Alternative dispute resolution is a modern solution for litigation, which are overwhelming present court systems.
Construction is a complicated industry with a tailor-made product with the involvement of specialists from several fields and clients from all levels of society. This is a sure formula for tension and friction among parties.
If disputed stakeholders’ resort to litigations (legal actions to resolve issues within the court system), then any construction project will never be truly completed due to legal battles and trust issues among them.
The main focus of ADR is to resolve disputes, build trust among parties and increase the efficiency of the industry.
What are 5 types of Alternative dispute resolutions in construction?
- Negotiation
- Conciliation
- Mediation
- Adjudication
- Arbitration
- Negotiation
| Win-Win situation | Non-Binding | Less effective |
Negotiation is the Oldest and non-offensive form of dispute resolution out there. Here, only the disputed parties are involved in the discussion and arriving at a mutual solution.
In construction, only the client and a representative from the contractor participate in the discussion. A third party might get involved by bringing the parties to the table, but they will not formally participate in the process.
| Advantages | Disadvantages |
| Protects privacy | Short term solution |
| Economical approach | unreliable |
| Aid to build trust among parties | Informality can lead to complications |
| Cheap compared to litigation |
- Conciliation
| Win-Win situation | Non-Binding | effective |
Conciliation is a voluntary dispute resolution process done considering civil law rules and contractual terms and conditions. Afterward, reasonable recommendations are presented. This has become popular for employer-employee dispute resolution before moving into labor tribunal regardless of the industry or profession. It is a flexible process so the disputed parties can decide on the structure, place, time, and whether to accept the decision. A neutral third party known as a conciliator will be assisting in the matter.
A conciliator is an experienced person in construction or dispute resolution within the industry. They will consider all sides separately from a neural standpoint and offer the parties possible terms of the settlement.
This method is better more effective compared to negotiation and is more formal. Parties can decide to use a conciliator for dispute resolution during the contracting phase.
| Advantages | Disadvantages |
| Protects identity | non-binding |
| An expert gets involved as a conciliator | Not a guaranteed solution |
| Economical and Time-saving | More expensive compared to negotiation |
| Confidentiality is maintained | |
| Less expensive compared to litigation |
- Mediation
| Win-Win situation | Non-Binding | More effective |
Mediation is also one step beyond negotiation. A mediator will participate actively in the resolution process. This is better than conciliation, as a conciliator will refrain from presenting a settlement by remaining neutral.
The mediator will bring the parties to the table and help them to present their case in a more structured manner so that parties themselves can come up with a
solution. Parties still retain the freedom to not settle on the final solution. Their main goal is to enable communication among disputed parties.
Functions of a mediator
- Make sure all parties present their case completely
- Provide guidelines to continue the dialogue.
- Encourage the parties to come up with imaginative solutions
- Come up with solutions that suit the interests of all parties
Mediation is known to solve close to 70% of disputes that seek ADR solutions. Engineers, architects, project managers, and Quantity surveyors can act as mediators regarding construction disputes.
| Advantages | Disadvantages |
| An experienced person will involve as the mediator | Can easily fail due to lack of critical information |
| Economical and Time-saving compared to litigations | More expensive compared to conciliation and negotiation |
| Can be used as proof of willingness to settle | If the process stretches over time, it will become expensive |
| Less expensive compared to litigation |
- Adjudication
| Win-Win situation | Non-Binding | Extremely effective |
Adjudication is a legal process by which the adjudicator reviews evidence and argumentations including legal reasoning set forth by opposing parties to come to a decision. This determines the rights and obligations between the parties involved. It is more effective than mediation.
Type of disputes that can be solved using adjudication
- Disputes between private parties
- Disputes between private parties and government
- Disputes among public bodies.
The adjudication process prevents construction disputes between professionals and stakeholders from reaching the litigation stage and saves valuable court time and resources for more compelling cases. It fast tracks dispute resolution for close to 28 days.
Adjudication is used in construction t solve issues around
- Claims
- Delays and disruptions
- Defect claims
The adjudicator has more power to present the parties with a viable solution.
| Advantages | Disadvantages |
| Less time consuming | Failure can become expensive as litigation is required |
| Less expensive compared to litigation | Decision depends on the adjudicator |
| No legal requirements | 28 days may be too brief to make a correct decision |
| Can be conducted while sites operate | |
| Easy transition to litigation |
- Arbitration
| Win-lose situation | Legally binding | Extremely effective |
Compared to all other ADR solutions, arbitration is legally binding from the start. All parties must accept the final decision of the board of arbitrators. The court makes sure most cases are solved by this stage by making it mandatory for a dispute to try even a single ADR method before resorting to litigations.
Arbitration is done judicially, as each party is allowed to present their case in front of an Arbitral tribunal Consisting of one or two arbitrators appointed by each party. Upon evidence investigation, the final verdict will be announced which must be accepted by both parties as a court can legally enforce all parties to the decision.
| Advantages | Disadvantages |
| Arbitral tribunal consists of industry experts compared to a court setting | Issues of transparency |
| Shift process compared to litigation | Vulnerable to Colluding |
| Economical | |
| Protect privacy | |
| Can be resolved taking a reasonable amount of time |
Litigation
Litigation is the ultimate method of dispute resolution with the aid of the public court system. Litigations regarding construction disputes are considered civil matters, and normal conditions of a civil case will apply here. The usual ascending order of court allocated for such cases are as follows
- District/County
- High court
- Court of appeal
- Supreme court
| Advantages | Disadvantages |
| Maximum justice in case of major damages | Expensive |
| Case will be cross examined for a longer period to get a broader idea | Time consuming |
| Legal professionals will get involved | Case gets public traction |