STUDENT PAPER
By Vamsi Maru
SKEMA Business School
India and Paris, France
ABSTRACT
Construction is one of the most booming business in the world. It is one of the important sources of generating employment and capital. The construction industry is larger and more complex because of the involvement of various parties associated with the project. Due to its complexity, various risks are involved like delays, improper cash flow, lack of skill, change orders and environmental conditions; if these are not cleared they lead to Disputes. Disputes can break the relationship among the participants, affect the work quality and productivity, leading to claims and may lead to project fail if it is not managed inappropriate method. The aim of this paper is to present different types of disputes that occur in construction and analyzing various alternative dispute resolution methods using Multi-Attribute Decision Model by comparing different resolution methods between them and providing the best option to resolve the disputes without claims. These findings can be helpful to construction practitioners in understanding the dispute problems that occur frequently. This can minimize the risk of cost overruns associated with disputes.
Key words: Construction dispute, Delay Causes, Road construction, Contract errors, Claims
INTRODUCTION
The construction industry is complex, unique, and span for long period, which make more challenging to avoid disputes. Depending upon delivery method, type of skills, and required type of contract to use an employee, have different forms of disputes. Disputes are never budgeted for therefore occurrence of any disputes turn out to be very costly. it can damage financial and human resources, time, quality of work, and opportunity cost. Therefore, disputes are unavoidable. It should be managed properly by assessing the causes.
FIGURE 1. Risks changing into disputes[1]
“Road construction contracts are responsible for several types of disputes. The disputes may be among the client and the contractor, the key contractor, and sub-contractor over-compensation, concert of the contract, delay and disturbance of works, design variations, value escalation, the value of works etc. Maximum disputes are fixed by compromise among the contracting revelries without the participation of third party[2]. The accessing architect and engineer tenacity maximum disputes that might arise through the development of the work on site. Roughly cases still may need the structure of dispute review professional or panel. Still, around cases could be mentioned to an autonomous adjudicator to seek practical solutions and disputing revelries may intentionally accept and implement the result of the adjudicator. Subsequently exhausting the preceding dispute resolution mechanisms, it may be inevitable to take the substance to arbitration, frequently for last and binding reward that is enforceable by public law court like any court decision”[3]
“Construction Claim can be well-defined as an appeal by any revelry to the agreement, frequently the Contractor, for reimbursement of reparations produced by a disaster of the further party to achieve his portion of responsibilities as stated in the contract. The reimbursement is frequently in the method of the added compensation or an extra time.
Claims are”[4] inevitable in road construction projects. Claims are an appeal for time and financial reimbursement for repairs acquired by any revelry to the agreement. The amount and occurrence of claims have enlarged over current years due to the upsurge in the proportions and complication of these missions. These claims outcome in cost overruns, agenda interruptions and combative relations amongst the contracting revelries[5].
The below Figure 2. shows the typical worth of construction conflicts globally between 2011 and 2016, corresponding by area. In 2016, the average value of construction disputes globally was 216 million U.S. dollars. A conflict was charted as a condition of concerns wherever 2 parties take problem within the declaration of a written bond right. The value of this dispute is that the extra claim to it enclosed within the contract.
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Editor’s note: Student papers are authored by graduate or undergraduate students based on coursework at accredited universities or training programs. This paper was prepared as a deliverable for the course “International Contract Management” facilitated by Dr Paul D. Giammalvo of PT Mitratata Citragraha, Jakarta, Indonesia as an Adjunct Professor under contract to SKEMA Business School for the program Master of Science in Project and Programme Management and Business Development. http://www.skema.edu/programmes/masters-of-science. For more information on this global program (Lille and Paris in France; Belo Horizonte in Brazil), contact Dr Paul Gardiner, Global Programme Director paul.gardiner@skema.edu.
How to cite this paper: Maru, V. (2019). Can construction disputes be settled easily? PM World Journal, Vol. VIII, Issue VIII, September. Available online at https://pmworldlibrary.net/wp-content/uploads/2019/09/pmwj85-Sep2019-Maru-can-construction-disputes-be-settled-easily.pdf
About the Author
Vamsi Maru
Paris, France
Vamsi Maru is an Indian national student, is 22 years old and comes from Andhra Pradesh state located in South India. He comes from an engineering background with a bachelor’s degree in Industrial Engineering from GITAM university, India.
At the beginning of year 2018, he chose to study Project Management as a specialization and integrated Skema’s Master of Science in Project and Program Management and Business Development. He strongly believes that Project Management is more than a subject, a competence, that is absolutely needed today to make successful projects and have a clear approach to how to deal with schedule and stakeholders within projects in every single topic. Vamsi is certified in AGILEPM Foundation, PRINCE2 Foundation, Lean Six Sigma yellow Belt.
Vamsi lives in Paris and can be contacted at vamsikrishna.maru@gmail.com
[1] STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION? (2015, August 9). Retrieved from https://www.slideshare.net/abhishekshah798/c-51427660
[2] (PDF) Assessment of Construction Dispute Resolution in Ethiopian Somali Regional State Road Projects: A Case Study on Road Projects in the Region. (n.d.). Retrieved from https://www.researchgate.net/publication/321012269_Assessment_of_Construction_Dispute_Resolution_in_Ethiopian_Somali_Regional_State_Road_Projects_A_Case_Study_on_Road_Projects_in_the_Region
[3] Dispute_paper[1]. (2016, September 21). Retrieved from https://www.slideshare.net/YolenteMacarubbo/disputepaper1
[4] “Types and Causes of Construction Claims”. (2015, 28). Retrieved from https://www.slideshare.net/abhishekshah798/types-and-causes-of-construction-claims
[5] Causes of claims in road construction projects in the UAE. (2016, December 14). Retrieved from https://www.tandfonline.com/doi/abs/10.1080/15623599.2016.1230959
