Remodeling your kitchen? Developer of a new downtown high-rise? A commuter having to make detours to bypass roadwork on your daily drive to work? Whether you are in the construction industry, or simply drive by something “under construction”, there’s no doubt you have experienced the myriad of hassles from construction projects big or small.
The construction industry, private and public, is fraught with conflict and special issues requiring intervention at many levels of a project. For better-or-worse, construction and conflict go hand-in-hand. But there is a positive side to glean from construction conflict: mediation and other alternative dispute resolution techniques are poised to become the preferred methods of dispute resolution within construction projects.
Why? In large part because of the lower costs associated with these resolution techniques as compared to litigation or even arbitration. More-so, because mediation can resolve disputes much faster than traditional alternatives. And delays in construction can amount to millions of dollars. Above all, mediation can and is used in two different ways in construction management: as a dispute prevention technique as well as dispute resolution once conflict has emerged. Thus mediators can be used very innovatively in construction projects: as dispute avoidance professionals and/or as dispute resolution specialists.
Construction can have many sources of conflict. The Construction Industry Institute and Pen-Mora, Sosa & MCone (2003) identify sources of conflict ranging from unrealistic expectations, contract document language, schedule delays, performance clauses, contractor negligence, construction document misinterpretation, industry unpredictability, and poor workmanship to name a few. Similar to other industries, the construction industry also has organizational conflict that is exacerbated by the various levels of project team members who may communicate or understand things very differently from one another. For example, the owner and financial resource (can be a private party or government entity), the architect/engineer, the prime contractor and subcontractors all are expected to work symbiotically with clear communications channels and understand each other’s needs. But often there are divergent objectives: an owner wants maximum quality and functionality at minimal cost and the contractor wants to meet the scope of work by expending minimum resources. A recipe for conflict!
Yet, if you ask a contractor or owner what the single most prevalent source of conflict within their work is, they will probably tell you it isn’t negligence or shoddy workmanship or disagreement over expectations and deadlines, instead they’ll say it is contract disputes over payment. They’ll tell you stories about change-order disputes, “paid-when-paid” verses “paid-on-terms” clauses and the clashes experienced when contractors or material suppliers can’t get payment in time to fund their own overhead and payroll. You’ll hear stories about price changes with construction schedule changes, being on deadline and not waiting for paper change-orders, operating on verbal agreements that differ from contract work and having final payments withheld. And it’s not just payment that gets held up; it’s also the completion of a job that is held up. It is not uncommon for years to go by before payment is complete – with or without litigation or arbitration. The result is relationships that fracture and future projects which are tainted. If specific points of conflict were addressed at the time they arise, much of the payment and contract disputes can be minimized or even avoided.
The inherent conflict that can occur with even the most coordinated and managed projects has caused the construction industry to become quite savvy with resolving conflict so that it does not affect schedules or the bottom line: many construction contracts now include provisions for mediation as a function of the on-going project – to identify and manage conflict as it arises and address it real-time. Suffice it to say that resolving conflict before it escalates is paramount in the construction industry. An impartial, objective third-party who can work with both sides of a construction dispute before or immediately upon its presence can make all the difference in a successful, on-time, on-budget construction project.