Conflicts and disputes on commercial projects - Essay Example

? Conflicts and disputes on commercial projects s Submitted by s: According to Spiess and Felding, (2008, p.9), conflicts and disputes among parties engaging in a business transaction is always expected and when solving them, it has to be remembered that there is an important difference between a normal business deal and a contractual settlement. The business deal is characterised by a choice to close the deal or walk away from it and on the other side a contractual agreement is entered into out of shear necessity. Contractual agreements have no option of walking away from hence senior managers should be aware of this fact before appending their signatures on the dotted lines. Even if a project and its distribution of work is better defined and the parties are better prepared and even if the contract is better drafted there still will be changes that give rise to disagreements between parties. In any commercial project, there will be unforeseeable changes that will require to be handled by the parties in a commercial manner. Hence there is need for an effective way of handling such disagreements for the project to be completed on time and with satisfactory results for the parties involved (Altfeld, 2010, p. 3-7). The presence of attitudes and aspects such as confrontation, problem solving, compromising, smoothing and withdrawal could all be applied by a strong facilitator to solve conflicts between team members. Leaders need to understand that most conflicts, in fact, contribute enormously to the experience and well performance of a team and for that reason must be regarded as constructive elements of multi-framework as long as the conflict is managed properly and channelled by a facilitator. Facilitation helps others to voice their views comfortably and avoid power and personality conflicts, (Spiess & Felding, 2008, p.407) According to Lowe and Leiringer, (2006, p.264) disputes and conflicts on projects or contracts are unpleasant and unavoidable at the same time as they divert valuable resources from the overall aim, which must be completion on time, on budget and to the quality specified to other unnecessary tasks such as dispute or conflict negotiations. In addition, they generally cost money and take time to solve, and they can destroy relationships which may have taken years to develop. Conflict in part of western societies and idioms; to use the academic jargon, there is a western dialect argument idiom. Conflict can be said to be a part of dynamic capitalism and an integral part of commercialism conflict in the current commercial world. It can as well be seen as the functional and necessary part and its management is seen where the emphasis is on the axiom that it must be in the interest of all the parties to avoid disputes by managing conflict in such a way that disputes do not arise as this is sometimes described as dispute avoidance. The understanding of a dispute on the other hand it is important as it can be said to only develop when conflict is not or cannot be managed. A dispute can be described as the unnecessary or dysfunctional element that brings about a diversion of resources from the real goal in terms of settling unnecessary scores. During dispute resolution, there must be occasions where the parties have legitimate disputes and that the techniques of dispute resolution are employed to bring about the conclusion or resolution of the dispute. Commercial management needs to recognise both conflict management and dispute resolution and hence have a different approach in addressing each of them. There has been strong evidence for the ability of commercial banks to signal their strong conflicts through their organisational structure. Contrary to the impression in the congressional hearings, the potential for conflict of interest was not something that was discovered among commercial banks the day after the 1929 crash of the stock market. Some bankers were well aware of the problem even in the middle decade, before the market heated up. The farmers’ loans and trust company of New York told the commercial and financial chronicle in 1925 that due to their policy and the conviction of the firm as a trustee, they should never place themselves in the position of a buyer and a seller of securities at the same time, (Crockett, 2004, p.9). In the construction industry, the handling of the commercial aspects of the projects also brings about conflict as Archarya, Lee and Im (2006, p.544) agrees that in a perfect construction world, conflict is a common occurrence due to the many activities to be carried out and overlapping responsibilities. These conflicts can lead to prolonged delays in the implementation of the various activities that have been planned as well as interruptions and at times suspension of these plans. Traditionally, contractual agreements were entered into for the purpose of smooth running of the construction projects as well as well coordinated accounts when it comes to the payment of the workers involved in the project. Owners and consultants have the tendency of transferring the risks to the contractors hence avoiding the blames in case of failed projects. Due to this imbalance of responsibilities, conflicts may arise as the more risk a party is subjected to, the more the remuneration this person will be entitled to. To solve such as conflict calls for understanding in the sharing of responsibility, risks and remuneration .Ilter (2012, p.47) adds that the root causes of conflicts – task inter-dependency, differentiations, communication obstacles, tensions, personality traits, triggering events, non-performance, payment, time, contract provisions Ross(2009, p.401) says that various cities of the countries in the world are inhabited by people from different cultures and backgrounds which have a variety of values especially when it comes to commercial aspects. The delicate balance between values, interests, needs as well as beliefs brings about different views when it comes to handling community projects. This situation is worsened by the continuously changing needs and interests of specific groups of people depending on their surroundings. In order to avoid disorder or even chaos, public authorities exercise authority over the allocation of the public resources entitled to the community. The overriding authority in such a situation also formulates the necessary policies and frameworks when it comes to the allocation and use of public resources. Karl Marx argued that conflicts between social classes were one of the issues that human progress depended on as differences can be appreciated and interpersonal conflicts resolved. A combination of energies can be derived from the personal differences where as inner conflicts can be solved by engaging in conflict resolutions with others (Eunson, 2007, p.3) Dispute Resolution Techniques According to Tasoluk, Yaprak and Calantone (2006, p.342), dispute resolution mechanisms will require a clear understanding of the related issues, the sensitivity of the issues at hand, the relationship between the partners involved and the likely outcomes of resolving such as conflict as well as the costs involved in the litigation process. This will pave way for the various ways in which the conflict will be resolved, the best way being through the negotiation process on a round table involving all the parties. During negotiations, every party should be understood and the relationship to the issues being addressed as this is an opportunity for peaceful conflict resolution. Negotiations can also deepen the relationships of the parties involved and strengthen the bond between the parties. Other options available for the resolution of the conflict include mediation, arbitration and litigation. Negotiation calls for all the parties in the conflict to sit on a round table and let out all the issues in a fair manner to find a common ground. They need to resist the temptation to use force and accept some tolerance attitude towards each other for peaceful existence. The parties compromise and finally get to resolve the conflict possibly with minimal damage to the relationship of the parties (Erik, 2011, p.575). Mediation seeks to enhance the needs of the parties as well as create a stronger future relationship. There needs to be a third party who should be impartial when it comes to the issues involved so that he can offer an unbiased opinion to the issues being addressed. The role of the mediator is to make the final decision and ensure that the parties have a mutually agreed solution to the conflict at hand as this situation plays out best when each party wants to retain control over the outcome of the conflict resolution process. Arbitration on the other hand is similar to mediation in various ways as it involves a third party too. The arbitrator is tens to the two parties as they argue out their cases and finally give a final binding position to be acted upon. Litigation is taking the cases to court and have a judge settle it with a decision whether favourable or not to the parties conflicting, (White, Joplin and Salama, 2007, p.387) Principled negotiations in a country Gatchalian (1998, p.222) proposes that in today’s borderless economies markets have rapidly intensified their competition and hence a framework for effective win-win negotiations is the best way to resolve a conflict rather than one party winning. In practice, an intense process of gathering the necessary supporting points of each party. The Three Gorges project in china had a technological discourse and competing interests in it approval as the proponents and opponents of the project had different views when it came to the benefits on completion. Conflicting interests dominated the economic development as the valuable and legitimate topic to be talked about as there was a prioritisation of collective interests as the expense of the regional and individual interests. Due to this, the Chinese government was obliged to go ahead with the project (Cheng and Starosta, 1998, p.4) Bibliography Altfeld, H., H. 2010. Commercial Aircraft Projects: Managing the Development of Highly Complex Products. Farnham, Surrey, England: Ashgate Pub. Archarya, N., K., Lee, Y., D., and Im, H., M. 2006. Conflicting factors in construction projects: Korean perspective. Engineering construction and architectural management. 13(6), p. 543-566 Cheng, G. M., and Starosta, W.J., 1998. Chinese conflict management resolution: Overview and implications. Intercultural communication studies. 7(1), p. 1-11 Crockett, A. 2004. Conflicts of interest in the financial services industry: What should we do? about them? London: Centre for Economic Policy Research. Erik, L. 2011. Organising Learning through Development Projects. Department of learning philosophy. International journal of manpower. Aalborg University, Aalborg, Denmark.32(5/6), p. 567-580 Eunson, B. 2007. Conflict Management. Milton, Old: Wiley. Gatchalian, J., C. 1998. Principled Negotiations–A Key to Successful Collective Bargaining. Management Decision. 36(4), p.222-225 Lowe, D., and Leiringer, R.2006.Commercial management of projects: Defining the discipline. Oxford: Blackwell Pub Ross, D., 2009. The use of partnering as a conflict prevention method in large-scaleurban projects in Canada. Conflict prevention method. International journal of managing projects in business. 2(3), p. 401-418 Spiess, W. and Felding, F. 2008. Conflict Prevention in Project Management: Strategies, Methods, Checklists and Case Studies. Guildford: Springer London, Limited Tasoluk, B., Yaprak, A., and Calantone, R., J. 2006. Conflict and collaboration in headquarters subsidiary relationships: An agency theory perspective on product rollouts in an emerging market. International Journal of Conflict Management. 17(4), p. 332-351 White G. O., Janice R.W., and Salama, M., F. 2007. Contracts and Conflict Resolution Strategies in Foreign Ventures: A Transaction Cost Perspective. International Journal of Conflict Management. 18(4), p. 376-390 Read More