A Study of Six Prevention/Resolution Alternatives
FEATURED PAPER
By Anthony Livolsi
SKEMA Business School
Lille, France
ABSTRACT
The objective of this paper is double: on the one hand it identifies which kind of dispute prevention could be implemented to avoid disputes to occur in construction consulting contracts and, on the other hand, provides tools to solve them once they have occurred. To do so, we have assessed a set of six Feasible Prevention/Resolution alternatives quantitatively and qualitatively thanks to eight chosen Attributes. Thanks to this process we conclude that specific Prevention (examples are given in this paper) enables dispute inhibition and that Negotiation is the best solution to tackle disputes in construction consulting contracts once they occurred.
Key Words: Consulting Contracts, Consultant, Managing Disputes, Preventing Conflicts, Construction Projects, Construction Industry
INTRODUCTION
According to Arcadis’ 2017 Global Construction Disputes Report, “both the time taken to resolve disputes and the global costs of disputes have decreased”[1] for a couple of years, but the overall trend is still slightly increasing. Moreover, the figures involved are still huge: “$42.000.000 USD is the average cost of a dispute, 14 is the average number of months taken to resolve a dispute, $2 billion USD is the highest value dispute handled”[2] – and those figures only concern the Arcadis NV Group. This highlights to what extent the issues regarding disputes in consulting contracts linked to construction are massive. As construction projects are a typical example of what project management is: “The administration, supervision or executive function to plan, organize, coordinate, direct and control a proposed or planned undertaking to achieve a particular aim or objective within a specific time frame.”[3], we will focus on issues regarding consulting contracts in the construction industry.
Why are those figures so important? The construction sector is based on projects involving many different actors such as owners, contractors, and consultants and various designing and building processes. Even if the relations between each kind of actors is basically defined – both the contractor and the consultant have a contractual relationship with the owner when contractors and consultants have only a functional relationship – the concentration of so different parties and work processes is so huge that conflicts are inevitable and have subsequent consequences on the construction projects. But what is exactly a conflict? A “Conflict is the struggle of conflicting ideas between two or more parties. Conflict involve the communication problems which may affect the relationship between two or more parties and impact on the effectiveness of the job of the project”[4].
There are “two principal types of conflicts in a construction project: internal and external conflicts. External conflicts concern only outside stakeholders when internal conflicts are concerning inner participants of the project (owners, contractors, and consultants)”[5]. Actually, if we take a look at all the research papers dealing with this issue, it appears that consultants – mainly architects, structural engineers, and designers – are at the heart of the conflict process because they are a bridge between the owner’s idea of the project and its realization by the contractor, a truly conflictive position. Thus, the inability to manage this kind of conflicts can turn them quickly into disputes between the consultant and the other parties, and “Disputes are one of the main factors which prevent the successfully completion of the construction project”[6]. Such a result can have truly undesirable consequences for a construction project: delays, cost overruns, decreased productivity, impact on business relationships and so on. There are multiple and diverse root causes explaining conflicts and disputes.
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Editor’s note: This paper was prepared 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: Livolsi, A. (2019). Managing Disputes within Construction Consulting Contracts: A Study of Six Prevention/Resolution Alternatives, PM World Journal, Vol. VIII, Issue VI, July. Available online at https://pmworldlibrary.net/wp-content/uploads/2019/07/pmwj83-Jul2019-Livolsi-managing-disputes-in-construction-consulting-contracts.pdf
About the Author
Antony Livolsi
Lille, France
Anthony Livolsi is a PGE Student at SKEMA Business School currently in MSc Project and Programme Management and Business Development in Lille, France. He has a strong experience in Project Management since he has been Project Manager in several student associations and throughout his internship at Bureau Veritas, an enterprise specialized in building controls and certifications. He is also going to start an internship in January 2019 for its gap year at HSBC within the International Business Management Unit as a Junior Project Manager. He did a Preparatory Class for competitive entrance into French Business Schools for 2 years and did a License in Management at SKEMA BS too. He has successfully passed Prince2 and AgilePM in 2018, two internationally-recognized Project Management certifications.
He can be contacted using his personal and school mail addresses:
Personal: tony.livolsi@gmail.com
School: anthony.livolsi@skema.edu
or
LinkedIn: www.linkedin.com/in/anthony-livolsi
[1] Arcadis, Global Construction Disputes Report 2017: Avoiding The Same Pitfalls. Retrieved from https://www.arcadis.com/en/united-states/our-perspectives/global-construction-disputes-report-avoiding-the-same-pitfalls/
[2] Arcadis, Global Construction Disputes Report 2017: Avoiding The Same Pitfalls. Retrieved from https://www.arcadis.com/en/united-states/our-perspectives/global-construction-disputes-report-avoiding-the-same-pitfalls/
[3] Paul D Giammalvo, Wideman Comparative Glossary of Project Management Terms. Retrieved from http://www.maxwideman.com/pmglossary/PMG_P16.htm
[4] Loke Yi San, A study of causes and effect of conflict in construction industry. Retrieved from http://umpir.ump.edu.my/id/eprint/8701/1/cd8461.pdf
[5] Loke Yi San, A study of causes and effect of conflict in construction industry. Retrieved from http://umpir.ump.edu.my/id/eprint/8701/1/cd8461.pdf
[6] Anita Rauzana, Causes of Conflicts and Disputes in Construction Projects. Retrieved from http://www.iosrjournals.org/iosr-jmce/papers/vol13-issue5/Version-6/F1305064448.pdf
