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Settling construction disputes

By Lynn Nystrom

Spectrum Volume 17 Issue 22 - March 2, 1995

"It is ironic that the one industry in the country which more than all others depends on coordination, cooperation, and teamwork among multiple participants, should be the country's most adversarial industry," reports the Center for Public Resources (CPR) in its landmark document on the construction industry, Preventing and Resolving Construction Disputes.

The construction industry is teeming with litigation. The two leading causes that drive the litigation process in the construction industry are uncertainty and imperfect contracts. Prevention of disputes, which might be considered only as a sound business practice, may be more difficult than the construction industry realizes.

In an effort to help the industry, Michael Vorster has authored a new document, Dispute Prevention and Resolution. For his efforts, CPR awarded him its 1995 Outstanding Achievement award based on his application of alternative dispute resolution, dispute prevention, and litigation management techniques.

Vorster, associate dean in the College of Engineering and the David W. Burrows Professor of Civil Engineering, is part of a 12-member research team who were honored in New York City by CPR recently for their work.

Vorster and his colleagues investigated the causes of construction disputes from 1991 through mid-1994. They were specifically looking at whether or not certain characteristics of construction projects are more likely to generate disputes.

As part of their findings, they advocated a "standing neutral" concept, whereby one or more neutral dispute resolution advisers are selected at the beginning of a construction project, to be available for quick resolution whenever needed. This concept is used currently in very large civil engineering projects, and Vorster's team looked at adapting the process for commercial and industrial building projects.

Vorster called the standing neutral concept one of the "most promising" of the dispute resolution methods. In fact, the use of an objective third party is a "remarkably successful dispute prevention technique," and not just a resolution device, Vorster says.

The construction industry, with its long history of litigation, is a prime testing ground for experimental ways of preventing and resolving disputes. For the past 15 years, the industry has been using mediation more extensively, but it may find the standing neutral concept more cost-effective, Vorster says.

Standing neutral is a technique that is easily transferable to any long-term business relationship that has a potential for disputes, he adds.