Concepts
Dispute resolution is an ongoing skill within the project management portfolio, and in the context of construction projects, it often holds the keys to project success or failure.
For a construction professional, getting familiarized with these techniques can be valuable for prevention, mitigation, and resolution of disputes in the volatile environment of construction. Here, we cover several dispute resolution techniques you can apply and some examples of each.
1. Negotiation
Negotiation is the most elementary method of dispute resolution, where the two disputing parties sit together, discuss the matter at hand, and attempt to reach a settlement.
For instance, imagine a situation where a construction project is lagging behind schedule due to slow delivery of quality materials. The project manager can meet with the supplier to negotiate an expedited delivery schedule.
2. Mediation
Mediation involves an impartial third party, often a trained professional, who assists the disputing parties in reaching their resolution through structured exploration of options. The mediator does not make decisions for the parties but facilitates the conversation to foster a compromise or understanding.
Consider a scenario where a construction project is stalled due to a disagreement between the architects and engineers over design changes. A mediator may be brought in to help both teams understand each other’s perspectives and come to a consensus.
3. Arbitration
Arbitration is one step further than mediation, where an external arbitrator or arbitration panel listens to both parties and makes a binding decision.
For example, a subcontractor may raise a dispute over delayed payments. An arbitrator would be called upon to hear both sides and make a final, legally binding decision based on the evidence.
4. Adjudication
Adjudication follows a legal route for dispute resolution in construction where an adjudicator is appointed to analyze the claims and issues a decision that is binding unless and until it is revisited in arbitration or litigation. For instance, disputes over contract terms or the quality of construction work are often settled by adjudication.
5. Litigation
Litigation is the traditional court-based process where a judge takes the decision related to the dispute resolution. This is usually the method of last resort due to the time and financial implications involved.
Suppose a major construction company is dealing with extensive property damage caused by faulty construction work. Such a dispute may likely reach court litigation if the parties involved cannot reach an agreement in previous stages.
Comparatively, each of these methods varies in terms of cost, time, and outcome.
| Method | Cost | Time | Outcome |
|---|---|---|---|
| Negotiation | Low | Short | Mutual Agreement |
| Mediation | Medium | Medium | Compromise |
| Arbitration | High | Long | Binding Decision |
| Adjudication | High | Long | Legally Binding Decision |
| Litigation | Highest | Longest | Court Decree |
As aspiring PMI-CP professionals, it’s essential to understand which dispute resolution technique is best suited for various situations. The intensity and complexity of the dispute, resources available, and the relationships among parties should be considered when choosing the optimal method.
In preparation for the PMI-CP exam, equip yourselves with the knowledge and application of these dispute resolution methods, and leverage them effectively in the multi-faceted world of construction project management.
Answer the Questions in Comment Section
True or False: Arbitration is a primary dispute resolution technique used in construction projects where all parties agree to accept the arbitrator’s decision as final.
- True
- False
Answer: True
Explanation: Arbitration is one of the most preferred dispute resolution techniques in the construction industry. It involves a neutral third-party arbitrator who examines the dispute and makes a decision that is legally binding and enforceable.
Which of the following are key dispute resolution techniques often used in construction projects?
- A) Negotiation
- B) Mediation
- C) Litigation
- D) Running away
Answer: A, B, C
Explanation: Negotiation, mediation, and litigation are all common methods of dispute resolution in construction. Running away, however, is not a constructive or professional approach to deal with disputes.
True or False: Mediation is a voluntary process where a neutral third party assists the parties to reach a binding agreement.
- True
- False
Answer: False
Explanation: Unlike arbitration, mediation is non-binding. While a mediator can help facilitate communication and propose solutions, the parties are not required to accept the proposed solution.
Which dispute resolution technique is the most formal and uses a court process?
- A) Negotiation
- B) Mediation
- C) Litigation
- D) Arbitration
Answer: C, Litigation
Explanation: Litigation is a formal process conducted in a court where a judge will give a binding decision after all the evidence and arguments are presented.
What is the main goal of negotiation in dispute resolution?
- A) To win the dispute
- B) To reach a mutually acceptable solution
- C) To avoid communication
- D) None of the above
Answer: B, To reach a mutually acceptable solution
Explanation: The aim of negotiation is to reach a solution that all parties can agree on. It involves direct communication and compromise to avoid further escalation of the dispute.
True or False: The decision of an expert determination process is non-binding.
- True
- False
Answer: False
Explanation: The decision of an expert in the process of expert determination is usually final and binding unless all parties agreed otherwise from the start.
Which of these techniques has the least impact on the working relationship among parties involved in a dispute?
- A) Negotiation
- B) Mediation
- C) Litigation
- D) Arbitration
Answer: A, Negotiation
Explanation: Unlike litigation and arbitration, which can create adversarial relationships, negotiation is a more cooperative approach that strives to preserve positive relationship among parties and encourages future cooperation.
The use of a Dispute Resolution Board is usually associated with which type of project?
- A) Short-term projects
- B) Long-term projects
- C) Both
- D) None
Answer: B, Long-term projects
Explanation: Dispute Resolution Boards are more commonly used in long-term projects as they offer continuous and timely dispute resolution services.
True or False: A mediator is also a decision-maker in the dispute.
- True
- False
Answer: False
Explanation: A mediator does not make decisions in the dispute. Instead, he assists the parties to communicate better and guide them to reach a consensual resolution.
In adjudication, the adjudicator’s decision is:
- A) non-binding
- B) temporarily binding
- C) final and binding
- D) appealable
Answer: B, temporarily binding
Explanation: In adjudication, the decision made by an adjudicator is binding on both parties but it can be revised later by arbitration, litigation or agreement.
Great article on dispute resolution techniques for PMI-CP exams. I particularly found the section on mediation very insightful.
Mediation is indeed a valuable technique. It helps in maintaining relationships which is crucial in construction projects. Have you tried arbitration? It seems more formal but effective.
Could someone explain the difference between mediation and negotiation?
Thanks for clarifying the difference between mediation and negotiation!
Appreciate the breakdown of arbitration processes in the article.
Found the explanation on Dispute Review Boards very useful!
Dispute Review Boards are great for ongoing projects, offering continuous oversight. This can prevent minor issues from escalating.
The collaborative law technique mentioned in the blog was new to me. Anyone has more insights on it?