aware of all the client’s priorities and needs. Secondly, the strategy allows the contractor to provide real benefits of specialty in construction knowledge. Also, since design and build eliminate the traditional process of tendering, there is a reduction of the time taken between the inception and the completion of the project (Chappell, 2008).
Another achievement in the current design and build strategy is that they have been able to produce functional building yet at a reasonable cost. There was a past criticism on the inability of the design and build in integrating its inability for a separate design with the construction functions, and the challenges of accepting the possibility of the involvement of a contractor in the early stages of the procurement process (Hughes, et al., 2015). However, the current design and build strategies are able to provide a multi-disciplinary integration creating one designer-contractor involvement.
There are still some disadvantages associated with the design-build approach. Nevertheless, most of these disadvantages can be addressed by the design-build contractors. Some of these problems arise from the fact that the client only provides a performance brief to the contractor (Chappell, 2008). That is, sometimes the client may provide an insufficient brief which does not cover all information required (Hughes, et al., 2015). This limits the investigation while looking for alternative solutions for that particular design. Also, the insufficient brief becomes a problem when evaluating the submitted tenders and proposals.
Another disadvantage is that the contractor’s abilities align with the firm’s capabilities. With this, the contractor might be unable to offer the solution the client wants if the firm does not have such solutions. Also, the design-build strategy can suffer the limitation of the industry. For instance, only a few design-build contractors can provide in-house design facility (Ling, 2012). As design-build focuses more on reducing costs, it is sometimes easier to sacrifice the aesthetic quality of both the internal and external design. Another shortcoming on focusing on cost reduction is that sometime the reducing cost might lead to a focus on minimum requirements, which can also the fact the long-term interests of the project (Chappell, 2008). Design and build strategy eliminates the traditional external supervision. Therefore, if the client wanted to supervise the contractor, he or she may be required to hire and someone else who is an expert in the field for feeding him with the updates.
Adjudication
Conclusions and recommendations based on reasonable examples
Based on the facts above, D&B should be considered as the best approach in project deliveries. Most of the studies have great evidence supporting the success of major projects while using D&B. A study carried out by (Vasters, et al., 2010) comparing the efficacy of D&B and Design Bid Build (DBB) strategies for reducing cost and time in small construction projects. This study found that D&B was reducing the overall cost and time by 52% while DBB reduced the same by 27%. These findings provide proof that D&B is a better strategy to adopt while focusing on saving costs and time. Similarly, a study carried out by (Ling & Leong, 2012) found that despite that Architects stated that there was an issue with the quality in D&B, both the clients and architect agreed that DB saves cost and take a shorter time. Further, a comprehensive study undertaken by (Muriro, et al., 2010) provided empirical evidence demonstrating the efficacy of D&B. The study found projects office projects tendered through D&B performed better by looking at the unit costs, construction costs, the intensity of construction, and construction speed. By evaluating all these evidence, D&B can be one of the best procurement strategies to consider while evaluating the best project delivery method.
References
Bailey, J., 2011. Construction Law (Construction Practice Series). s.l.:Informa Law from Routledge.
Chappell, D., 2008. The JCT Design and Build Contract 2005. s.l.:Wiley.
Chern, C., 2016. The Law of Construction Disputes. s.l.:Taylor & Francis.
Dragos, D. C. & Neamtu, B. eds., 2014. Alternative Dispute Resolution in European Administrative Law. s.l.:Springer Berlin Heidelberg.
Housing Grants, Construction and Regeneration Act (1996).
Hughes, W., Champion, R. & Murdoch, J., 2015. Construction contracts: law and management. s.l.:Routledge.
Klee, L., 2015. International Construction Contract Law. s.l.:Wiley-Blackwell.
Kubba, S., 2012. Handbook of Green Building Design and Construction: LEED, BREEAM, and Green Globes. s.l.:Elsevier Science.
Ling, F., 2012. Design-Build: How to Increase Its Usage and Its Impact on Architects and Contractors in Singapore. Australasian Journal of Construction Economics and Building, Volume 6, p. 12.
Ling, F. & Leong, E., 2012. Performance of design-build projects in terms of cost, quality and time: Views of clients, architects and contractors in Singapore. Construction Economics and Building, Volume 2, pp. 37-46.
Maiketso, N. C. & Maritz, M. J., 2012. Adjudication as an alternative dispute resolution method in the South African construction industry. Journal of the South African Institution of Civil Engineering, 1, Volume 54, pp. 65-70.
McAlpine Humberoak Ltd v McDermott International Inc (1992) 58 BLR 1.
Muriro, A., Wood, G. D. & others, 2010. A comparative analysis of procurement methods used on competitively tendered office projects in the UK.
Rabban, D. M., 2013. Law’s History: American Legal Thought and the Transatlantic Turn to History. s.l.:Cambridge University Press.
Turina, N., Radujkovic, M. & Car-Puvsic, D., 2008. ” Design and build” in comparison with the traditional procurement method and the possibility of its application in the Croatian construction industry. s.l., s.n.
Turner, D. F., 2014. Design and Build Contract Practice. s.l.:Taylor & Francis.
Vasters, R., Prins, M. & Koppels, P. W., 2010. Does integrated procurement reduce building cost and project time. s.l., s.n.
Yaskova, N. & Zaitseva, L., 2017. Application of alternative dispute resolution in the field of construction projects. IOP Conference Series: Earth and Environmental Science, Volume 90, p. 012182.
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