Dispute Avoidance in the Construction Industry: A Perspective of Procurement Methods

Abstract

Disputes are inevitable in the construction industry due to the complex characteristics of the construction projects and the involvement of different stakeholders, and they can be considered as a major hindrance obstructing the successful completion of a project. The drawbacks of the dispute resolution mechanisms (DRM) used in projects have directed attention toward dispute avoidance based on the concept of prevention is better than cure. Conversely, previous studies emphasized that disputes in a project are the consequences of procurement approach used to some extent and the likelihood of disputes seems less in the projects procured under collaboration or partnering. Therefore, this study investigates dispute avoidance from the perspective of procurement methods. Following a comprehensive literature synthesis, case study approach was used by selecting one (01) case from four (04) different procurement methods and research data was collected through semistructured interviews. The findings revealed that the highest number of disputes occurred in the traditional method and the lowest in the collaborative approach. The dispute avoidance strategies varied in terms of procurement method adopted, due to their salient features. However, strategies like negotiation, proper tendering process, proper contract preparation and contract administration, and appointment of a third party from the initial stage of the project irrespective of the procurement type were common in all projects. Moreover, the highest number of key features which proactively avoid disputes were identified in the collaborative approach. Therefore, this study recommends collaborative procurement as the most suitable method to avoid potential disputes in a project. The main contribution of this study is investigating the dispute avoidance strategies implemented from the perspective of procurement methods in the Sri Lankan construction industry. Further, it provides insight into the current nature of the procurement methods used and key features of procurement methods which avoid disputes. Moreover, it recommends dispute avoidance strategies to be implemented from the initial stage of a project to enhance the success of construction projects. The result of the study will be beneficial for the industry practitioners to ensure the completion of the project while reducing the impacts from disputes in terms of cost, time and quality by identifying the dispute avoidance strategies to be implemented in the basic stages of a project and to select the most suitable procurement method based on its key features on dispute avoidance.