Cost Control of Arbitration in Construction Projects

Abstract

Arbitration has been the alternative dispute resolution to litigation in many contractual agreements and among many construction projects. It was promoted as a better alternative dispute resolution method to the litigation process due to the presumed decrease in both time and expense. However, over the last decades, arbitration proceedings have become longer, more expensive, and almost comparable to litigation. Despite having many other alternative dispute resolution methods, arbitration is still the most prevalent method in many contractual agreements. Therefore, arbitration cost and time overrun issues have to be addressed in order to understand the reasons behind the cost overruns and to allow the discovery of different opportunities to mitigate arbitration costs while maintaining the arbitration process efficiency. This research study identifies the root causes for arbitration cost overruns and analyzes the different scenarios that lead to these overruns. The study also analyzes the different control and mitigation strategies that can be utilized to better control arbitration costs.