Dispute Resolution Strategy Selection

Abstract

Disputes inevitably happen in construction projects. Consequently, dispute resolution strategies—such as litigation, arbitration, mediation, dispute advisor boards, and negotiation—are all widely practiced. This paper aims to highlight the occasions when parties involved in a construction dispute should utilize mediation or arbitration after failing to reach an agreement through discussion and negotiation. Therefore, a set of selection criteria is necessary when deciding on which method of alternative dispute resolution (ADR) to use. In addition, the response of each method toward these selection criteria must be known. Moreover, the disputant must make an informed decision on how to weigh each selection criterion. However, in order to make an informed decision on which dispute resolution strategy to use, the position of the individual parties must be ascertained beforehand. For this reason, this paper discusses how the market position of a company can dictate what form of ADR is the most beneficial. Further, the relationship between the involved parties is important when deciding on a method of ADR, so this paper also discusses whether or not parties envision working together in future and how this factor affects the choice of a dispute resolution strategy. The last factor one must consider is the source of the dispute; however, because there are a vast number of definitions for specific sources of construction disputes, this paper analyzes how these affect the weighting of the selection criteria and uses pairwise matrix analysis and the Analytic Hierarchy Process to arrive at conclusions. A stepwise methodology is presented. After considering all relevant impacting factors, the disputant can systematically identify an appropriate dispute resolution strategy rather than solely rely on subjective decisions. Essentially, the methodology developed feeds assigned weights and scores into the authors’ developed matrix to provide a systematic framework for the professional to choose suitable dispute resolution techniques. This article uses findings from a multi-attribute utility model for dispute resolution strategy selection, and simulates six hypothetical—but real-world—scenarios to illustrate applications.