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How to prevent disputes in construction contracts

due to cultural differences

 

STUDENT PAPER

By Arthur Durand

SKEMA Business School

Lille, France

 


 

ABSTRACT

This article aims to prevent cultural disputes. Indeed, projects and contracts in the international construction area meet a lot of obstacles, where disputes are the most damaging. They can cost lot of time, money and even sometimes conduct to the failure of those one.

To solve this problem, we will consider adequate alternatives with the best attributes to evaluate the value of these alternatives. We forecast to use Multi-Attribute Decision Making methods and Pareto analysis, to find the fittest solution to this problem.

Key words:     Construction contracts/culture/Dispute/resolution/Way of thinking/success.

INTRODUCTION

The construction sector involves a large range of international actors in different sectors. Those stakeholders have various “political, legal, economic, and cultural backgrounds”[1]. Many constructions companies propose a wide pack of product. China, USA and India own most of the market shares in the world. “Leading U.S.-based construction contractors in 2017, based on new contracts (in million U.S. dollars)”[2] are The Turner Corp, Fluor Corp and Skanska. Usually most of the companies “involved in on-site construction are small and local”[3]. An organism exists at a bigger level named “the international construction industry”[4], but most of this sector activity is done by local business. However, there is a trend in this sector to outsource the supply of goods and services used in the construction process. Firms ask for specialized services via subcontractors.

Indeed, in construction case, most of the disputes come from the shock of diverse cultural approaches of the contracts and the way of understanding the terms. Cultural discordances and culture have to be managed well and carefully because “these concepts become more critical in construction due to the nature of contracting, internationalization of procurement, joint venturing, and partnering in this industry” [5].

In this situation, many parts are involved, to owner from subcontractors. They have to deal with many elements like time, cost and quality expected. The biggest issue is disputes due to various interests where culture have a big impact.

The growth of strategic alliances in this area also rise the meaning of cultural differences due to people coming from different cultures interacting.

Many researchers proposed some different definition of culture. Hofstede’s has defined culture in an organizational way as “the collective programming of the mind which distinguishes one group from another” [6]. Barthorpe tried to give an easier definition as ‘‘what we are and what we do as a society’’[7].  For Holden, it’s just “varieties of common knowledge.” [8]

More…

 

To read entire paper, click here

 

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: Durand, A. (2019). How to prevent disputes in construction contracts due to cultural differences, PM World Journal, Vol. VIII, Issue IX, October.  Available online at https://pmworldlibrary.net/wp-content/uploads/2019/10/pmwj86-Oct2019-Durand-prevent-disputes-in-construction-due-to-cultural-differences.pdf

 


 

About the Author


Arthur Durand

Lille, France

 

 

 

Arthur Durand is a student in SKEMA Business School and currently doing a master in a Program Project management and business development. He passed the Agile PM this year and is currently searching more experience in project management area. He did an internship at BADENOCH & CLARK Company during the first six months of 2019 year. Currently researching a second internship in project management to complete my gap year, He finished his last semester of study in April 2019.

He spent one semester in Suzhou (China) in Fall 2015 and one in Belo Horizonte (Brazil) in Spring 2018, where he learned how to deal with cultural differences. This experience allowed him to write an essay on Prevent disputes in construction contract due to cultural differences. He completed an internship in Philippines as a teacher in Angeles city during the 2017 summer. It was a humanitarian experience helping to educate Pilipino youth. He gave mathematics and English courses to orphan children who needed education to succeed in life. Arthur has worked in companies during summer since he was eighteen to finance his expensive studies. he worked at INTERSPORT as a cashier, at BOULANGER as a seller and finally at FRUIDOR as quality manager.

Dr Paul D. Giammalvo helped a lot to achieve this goal; thanks to Dr. Giammalvo for giving advice and feedback on work and courses with a work methodology.

Arthur can be contacted at arthur.durand@skema.edu

 

[1] Edwin H.W Chan and Raymond Y.C Tse (2003) – Cultural consideration in international construction contracts. Retrieved from https://pdfs.semanticscholar.org/8686/54fbf0a05f76ab9dd518308182bb7f5d047e.pdf

[2] Statista. (n.d). U.S. Construction Industry – Statistics & Fact. Retrieved from https://www.statista.com/topics/974/construction/

[3] International Labour Organization. (n.d).Construction sector. Retrieved from http://www.ilo.org/global/industries-and-sectors/construction/lang–en/index.htm

[4] International Labour Organization (n.d). Construction sector. Retrieved from http://www.ilo.org/global/industries-and-sectors/construction/lang–en/index.htm

[5] Reach Gate. (n.d). Impact of cultural differences on project success in construction.  Retrieved from https://www.researchgate.net/publication/265973264_Impacts_of_cultural_differences_on_project_success_in_construction

[6] Reach Gate. (n.d). Impact of cultural differences on project success in construction.  Retrieved from https://www.researchgate.net/publication/265973264_Impacts_of_cultural_differences_on_project_success_in_construction

[7] Reach Gate. (n.d). Impact of cultural differences on project success in construction.  Retrieved from https://www.researchgate.net/publication/265973264_Impacts_of_cultural_differences_on_project_success_in_construction

[8]Reach Gate. (n.d). Impact of cultural differences on project success in construction.  Retrieved from https://www.researchgate.net/publication/265973264_Impacts_of_cultural_differences_on_project_success_in_construction