Dispute Resolution & Conflict Management in Construction - Literature review Example

Dispute Resolution & Conflict Management in Construction Literature Review Literature Review Introduction The principles of conflict resolution in the construction industry are varied. Many eminent thinkers have propounded various causes of the disputes and the methods of resolution. The modern day method to resolve disputes centers on an unbiased umpire who can resolve conflicts for the parties at loggerheads in a satisfactory manner. The Arbitrator is the best person to resolve a dispute, and awards by Arbitrators ought to bring about amicable settlement. Dispute resolution in the construction industry can be analyzed in two ways, by looking up the causes of disputes and then at the most efficient methods of resolution. Causes and Problems The causes of disputes may be multisided with problems relating to the parties involved in a construction are very important. A dispute ought to be viewed in emotional and human spheres rather than as a quantitative subject. Ankrah, N., & Langford, D. (2005)1 Relationships between entities get defined on the role models expected form them from each side, and this results in conflict. By analyzing the cultural, professional and background related to a specific contract and goals set, disagreements and agreements on objectives, only a seasoned arbitrator can find the personal conflicts and feelings are the prime source of organizational disputes. Individual perceptions may not matter to organizations in the construction industry which are companies. Companies are the main focus in the industry, for it is the foundation for the construction business. A company that carries out construction activity must be organized in a systematic manner with healthy attitudes at work and principles. Many authors and experts have gone on to group the causes of the disputes under various heads and have also offered solutions. These solutions pertain to the single window which they use to see the scenario. For example, some believe that the parties involved and their personality plays an important role. Kelly, R. (1999)2 the contractors, labor, owner and architects are the source of disputes. The cause of problems is also attributed to unfamiliar or multi national laws and practice. While local projects require lesser interaction and preparation as compared to a venture abroad which involves cross cultural interaction? Bercovitch, J. (1995)3. In the international scene, many themes ought to be considered. The diverse tactics have to be studied suited to the international arena. Contributors take a systematic approach to analyzing some significant aspects of mediation and consider the process in the overall context of conflict management. One example we can see is the construction boom especially in the East and Middle East attracted investors into construction, there was a gap in the knowledge of the industry as to the requisites and customs of various countries. Understanding the law is a major requisite for dispute resolution. Davies, E. (1998)4 Examination of different national systems with a “consistent and rigorous analysis of each national system, as well as the necessary tools for managing conflict and resolving disputes on construction projects.” is advocated as being the best possibility. The global perspective in the context of the global development of the construction industry emphasize on the global perspective and dwelt on the They emphasized on risk management options and conflict resolution being a part of minimizing risk. Retik, A., & Langford, D. (1996)5 Some study has gone under way in countries like Australia and UK D. A. Langford,(1996) 6 which discussed the alternate approach but came out with the conclusion that the best thing to do was to avoid a dispute. However it is not that simple, and with the law governing the industry, and with international law, it is absolutely necessary for companies to abide by procedures. Arbitration – The Best Recourse The construction industry is still conflict oriented. The underlying assumption is that there will be conflicts in the industry, and the thought revolves around resolving them. Conflicts can involve the workers, employers, companies and factors. A person or a body well trained in the precedents and all aspects of arbitration, conflicts, and litigation with procedures to be followed can help resolve conflicts much better than any other means. Fenn, P., & Gameson R. (1992)7. What is the basis of arbitration? Arbitration is the best method in solving disputes. Burgess, H., & Burgess, G. (1996)8 considered mediation in a dispute and they emphasize on mediation as a method of solving conflicts in the industry. The constant engagement of a third party disinterested mediator can help solve disputes as they arise. The important aspect is the mediator must recognize the problem and its aspects as they arise and must undertake to resolve the dispute which must be the ultimate goal. It is not necessary for it to be a formal venue like a court or even a rule bound arbitrator. What ever be the method of resolution of a dispute, there is no doubt that it has to be fast and efficient. Darrick M. (19969) The Arbitrator can save on the costs of delays caused by disputes and the costs that are incurred including the bankruptcy of the owners, and the project becoming redundant in case of long delays. On occasions it can also cause harm and inconvenience to the public in cases where the project deals with public utilities like subways for example. Arbitration without the legal hassles of a lawsuit proper is a solution in mediating the disputes. The important fact is the cost angle, and the time and resources wasted in prolonged disputes. The suggested speedy arbitration as against a law process involving judicial intervention is a suggestion that deserves merit. Campbell, P. (1997)10 and the effects of mediation is great and speedy This can be noticed with the sample arbitration proceedings that are available. Borgeryd, A.(1999)11. Stedman, B. (1999)12 proves the effectiveness of arbitration with particular reference to Boston’s massive Central Harbor Tunnel construction project, known as the Big Dig, was able to demonstrate “The effective utilization of a comprehensive multi-option dispute prevention and resolution program that addresses potential and real conflicts throughout the life of a mega-construction project.” This was a case study that highlighted and instructed on conflicts, their origin and resolution. This applies to domestic activity and also to multinational contracts. Sheridan, P. (1999)13 Peter R. Hibberd, Paul Newman (1999)14 emphasize the effectiveness of alternate dispute resolution is a feasible thing as seen against the background of available law in Australia and UK. The ‘Partnering’ of a project leads to lesser disputes, and this can be solved via a mediator. Partnering focuses on preventing contracting disputes by nurturing the relationship between the contracting parties. There should be a combination of partnering and the use of “dispute resolution boards.” Libbey, C. (2000)15 With regard to building industry disputes with the Australian law and alternate jurisprudence the commonwealth is still researching the field, elsewhere experiments in sociology are afoot. Rick Best, Gerard De Valence (2002)16 Arbitration is a world wide choice. Appel, M. (2004)17 recommends a public sector panel for arbitration. This is done to keep up with arbitration legislation. Arbitration of disputes has become a very viable and speedy solution to litigation before courts. It also is pertinent to note that alternate dispute resolution clauses are mandatory in construction agreements and the Arbitrator fixed. Lawyers are the best source of resolution and their methods of doing so, with looking up precedents is a time saving method. Arumba, Chimay J. Carillo, Patricia & Egbu, Charles (2005)18 Goes deep into the aspects of learning from the past, or precedents. Arbitration was proved effective using quantitative methods. Al-Tabtabai, H., & Thomas, V.(2004)19 To fit the case, a study of the AHP method does pinpoint the effectiveness of the Arbitration and negotiation method. The decision making methodology analyzed in detail relates to the AHP method. The claims are made that this method was used to settle a dispute at Kuwait. Why is the method so special? The aim is to create a system that can foresee that disputes may arise and thus give viable solutions. Thus we see that arbitration is a better solution. However viewpoints of various experts also point out the causes of conflicts that require considerations other than a dispute redress. There are arguments advanced to show that conflicts could be avoided or foreseen and acted upon. These theories are discussed below. Some Alternate Solutions to Overcome Conflicts A dispute is a knowledge base, and a company involved in a dispute, or having first hand knowledge of the dispute in any aspect of construction of other firms must record, and make the event a part of its knowledge base and use the knowledge to avoid further disputes, and also use such knowledge to further its cause in a dispute. Knowledge management, it is argued, is capable of being used to solve crisis and a method is touted to keep teams abreast of this knowledge. While it is true that for each situation we act on gut feeling, and corporate memory is very short, this idea can help in avoiding mistakes, and keep the organization on a higher level of functioning alert to the situation that has a potential to develop into a dispute. While the utilitarian analysis suggests that economics of the issue is no less important. Leung, M., Liu, A., & Thomas, S. (2005). From the point of dispute to its escalation, the satisfaction levels of individuals involved with it and the solutions offered diminish with increments of time. Goal setting as a method of creating values that increase satisfaction in the solution. We are not questioning their research finding, but satisfaction is subjective and goal setting cannot be a solution for all problems. Usually ‘time heals’ and while a mediation can bring down hostilities, in course of time the warring parties mostly become amicable provided the dispute is not based on serious concerns. Conflicts fitted to goal frames can enthuse those who have made setting and achieving goals a way of life. It will not be a solution for the common variables that often are found in a dispute. It can also be a result of seemingly disjointed thing like the attitude of staff, supervisors and the effects of their relationships, their family problems, and how personal bias and conflicts often blew up into a conflict at the work spot. Lingard, H., & Francis, V. (2006)20 Some suggest emotional support has a moderate influence in avoiding conflicts. A more statistical view in the form of information processing and managing the gap in knowledge can result in finding better solutions Belcher, Osmond F. (2003)21. Solutions to disputes can be found quantitatively using the logic applied to statistical correlation analysis in a roundabout way and attempting to find a median between the conflicting interests of the parties. However the method is restrictive and is not conclusive to disputes that span multiple disciplines within the industry or when stray variables not predicted (like someone not concerned) enters the fray. It can at best be used as one of the many ways to solve the dispute. While scientific research is perfect with quantitative analysis, it is absolutely ineffective in situation where we deal in human interactions. Therefore one must also always take the opinion of the people who handle disputes as a profession must see the problem whole. Schumacher, L. (2004)22. All disputes in the construction industry are resolved either by surrender, litigation or by agreement. How the choice is made determines the situation and consequences for all involved. Contractors ought to be informed on how they must go about avoiding litigation and claims post contract, and also advises how they must go about making a genuine claim. It has a word for the owner too to avoid conflicts and accept the genuine submissions without having the ego or extraneous considerations come in the way. This proposal according to this reviewer is rather simplistic and can be used before entering into a contract and specifying terms rather than when in a conflict. However its simplistic solution of either party seeing the view point of the other and acceding to it is utopian. Specific transactions can cause disputes. Some considerations that could also cause or affect disputes and may form an important consideration in their resolution must not be overlooked. For example technical things and management decisions at the appropriate time can prevent a dispute or can stop a small incident from escalating into a full blown dispute. Take the process of purchasing materials for example. Purchases and long term vision are important in the industry context. Derek H. T. Walker, Keith Hampson (2003)23 argued the fact that team leaders ought to be cautious in dealings and be scientific in procurements which is important to avoiding litigation in the context of Australia. Is it just that disputes are cause because firms do not change with the times and are redundant? Bennett; J. (2000)24 Companies ought to review their functioning and also take the customers to partner with them in evolving key strategies in construction management of specific projects. The tracking of real exchanges and mails in a conflict helps study the effects of the dispute on parties. He concluded that Hedging, and attack was the propellant of r all escalation of conflicts. Winograd, D., & Milton, K. (2000)25 Extreme suggestions of using conflicts of profit were also propounded. Loosemore, M. (2000)26. A crisis was bound to happen in any construction activity and the best method was to look at the crisis and turn it into an advantage. Taking cues from psychology, management concepts, and other business models that cover risk and finance, the argument is that a crisis can be turned to the advantage of a party who can alienate or have an upper hand with manipulating the resources or any one or all of the factors either psychological or metric to their advantage. While that may have seemed revolutionary in the beginning of the millennium, we now feel that this is manipulative and not conductive to creating a win-win situation and something for all in the dispute. Another scientific solution Kriesberg, L. (2002)27 argued that disputes can be viewed as resolvable situations and what ought to be done is a through analysis of the conflicts, requirements and the load required to find a median in the resolution of the dispute. Still the scientific attempt at making a formula that can be universally applied to at least most situations in the construction industry, or any industry for that matter remains elusive. Meeting statutory requirements and planning a contract can go a long way in keeping disputes off the door Carr, F. (1999)28. Those who are about to embark on a contract are encouraged at conducting periodic workshops with all parties involved to sort out potential problem areas and reach an agreement in day by day and case by case basis which will then form the basis of the activities planned. They also caution the parties and provide the know how in formulation the statement of intent, contract and the method of the follow up activities. This is claimed to avoid most conflicts and also cut costs. Ronco et al (1995)29 argued that a company by ensuring that the companies engaged in construction activities gets the right forms and material in setting up construction contracts can avoid conflicts. Some researched case history was also cited to prove the necessities of using the structured material provided. This is the earliest attempt noted by the reviewer in bringing about a compendium regarding the dispute and all aspects of the construction industry. The forms by themselves do not solve disputes how ever meticulously is filled. There ought to be interpretation of clauses, and many nuances creep in. In contrast to that, Best, R., & Valence, G. (1999)30 seemed to favour what they called ‘building values’. According to them, parties involved in construction projects must also bring in experts who are current in many available technology, tools, and modern concepts that not only cut cost and time but also functions as a bridge between the parties. They seem to view sophistication as a means of solving disputes. Material, financial and other management techniques ought to be used to avoid conflicts. The theory is more technical and we observe that mathematical or logical processes cannot be applied to a dispute that involves human emotions, where such figures and analysis falls on deaf ears. While technology can speed up things and bring in a breath of positive analysis, the suggestion is subjective. It has to be argued in contra that the very technology can cause animosity and disputes as will be seen in specific cases. These are some of the alternate proposals to resolve conflicts and we note that while each individually is true and applicable in some cases, or have been proved to be correct in sample cases, universal solutions are still not available. The universal solution at hand is of course mediation or arbitration. The Theory and Practice (Analysis & Review) The cascade of ideas and information that began at the last three decades makes the concept so vast that it is impossible to arrive at any one standard method or formula. To approach the issue holistically one has to consider all the available information that has been tested scientifically or in other words contrast conflicting theories or amalgamate the different theory into a consistent formula that can be followed. From the vast literature such a step requires tremendous efforts. This approach will however cause a lot of anomalies as explained below. Issues that are sources of dispute in the global context or universal context in the sense that they may be found in all construction activities, irrespective of regional differences, or culture or country can be categorized as global issues that result in disputes. This could include labor, wages, land sharing, resource handling, logistics, materials, contracts and perceptions and views about the roles and responsibilities of the various concerned entities, and also the method of operation in any construction activity. Regional issues pertain to issues raised in the region where the proposed construction or activity is to take place. For example if an airport is planned in a fertile land that is being profitably cultivated, the local people may resist the activity. Similarly building an aquatic complex in a drought prone area may cause derision. Other than these issues, multinationals involved in construction in a foreign land may have to put up with the variance in law, usage, and customs of the host country. Labor requirements and contract laws may vary. In such instances the conflicts require mediation, negotiation and arbitration in such a manner that the parties in conflict can identify the major points of disagreements and come to a conclusion. However, what ever the causes of the conflict, we can conclude that while adopting the strategy for avoidance given by various theories, where there is a conflict, it ought to be resolved using a mutually agreeable arbitrator. Conclusion We are able to find that there are many vital ingredients in all disputes in the construction industry. No one solution can be universal. Therefore for each case a separate formula taking into consideration the differences in culture, usage, and levels of commitment, environment and social issues, relevance and economic implications of the dispute can alone bring about a solution. We have to remember that in any dispute the most vital ingredients like cultural values which may conflict with that of another or be tangent to the ideas and policies of the opposite party must be considered. Cultural and professional background related to a specific contract and goals set, disagreements and agreements on objectives, the paper tries to prove that intra cultural conflicts and different values tend to cause disputes and also cause the solutions to be negated by bias. Corporations and those in the business must also keep track of their past experiences and maintain a knowledge base, both current and of the past disputes. Arbitration and a will among parties to reach an agreement at the earliest is the best method of solving disputes in the industry. We can conclude that in all these complexities, an arbitrator or a neutral body not involved in civil procedures is the best form of reconciliation and solving disputes in the industry. Further that such an arbitrator must be selected from a group of industry specific professionals who will not be mired by technicalities. Bibliography 1. Riley, O. (1984). Reducing construction conflicts between highways and utilities, Washington, DC: Transportation Research Board. 2. Fenn, P., & Gameson, R. (1992). Construction conflict management and resolution: Proceedings of the first international construction management conference, the University of Manchester, Abington, Oxon UK: Spon Press. 3. Bercovitch, J. 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