The nature of the construction industry in Hong Kong is such that there is an existing conflict between the major construction project participants, owners, design professionals and contractors. The construction industry is famous for high levels of conflicts and disputes.
Construction is construction, no matter how complicated the technology. Additionally it is a project-based industry with each project being unique. Inside a project life cycle, a big range of separate firm are participating. Failures by one party can affect those engaged in a project and, as work often takes substantial periods where national economic circumstances can change, it is unavoidable that dispute will arise.
From the above-mentioned scenario, it will not be surprised that the techniques of conflict management and dispute resolution in construction industry are more developed, compared to the industry, one might be inclined to ask the questions as to whether you can find any hope for the industry in wanting to decrease the serious and extent of conflicts and disputes? According to Fenn et al(1997), conflict can be managed, possibly to point of protecting against it from leading to dispute whereas, dispute require resolution and, therefore, are associated with distinct justifiable issue.
The reason for this paper will firstly describe the definition of conflict management and dispute resolution. And in addition identify the causes of the conflicts and disputes in Hong Kong construction industry. Finally, this study will also identify the way of formal conflict management and the dispute resolution solutions to be utilized.
2. Conflict Management in Construction Industry:
Conflict may be thought as a contest between people with opposing needs, ideas, beliefs, values or goal. Conflict on team is unavoidable; however, the results of conflict aren't predetermined. Conflict might increase and lead to non-productive results or conflict can be beneficially resolved and lead to quality final products.
Therefore, understanding how to manage conflict is essential to a high-performance team. Though very few people go searching for conflict, more often than not. Conflict results because of lacking communication between people with regard to their needs, ideas, beliefs, goals, or values. Conflict management is the principle that all conflicts cannot consequentially be resolved, but learning how to manage conflicts can decrease the odds of non-productive escalation.
According to Algert, N. E. , and Watson, K. (2002), Conflict management involves obtaining skills related to conflict resolution, self-awareness about conflict modes, conflict communication skills, and establishing a structure for management of conflict in your environment.
Construction is significantly not the same as manufacturing, in which the same goods are produced one thousand times. Also, construction will not enable the change of variable while holding the others fixed in order to study its effects. The type of the construction referred to earlier so conflicts among owners, design professionals and contractors are general.
To suggest that these parties are prone to confrontational interaction and conflict will be a major statement in the construction industry.
Owners are even arguing with their design professionals over design service clarify of errors and neglect in design services rendered, aesthetic considerations and budget overruns.
The design professional's responsibility to define and design the project scope so as to meet up with the owner's functional, budgetary, time and environmental project criteria. When the design professional fails to meet their responsibility, the dog owner is nearly always dissatisfied with the result, with the effect that strict correspondence soon ensues between your parties. Also, when the scope of the task is unclear, this presents an unhappy relation for future between your owner and the contractor, arguing about the scope and quality of the task, and whether in fact the task is properly defined by the contract documents made by the look professional.
Contracts are endemic as factors behind conflict within the construction industry; almost every stage of the construction process is regulated by an agreement of some kind. Some of the regions of contract dispute are breach of contract in contract clause interpretation, inspection of work clauses, indemnity clauses, payment of supplies, and liability to third parties, merely to name a few possible regions of contract dispute.
Infrastructures are unique products with an increase of complex production process than other and almost all of building products are a combined effort of several peoples or organization. Numerous professionals have contribution to do a building in a variety of capacities. Among construction team members, each may have different aim with regards to their profession, but their main aim should be to complete the project within a given plan. Conflict between team members may arise when their objectives are inconsistent. Also, their interpretations of contract documents, terms, and conditions can diverge, leading to discrepancies and conflict. In short, all factors behind conflict within an area are interrelated.
For external: a) Environmental concerns; b) Social impacts; c) Economics;
d) Political risks; e) Weather; f) Regulation;
g) Unforeseen site condition.
For internal: a) Error in design; b) Construction methods and workmanship
In figure 10. 3 which is one example of what the dog owner should think about when identifying potential conflicts. We can identify which ones may be realized at the interfaces among the list of multiple participants in an agency construction management delivery system. Certain conflicts in the partnership among the dog owner, designer, CM and trade contractor can be eliminated in various situations in case a different delivery system is selected.
In the construction industry, ask anyone if they completed a construction project without the conflict. The solution 100% of that time period will be "NO". The successful project managers must be implement strategies to avoid or monitor conflict in their construction project.
Design and implementation of any conflict management;
Monitoring and overview of the conflict management.
Dispute review boards or advisors;
Quality (Total quality management and quality assurance);
which are non-blinding process.
Baden-Hellard (1988) emphasized that construction industry has a built-in prospect of conflict due to the dissimilarities always within values, principles and interest. Thus, when differences arises from unforeseen events, no matter how well the clients, design team and contractors have managed the project, better methods of resolving the differences are needed.
Dispute review boards or advisors:
It is almost impossible to complete a huge construction project without having any disputes develop between your parties. The DRB is a panel of two neutral those who are selected by the parties to the construction contract, usually the project owner and the overall contractor. The project owner will stipulate in the specifications for bidding the project.
DBR provide the processes and mechanisms to not only help to settle disputes but also provides a strategy to prevent the potential conflict from ever happening. The conflict to the DRB means that plausible argument at each construction stages and the grade of the presentation of claims.
The first meeting of the DRB often takes place well before the commencement of the construction project and will continue to meet until the DRB members are well-known all of the areas of the project. After the project begins, each DRB will usually meet over a regularly scheduled basic such as once every month or once each quarter, etc. Besides, site visit can ne made depending on the requirements of the project.
Negotiation must be carrying out to solve the conflict before it reached a more serious stage and change into dispute. The parties must get together and approach an agreeable settlement through communication.
The following two example shown a straightforward negotiation between the main contractor(MC) and a subcontractor(SC) who is unable to meet the objective in the contract.
SC: I'll not be able to finish this process on time.
MC: You must be finish theses according enough time schedule.
SC: I need three extra weeks to complete it.
MC:You should not have extra three weeks.
SC: If I do not get three weeks, i can not complete this technique promptly.
MC:No, you will complete as scheduled, if you truly cannot finish it, we will gather damage and replace you.
The example A is a position-based type of negotiation that will go around in circle until one of parties abandons its position. It isn't clear why the parties are even arguing.
SUB: I will not have the ability to finish this process promptly.
MC: What are the reasons and why is it possible to not finish as scheduled?
SUB: My supplier will not able to deliver the materials until in a few days therefore i need three extra weeks to complete it.
MC: You have to know the schedule is very tight because of this project. Are there any other suppliers who is able to deliver on time?
SUB: Yes, but the suppliers are more costly than the damages given by finishing late.
MC: Although you are in charge of achieving the target, I also understand your predicament. Actually, I know various other suppliers that could be in a position to solve these problems and I am going to contact them at the earliest opportunity.
The example B is an interest-based kind of negotiation which is often reached a mutually agreeable solution even the foundation of the conflict is uncovered.
According to these two examples, a successful negotiation should lead to a solution acceptable to both parties that won't damage their relationship and implies collaboration, trust and common objectives.
Quality (Total quality management (TQM) or assurance):
According to Gardiner et al (1992), the most confliction stages are recognized within the business, closely accompanied by the problem of quality and control. Probably one of the most confliction stages is the product quality issue so a good and suitable quality management or control system should be issued. It can reduce the frequency of conflict.
Focuses on meeting owners' needs by providing quality services at a price that provides value to the owners;
Is compel by the search for continuous improvement in all operations;
Understand everyone in the organization;
Observe an organization as an internal system with one common objective rather than as individual parties acting to increase their own performances;
Emphasize teamwork and a higher level of workers.
The procurement system is one of most effective methods in prevention of conflict so it should be located in the sooner stage of the project life cycle.
According to Bennett et al (1990), the procurement system built up the roles and relationships, which constitute the organization. It establishes the overall management structure and systems, which helps to form the entire values and styles of the project.
Selection of appropriate procurement and contracting strategies, and nomination of an appropriate Principal in the contracts;
Preparation of tender documents and contracts based on standard forms;
Selection of contractors and consultants with proven performance records;
Effective management of contracts, including clause commentaries, sample letters and checklists;
Maintenance of an efficient performance management system through monitoring and reporting; and
Resolution of contractual claims and disputes.
NSW Government, NSW Government Procurement
Web site: http://www. nswprocurement. com. au/Procurement-System-for-Construction. aspx [Accessed: March 13, 2011]. )
3. Dispute Resolution in Construction Industry:
Dispute resolution is about identifying the main factors behind conflict and avoiding and managing conflict with the goal of resolving disputes or conflict during the construction process in order to avoid post-construction claims, litigation, and related costs.
According to Whitfield(1994), resolve disputation can use either informal resolution methods such as negotiation and alternative dispute resolution(ADR) or formal resolution methods such as litigation and arbitration.
Disputes are often the results of ill considered procurement practices, inadequate preparatory planning and design activity, or poor project and commercial management procedures.
If the conflict happened in construction site, all parties are agreed to each other. There is absolutely no further conflict because objectives of both party become same. But if one or both party becomes intransigent, then the conflict risk turning to a dispute. In other word, disputes are come up when parties cannot manage their conflicts properly. Dispute can be defined as a disagreement between parties in connection with their objectives.
2) Improper non permanent supports.
3) Inadequate planning and execution of construction process.
4) Lack of inspection.
5) Insufficient safety factors.
6) Inadequate training of construction industry workers.
Feld, J. and Carper, K. (1997). Construction
Failure. John Wiley &
Sons, New York.
Cause of client:
1) Failure to respond in timely manner.
2) Inadequate tracing mechanisms for RFI (Request for information).
3) Reluctant to check on for constructability, clarity and completeness.
4) Discrepancies / ambiguities in contract documents.
5) Poor communications between and one of the parties involved in theproject.
6) Failure to appoint a standard project manager.
7) Lowest price mentality in engagement of contractors and designers.
The lack of "team spirit" one of the participants.
8) Deficient management, supervision and coordination efforts on the
part of the project.
Cause of designer:
1) Failure to comprehend its responsibilities under design team contract.
2) Over-design and underestimate the costs involve.
3) Inadequate in open and factual communication.
4) Late information issued and cumbersome methods to RFIs
5) Design and specification oversights and errors or omissions resulting
from uncoordinated civil, structural, architectural, mechanical and
6) Incompleteness of drawing and specifications.
Cause of contractor:
1) Inadequate contractor management, supervision and coordination.
2) Lack of understanding and agreement in contract procurement.
3) Failure to comprehend and properly bid or price the works.
4) Reluctance to get clarification.
5) Failure to plan and execute the changes of works.
6) Inadequate CPM Scheduling and update requirements.
7) Delay/ suspension of works.
Fenn et al (1997) offers a synopsis of the findings of nine frequently cited
According to Carmichael (2002), the step method of dispute resolution as below.
i) Negotiation at project level
ii) Negotiation at higher level
iii) Alternative dispute resolution (ADR)
iv) Arbitration or Litigation
An attempt is made to resolve the dispute at the particular level of which it occurs, in an acceptable time;
If this fails, involve parties at an increased level with decision making authority, and the actual to settle in the interests of a commercial solution;
If this fails, check out an ADR approach using and independent third party;
If this fails, arbitration or litigation will be used.
Negotiation is a common dispute resolution method, which most of us are using atlanta divorce attorneys day. There is absolutely no neutral alternative party for the negotiation, only the disputants. Additionally it is defined as a way to reach mutual agreement through communication, according to Down, L. J. (2009), (p. 140-white)
Negotiation is considered by best suited way to solve any dispute in construction industry. It was because negotiation is cheap and can be maintained relationship with the related parties.
However, there are also negative sides of negotiation. For instance, if the related parties negotiated an extended and protected amount of discussion, the negotiation will be fail because they're not blinding. Besides, it is an informal resolution method, it makes it possible for any surprise issue or irrelevant points rising.
b) Alternative Dispute Resolution (ADR)
ADR is a collective term used to spell it out methods of resolving disputes that happen to be alternatives to litigation and arbitration and which usually offer a less expensive solution.
Mediation: It has appeared as an extremely used form of dispute resolution, involving a neutral alternative party working to facilitate effective negotiations to allow a mutually acceptable settlement.
In mediation, the parties explore options, measuring the strengths and weaknesses of their respective cases.
Mediation can save significant amounts of time and cost in resolving a dispute and can also help the parties to re-establish trust and prevent harm to ongoing relationships.
Adjudication: This is a quick and relatively inexpensive way of resolving a dispute. The adjudicator's decision is generally upheld by the courts and so it's important to ensure that all the relevant fact is devote front of the adjudicator.
Adjudication will not necessarily achieve final settlement of a dispute because either of the parties has the right to have the same dispute heard afresh in court.
However, experience shows that the majority of adjudication decisions are accepted by the parties as the final result.
(Powell, J. David. 2005. Boundary Dispute Resolution in England & Wales Surveyors and Lawyers Working Together to Resolve Problems. Proceedings of Cairo: Egypt. )
(Add chep lak kok adr table, refer to white book)
Because of the next potential advantages, it is worth considering using ADR early in a lawsuit or even before you files a lawsuit.
Continued business relationship;
More options for settlement;
Reduced costs in obtaining settlement;
Control of outcome and the process.
On occasions, alternative dispute resolution procedures aren't successful in resolving disputes, resulting with the parties resorting to formal litigation through the courts.
According to Whitfield(1994), the procedure of litigation is from the problem of an writ to a hearing and then on to a judgment. One of the failures of the legal process has been the speed with which solicitors have been prepared to issue writ. After writ has been issue, the plaintiff cannot simply withdraw his writ and your investment matter. If he did so, the counterclaim would be found against him combined with the cost.
Programme delay analysis;
Preparation of statements of claim and statements of defence;
According to Ashworth (2005), Arbitration is a legal way of the resolution of dispute beyond your courts. The parties refer the dispute to a neutral, knowledgeable person (arbitrator or arbitral tribunal) who then gives the final decision (award) to which both parties agree.
Arbitration, instead of court proceedings, as the last resort to resolving disputes in construction contracts has been commonly used in Hong Kong as well as internationally.
Although intended to be considered a less formal and much more flexible option to litigation, arbitration is often as thorough and time-consuming as litigation, specifically for construction disputes.
The related companies should be employ the expertise in representing them in arbitration proceedings and handling the whole arbitration process from the appointment of arbitrators, drafting of pleadings, dealing with interlocutory proceedings through to the hearing stage and beyond.
Where necessary, lawyers who experienced in construction disputes to supply the most comprehensive services to the business in arbitration.
Each construction projects are unique and complex undertakings. A unique group of drawings and specifications are used to spell it out each construction stages. The drawings and related documents generally performed by a general contractor and many subcontractors, a lot of whom have not interact previously. The unique areas of each project and the unique constitution of each construction team are normal known reasons for disagreements to occur.
Disputes can be made in any environment; indeed, conflict may appear whenever two individuals try to work together. These disputes often concern matters such as changes, differing site conditions, delays, and payments.
Many researchers had attempted to determine the causes of conflict and disputes within the construction industry.
1) Errors, defects or omissions in contract documents;
2) Underestimation of the cost - by your client, the contractor, or both;
3) Changes in conditions, (e. g. unforeseen ground conditions);
4) Claims from end-users (rights of owners and tenants);
5) People involved in the construction process.
When confliction is arise in the construction industry, the value of proper conflict recovery method and compliance with formal procedures can't be over-stressed. If disputes proceedings become unavoidable, it should be some comfort to learn that proper alternative dispute resolution will be a favorable condition rather than a drawback.
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