Early intervention creates more resolution, less litigation

Construction isn’t slowing down. In fact, it’s speeding up. Fast-paced, complex projects involving multiple stakeholders are creating multiple points for disputes to occur. The good news? A significant part of the industry is embracing proactive dispute avoidance, mitigation and resolution measures.

We detail the latest on global construction disputes market insights in Laying the Foundation for Success, the latest entry in a survey-driven research series from Arcadis’ Contract Solutions group.

Overall, the value of disputes in North America continues to drop, but there are still significant large construction programs yielding large dispute values. The average time to resolve a dispute decreased as well to 15.2 months, reversing last year’s trend.

These figures are interesting to note, but the real story is what’s influencing market changes. The report details many causes and trends, but a few really stood out that I wanted to share.

Early birds get quicker resolutions

Many of us like to preach the benefits of early intervention, and some of us have been for years. Litigation can be a rough, messy and costly. Most participants walk away feeling robbed, swearing they’ll never take that path again.

But times are changing, and the industry is learning. Leaders are homing in on being early.

• Early avoidance: Using sophisticated project controls and regular forums, project participants are proactively addressing issues that could develop into disputes. Formal risk management programs are helping prepare for change orders that create delays or inefficiencies that lead to disputes.
  
• Early mitigation: Utilizing working team agility and innovative model techniques is allowing participants to resolve issues during construction.This allows for more inexpensive settlements and in some cases affords an opportunity to still have time to turn the project around. This is a stark contrast from the traditional method, where issue resolution would be saved for the end long after the money was gone and relationships had soured.
  

• Early resolution: Avoiding court is a priority. For third year in a row, the preferred order of dispute resolution is:
1. Party-to-party negotiation
2. Mediation
3. Arbitration

Parties are realizing that the further a dispute progresses, the higher the value and cost of resolution becomes. Expenses such as interest on the claim and the cost of litigation can exceed the cost of the original claim itself. Employing proactive dispute avoidance techniques early in the construction process can keep participants away from formal claim proceedings altogether.

For more information about Arcadis’ Contract Solutions practices, click here.