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Contents:
Abstract .................................................................................................... 2
Introduction............................................................................................... 2
2. Literature review .................................................................................... 4
2.1 Introduction ................................................................................... 4
2.2 Historical development of alternative dispute resolutions .................. 4
2.3 Limitations of traditional dispute resolution ...................................... 6
2.4 Limitation of existing Alternative Dispute Resolution in UK ................ 8
2.4.1 Procedures and Limitations of Arbitration ................................ 8
2.4.2 Procedures and Limitations of Mediation ............................... 10
2.4.3 Procedures and Limitations of Adjudication ........................... 11
2.5 Introducing DRB as a possible solution for existing limitations ......... 13
2.5.1 Procedures of DRB .............................................................. 13
2.5.2 Critically analyses the strengths of DRB ................................ 14
2.6 Conclusion ................................................................................... 15
3. Methodology ........................................................................................ 16
4. Discussion ........................................................................................... 18
5. Conclusion ........................................................................................... 25
Reference ................................................................................................ 28
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Th e Feasibility of Introducing Dispute Review Board into UK Alternative
Dispute Resolution for Construction
Abstract
Dispute management is the unchangeable challenge for construction industry.
With the development of industry and the increase of people¶s experiences,
more and more people focus on the origins of construction disputes, which
result in the creation of DRB as a greatly effective resolution. This paper
explored the feasibility of introducing DRB into UK construction industry. The
exploration will be conducted by, first comparing the DRB with existing disputeresolutions, second analyzing the performance of DRB during the actual
dispute¶s process, then discussing the attitudes of legal system on DRB to
show the feasibilities. Finally, draw a conclusion to present that the use of
DRB in UK is feasible and necessary.
Introduction
As a huge and complex process, construction projects are always connected
with big input-funding, many participants, complex technologies and
complicated management. Therefore, disputes are unavoidable, and with the
development of construction industry, the quantity and type of disputes are
increasingly developing, the degree of complexity and amount of money
involved are further enhanced. As Brooker & Lavers (1997) stated that ³Over
the past 20 years, loss and expense due to contractual claims have attacked
British construction industry like a cancer´. Moreover, because of the increase
of construction disputes, the contractual relationships between involved
parties have become more and more sensitive (Donohoe, 2006).
Consequently, the effective dispute resolutions are very important for UK
construction industry.
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In UK, many construction disputes were solved by law (Gillie et al, 1991).
Although litigation seems a powerful and effective way to solve construction
disputes, but limitations of litigation are obvious. Litigation as a strict method
mainly focuses on the responsibility payment of disputants and tends to be
very competitive. Furthermore, unacceptable high-costs and time delay duringthe process indicate that litigation is not an appropriate approach for most of
construction disputes. Generally, it will be appropriate as the final resolution,
only when all the other dispute resolutions failed (Steen, 1994).
On the other hand, in UK, there are alternative dispute resolutions (ADR) as a
set of impartial and private method, which perform as the alternative
approaches of litigation during the process of construction disputes (Treacy,
1995). Generally, the characteristics of ADR in construction industry can be
presented as that with a involvement of a less formal and neutral third party
and making binding or nonbinding decision, and with higher effectiveness of
speed and cost and less powerful than litigation, the ADR has been used
widely in situations which litigation is inappropriate (Creighton, 2000). The
mediation, arbitration and adjudication are three mainly available ADR
methods in UK construction industry and the procedures and limitations of
each method will be analyzed in following sections (Donohoe, 2006).
However, with the accelerant development of construction industry and facing
the complex construction projects in global events such as 2012 Olympics, it
is worthy to consider that whether the existing three types of ADR and
litigation are enough for resolving disputes in construction projects, and is
there any gap in the field of construction dispute resolution in UK. Therefore,
this paper will argue that Dispute Review Broad (DRB) as a significantly
effective ADR method should be introduced into UK construction industry.
Generally, DRB tends to solve dispute at early stage, before the problems and
disagreements turning into serious disputes, and focus on the improvement of
contractual relationships (Harmon, 2003). In this purpose, this project will
analyze the Feasibility of drawing DRB into UK construction industry by
analyzing and comparing the advantages and disadvantages between
existing ADR methods and DRB through literatures. In addition, the
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performance of DRB in Model of Dispute Development and Resolution, and
the legal system and the attitude of legal system towards ADR in construction
industry as the environment of DRB are also needed to be analyzed. Finally, a
conclusion will be drawn to show to what extent the DRB should be
introduced as a necessary and more effective method into UK constructionindustry.
2. Literature review
2.1 Introduction
In terms of construction industry in UK, because of the rising of complexity
and involved funding of projects, disputes management and resolution are
increasingly complex and difficult (Brooker & Lavers, 1997). The purpose of
this review is to analyses the feasibility of introducing Dispute Review Board
(DRB) as a more effective and efficient ADR method into UK for construction,
by analyses the limitations of existing methods through those literatures. To
understand what existing resolutions lack of and to know what DRB brings,
this review will be organized as followed. Firstly, historical development of
disputes resolutions will be reviewed as a general knowledge about relevant
field. Secondly, the limitations of existing approaches will be studied
specifically and to find the problems in UK construction dispute resolutions.
Finally, the procedures and strengths of DRB will be critically analysed to
show that it can be an appropriate solution.
2.2 Historical development of alternative dispute resolutions
Alternative dispute resolutions (ADR) originated from the USA, of which the
purpose is to relieve the pressure caused by the sharp increasing cases on judicial system by create a set of alternative methods of litigation (Creighton,
2000). The U.S. government has promoted commercial arbitration since as
early as 1887 (Frederick, 1997). In 1920, American New York state passed
first modern arbitration law, within five years, fifteen other states followed
(Frederick, 1997). After that, to promote use of arbitration, the American
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Arbitration Association (AAA) was founded in 1926 (Treacy, 1995). In addition,
Taft Hartley Act created U.S. Mediation and Conciliation Service in 1947,
which established Alternative Dispute Resolution (ADR) for national
emergency, and successfully prohibited some union activities by ADR
(Creighton, 2000). Therefore, the ADR was first time established as a set of dispute resolutions without litigation, and actually used in business disputes
and national dispute events.
In terms of ADR in construction industry, the Construction Industry Arbitration
Rules was conducted by the AAA in 1966, which means that since 1966 a
specific criterion of arbitration has been established for construction industry
(Treacy, 1995). Base on the arbitration law in 1920, the first complete
construction arbitration institution was built, and rapidly accepted and adopted
by other western countries. Furthermore, in 1974 U.S. Mediation and
Conciliation Service expanded mission statement beyond labor dispute
management to wider fields containing construction disputes management,
which means that the arbitration and mediation as two fundamental methods
of inchoate ADR are both available in solving construction disputes (Gillie et al,
1991). The major funding have been invested for promoting and researching
ADR by Hewlett Foundation in 1984, which signaled the significant advance in
status of ADR in fields of dispute resolution (Cheung et al, 2004).
In UK, the significantly mentionable innovations of ADR for construction
industry are in 1996. Housing Grants Construction and Regeneration Act
1996 was conducted by British courts, which is the first construction
adjudication institution over the world, by which adjudication was completely
formulated as a binding construction dispute resolution and differ from
traditional litigation (Dancaster, 2008). In addition, the 1996 Act was further
specified by The Scheme for Construction Contrasts [England and Wales]
Regulation 1998 (Dancaster, 2008). It is also mentionable that, in 1999,
during the first construction case using adjudication as resolution, the actively
positive attitude of British courts towards adjudication was been determined,
the rapidity and efficiency as natures of adjudication were actively supported
by British judge Dyson and courts (Dancaster, 2008). Thence, adjudication
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was confirmedly added to UK ADR list as a binding technique, furthermore the
use of adjudication have been strongly supported by UK judicial systems,
which have significantly advantages on the promotion of adjudication.
Over the general historical development above, it can be easily found that
within more than 10 years, there are no significant progresses in fields of
construction ADR in UK. Moreover, it is also worthy to consider that to what
extent the existing approaches are suitable enough and whether these
approaches have serious limitations for UK construction industry.
2.3 Limitations of traditional dispute resolution
Litigation, as the oldest and most powerful formal resolution for construction
disputes, its limitations will be critically analyzed as following.
As Gnaedinger (1997) comment that ³ I t is almost impossible these days to
read a newspaper or engineering publication without finding a reference to
problems within the current legal system. ´ Gnaedinger further states that for
construction industry, it has been proved that as a traditional form of dispute
resolution, litigation is especially inappropriate.
Rubin (2003) similarly and more specifically voiced their opinion
³Considering the amount of costly discovery that litigation on large
construction projects can produce, the expense of retaining
consultants and expert witnesses in the preparation of a case for trial,
and the likely inclusion of additional contingency in contractor bids to
cover the risk of time consuming litigation.´
Rubin (2003) explain further that although each construction disputes can be
concluded in types, but every construction disputes have different factors
which depend on differences of the project contexts. Despite litigation have
complete legal procedures and legal institutions, however providing strict
letter-of-the-law instead of professional considerations of relevant project
context, which is at least not appropriate for construction disputes.
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With the development of construction industry, amount of construction
disputes are also raising, meanwhile it put pressure on legal organs. For
instance, according to the court statistics between 1970 and 1998 the number
of civil cases in the USA increased more than tripled. In addition, more than
19,000,000 cases were filed in 1991. Furthermore, the number of civil caseswhich last more than 3 years old within courts rose from 15,646 cases in 1984
to 25,207 in 1990 (Treacy, 1995). The statistics show limitation of litigation
from another aspect, by which the inefficiency and serious time delay of
litigation can be easily identified.
Furthermore, partially problems of litigation in resolving construction disputes
contain uncertain and unacceptable time delays and expense. As early as
1987, the problem has accrued in professional liability insurance dilemma
which can be at least partial result of problems of litigation in construction
industry (Devilling, 2008). It can be understand that when due to construction
dispute, procedure of litigation may be lack of consideration about damage-
control in construction project, it may result in huge amount of time delay and
expense, which seriously harms all disputants.
In addition, the comment by Steen (1998) indicates that legal systems have
reasonably high degree of transparency for public through media, and
litigation procedures are public documents, it is a serious disadvantage for
parties involved, because of the revelation of project secrets and deterioration
in cooperative relationships.
On the other hand,
³English Common Law is an adversarial system which traditionally
produces a ³winner´ and a ³loser.´ The winner is generally awarded
³costs´ which generally results in the loser paying the majority of the
bill for both parties. This has resulted in some cases being more
concerned with who pays the final bill than the legal principles
involved in the case´ (Donohoe, 2006).
The adversary systems not only seriously harm the cooperative relationships
in construction project, but also have significant negative impacts on
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opportunities of further cooperation between parties. To sum up the ideas
above, it can be concluded that litigation is unnecessary in most construction
disputes, only when it is the final choice.
2.4 Limitation of existing Alternative Dispute Resolution in UK
There are two major branches of UK construction ADR methods which are
formal binding methods, and informal nonbinding methods. In UK, binding
ADR methods are arbitration and adjudication, and nonbinding ADR
technique is mediation (Chueng et al, 2004).
2.4.1 Procedures and Limitations of Arbitration
2.4.1.1 Procedures of Arbitration
As a binding ADR method, the decision called an award, which make by
arbitrators, is final and binding for parties (Gnaedinger, 1997). This arbitrator
is selected directly by involved parties or is appointed by an arbitration agency
after disputes emerged. The arbitrator acts as both the judge and the jury in
the process of resolving disputes. After hearing the disputes, arbitrator will
give a final and binding decision. If the award is not accepted by either part,
the issue can be appealed to litigation, however because of the support of arbitration by courts, appeals will be generally useless, except serious
misunderstanding or mistakes (Suen, 2002).
2.4.1.2 Limitations of Arbitration
Broadly speaking, Arbitration, as an alternative and binding method of
litigation, has been widely accepted in many fields all over the world, of which
the purpose is to be more efficient and less costly than litigation and to relieve
the pressure on litigation. Incontestably it has been highly successful in the
past, however, with its development, significant problems were appeared on
its procedures and institutions recent years (Gnaedinger, 1997).
Firstly, decisions conducted by arbitrators are often not the most acceptable
solutions by parties, but rather the previous model-decisions which has been
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used before in the same type dispute precedents (Gnaedinger, 1997). In other
words, situations above can be described as, usually arbitrators will give the
solutions of disputes without the relevant investigation on contexts of
construction projects, but rather follow the decisions in precedents, which
result in the inappropriate decisions and the injustice.
Secondly, as a defect in the procedure of arbitration, arbitrators are selected
after disputes developed, it may cause some unequal behaviors in the
selection process (Gnaedinger, 1997). Many construction contracts will
confirm arbitration in advance as the dispute resolution, but arbitrator is
selected after disputes. If arbitrator can be chose before promotion of project
and write into contract, the opportunity of this dishonest behavior will be
eliminated.
Thirdly, although the arbitrator is the unique neutral decision-maker in the
process of arbitration, but nowadays lawyers are often be employed by parties
and act as representatives of disputants, even though traditionally lawyers are
not necessary in arbitration (Gnaedinger, 1997). In addition, unquiet
comments by Treacy (1995) voiced that the increasing development of
institutions and regulations of arbitration procedures, and increasingly strict for
examination of documents before meetings and hearings, which have made
arbitration more and more like litigation. This problem of arbitration has
similarly been criticized by Treacy (1995) that nowadays arbitration is
becoming as expensive and time consuming as litigation. The main idea
above can be explained that, the origin purpose of establishing arbitration is to
create a more effective and efficient method than litigation for resolving
disputes which can not only avoid limitations of litigation but also give
impartial and relatively powerful solutions to disputants, however these
negative trends and problems will drive arbitration to lose its advantages and
become neither effective nor as equitable as litigation.
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2.4.2 Procedures and Limitations of Mediation
2.4.2.1 Procedures of Mediation
Mediation can be described as a voluntary, nonbinding, consensual and
private disputes resolution technique. In mediation, a neutral third party or
individuals meets with the disputants, after hearing to the issues and
discussing with the parties, then a nonbinding suggestion on how to resolve
disputes will be given. The purpose of these nonbinding suggestions mostly
tends to be the reconciliation. If an agreement between disputants can not be
conducted, then disputes will often be submitted to binding arbitration by a
neutral arbitrator (Gillie et al, 1991).
2.4.2.2 Limitations of Mediation
In spite of mediation has been used in construction industry for hundreds of
years, which is believed much cheaper and faster than arbitration or litigation,
however the non-binding character and the relatively low practicality in
construction practices make it not a effective choice for resolving construction
disputes, especially those severe, big involved and late stage disputes (Lurie,
2006).
One reason has been explained by Lurie (2006) that the purpose of mediation
is to resolve disputes on a negotiation or settlement, however non-binding
advices are not powerful enough in many situations, if the positions of parties
are too strong to meet an agreement at the level of nonbinding suggestions,
success of mediation will be impossible during that case. In addition, similar
comment by Gould & King (2002) state that the nonbinding nature of
mediation directly leads to the lack of confidence and certainty in the
procedures, which seriously reduce the possibility of bringing disputes toconclusions.
The other specifically problem indicated by Teo and Aibinu (2007) presents
that during the process of mediation, mediators usually only directly give the
final suggestions which he (or she) believe to be the best to parties, but do not
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estimate the possible strengths and weaknesses to each parties, which
means that the acceptation of negotiation will only depends on the evaluations
of the suggestion by disputants themselves.
On the other hand, if the mediation process fails, disputants have to submit
their issues to another resolution which is stricter and more powerful to deal
with disputes. As a result, the time and money which have been spent on
mediation will be wasted. It will seriously harm courses of project (Mok et al,
2006).
Claims held by Teo and Aibinu (2007) accurately concluded that only some
specific construction disputes which involved in less complex issue and
smaller funding may be generally suitable for mediation. In other words,
claims above also can be understood as that mediation is not an effective and
appropriate choice for big involved and difficult disputes in construction.
2.4.3 Procedures and Limitations of Adjudication
2.4.3.1 Procedures of Adjudication
Dissatisfaction of litigation, arbitration and mediation has resulted in the
establishment of adjudication which is generally more powerful than mediation
and more efficient than arbitration and litigation (Dancaster, 1997).
Under the Housing Grants Construction and Regeneration Act 1996
mentioned before , the right of using adjudication is implied in every
construction contracts in UK (Dancaster, 1997). Whenever disputes accrued
under formal contracts, disputants only need to submit a written Notice of
Adjudication to an adjudication agency, then the adjudicator will be decided
within 7 days. The supporting documents for each party¶s claims are the only
things needed by adjudicator in the process of adjudication. Generally, the
verdict must be decided within 28 days after the selection of adjudicator,
although time period can be extended, but further time period must be agreed
by both involved parties. Appeals to litigation are available, if the decision by
adjudicator is unacceptable by either party, but it is worthy to mention that
most of the adjudication verdicts will be supported by courts in UK, except any
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obvious errors (Dancaster, 1997). Generally speaking, through the procedure
of adjudication, it can be easily seen that the applications of using
adjudication are convenient, in addition the time and form of documents are
strictly limited to make it efficient.
2.4.3.2 Limitations of Adjudication
Although, according to opinions by Dancaster (1997) that the procedure of
adjudication has been limited in 28 days, it is significantly more efficient than
arbitration and litigation, which effectively protect the cooperative relationship
between parties and prevent the projects from superfluously negative impacts
on time and cost. However, Costello (1999) oppositely pointed out that the
limited timetable for adjudicators can cause significant pressures and force
adjudicators to make quick decisions, which may consequently impact the
equity of verdicts especially in some complex and big involved cases. In
addition, the statement by Costello (1999) pointed out that despite decisions
by adjudication are binding to both parties, but unlike situations in litigation
and arbitration, adjudicators have no right to compel the execution of payment
issues, even the principle of adjudication can be indicated as ³pay first, argue
later´. It results in that winning party has to proceed the dispute to litigation for
payment. In other words, whether or not losing party will drive payment
process smoothly, it mainly depends on the value of bills; big bills are
relatively more difficult to be cashed.
Summarily, Costello (1999) presented that despite the strengths of
adjudication are undeniable, however these limitations reflected that the
effectiveness and efficiency of adjudication will be significantly diminished
burning complex and big involved disputes.
Through all above, it can be seen that although UK construction industry hascreated efficient adjudication system for construction disputes, but it has been
described more suitable for relatively small and medium-sized than big
involved construction disputes. Consequently, litigation and arbitration are still
the only choice for those big involving and complex construction disputes. In
addition many serious limitations of litigation and arbitration have been
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critically discussed before, and proved that in most cases they are actually not
appropriate dispute-resolving approaches for construction industry.
2.5 Introducing DRB as a possible solution for existing limitations
2.5.1 Procedures of DRB
The dispute review board is a neutral impartial group which directly get
involved in construction project with three members, two of them are selected
directly by each parties, one by project owner and one by contractor, then the
board chairman as third member will be picked by preceding two board
members, meanwhile three members must be approves and agreed by both
owner and contractor (Menassa et al, 2010). The use of DRB and the board
members should be written into the contract before the promotion of project
(Menassa et al, 2010). In addition, any individual communication between
board members and employees belonging to the contractor or the owner will
not be allowed during the life of DRB, and all communications should be
conducted by the board chairman. Each board member and parties should
acknowledge that board members are not representatives or advocates of the
party that selected them. As the principle of DRB, the whole board must be
objective, impartial and independent, and the members always be considered
as full experienced experts in field of relevant project (Menassa et al, 2010).
During the process of project, board members need to meet periodically with
project manager to review the progresses of project and to keep up to date
with any contract changes, problems and possible disputes. During these
periodical meetings, the project managers as the representive of parties make
a presentation of the project progresses since the last meeting. Possible
changes and problems will be discussed in following informal discussions
(Menassa et al, 2010).
When there is a dispute, a more formal meeting will be conducted. A
presentation will be make by disputant to DRB members and it is followed by
the other party state its argument, and each party has rights of refutation.
Then the board members can ask any questions they may have, and usually
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an informal discussion follows. After a full discussion and hearing, the
members of the board meet privately and make the decision. The decisions of
DRB is nonbinding on either party, however, if the dispute can not be settled
and have to go on to litigation or arbitration, the records from DRB are
available as evidences (Kheng, 2003).
2.5.2 Critically analyses the strengths of DRB
Firstly, according to Thompson et al (2000), ³the American Society of Civil
Engineers has introduced the Dispute Review Board (DRB) as a
complementary provision to standard U.S. construction contracts and
practices.´ In other words, the DRB is conducted specially for construction
industry, which means that it is highly relevant and suitable for resolving
disputes during construction projects with full considerations about the
situations and characteristics of construction industry (Thompson et al, 2000).
In this aspect, it significantly differs from other ADR methods or litigation. With
extensive use in many other fields, other dispute resolutions may lack of
effective methods or targeted procedures for highly complex construction
disputes.
Secondly, the estimate by Harmon (2003) indicates that DRB can highly
confirm the equity of judgments for disputes. It is because that the use of DRB
and the selected members need to be written into the contract before the
promotion of project and selected person should be agreed by both owner
and contractor, which significantly protect the neutrality and equity of the
board. On the other hand, Thompson et al (2000) further stated that with the
high neutrality and equity, the decisions made by DRB are more trustable and
relatively easier for disputants to accept and practice.
Thirdly, the claim by Harmon (2003) voiced that instead of unacceptableexpense and time delay in other resolutions, DRB has significantly
advantages on effectiveness and efficiency for resolving construction disputes.
The periodical meetings can keep board members up to date with any
progresses, changes and possible disputes in project. The familiarity of
project can significantly accelerate the decision-making process, and also big
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disputes can be exchanged into small and early stage ones which are much
easier to deal with. In addition, according to Tompson et al (2000), DRB
members are usually selected for their knowledge and technical expertise in
the relevant type of project. It also strongly supports the effectiveness and
efficiency of DRB.
In another aspect, according to Tompson et al (2000), as same as other
informal ADR methods, DRB is a private informal dispute resolving technique.
In other words, unlike litigation, the documents of dispute and the situation of
project will not be published, which effectively protect the privacy of parties
and business.
In addition, Tompson et al (2000) state that, ³experience has shown that this
method tends to result in more cooperation between the project managers for
both the owner and the contractor, resulting in an old-fashioned team effort.´
Menassa et al (2010) specifically indicate that the use of attorneys is greatly
discouraged in both DRB and dispute presenting meetings, which aims to void
adversarial climate as much as possible. It has significant benefits on
cooperation relationships between parties, especially in some international or
big involved projects, the friendly cooperation experience greatly increase the
opportunities for further business.
Finally, as the disadvantage of DRB, the price of employing DRB is generally
higher than other dispute resolutions, because the salary of experts will be
counted by days (Menassa et al, 2010). Moreover, Tompson et al (2000)
claim that the use of DRB is mainly suitable for large and complex project
such as highways and tunnels.
2.6 Conclusion
The effectiveness of a dispute resolution depends on whether or not it is
appropriate for the type of dispute, especially in construction industry.
Through those literatures, it has been proved that litigation, as the most
powerful method, is necessarily needed as a final method when all other
processes fail, however it is inappropriate and unnecessary for most
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construction disputes, mainly because of the unacceptable cost and time
delay. As a result, a set of alternative dispute resolution have been created, in
UK for construction, which mainly are arbitration, mediation and typically
adjudication. It can be seen through literatures that, mediation and
adjudication only effective and suitable for relatively small constructionprojects. And arbitration, with its negative development, is more and more like
litigation and have generally similar limitations. Then the gap has been found
that for those complex and large construction projects, there is not appropriate
method in UK for construction. Moreover, costly and time consuming disputes
usually connected with the complex and large projects, and it is significantly
harmful. Therefore in terms of these projects, it is worthy to consider that
higher inputs for effective and suitable resolution brings better outcomes to
dispute and parties¶ interests. After the study on the procedures and strength
of DRB, it can be said that DRB can effectively and appropriately fill the gap of
dispute resolutions for large construction projects in UK.
3. Methodology
The research and the selection of information has begun from April 2011, as a
secondary research, this paper is a gap searching approach, through the wide
reading and study on existing literatures and studies which are based on the
knowledge in the fields of civil engineering management, construction
disputes resolutions, construction contracts, contractual relationships and law,
the topic and thesis were finally decided at May 2011 by the gap of
construction dispute resolutions in terms of the large and complex
constructions in UK.
The method of this project is primarily about the comparison and the feasibility
analyses and combined them together to draw conclusions. As the secondary
comparison and secondary analyses, they are all base on the previous
literatures and researches which are related to traditional dispute resolutions,
alternative dispute resolutions and the condition of UK construction, in
addition, the attitude of UK legal system towards ADR and UK contractual
conditions and relationship between involved parties are also needed to
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analyses as the background of topic and a arguable part of secondary
feasibility analyses.
The sources used in this project are academic articles primarily from civil
engineering journals and statistics by academic groups, because the changes
in relevant fields are slow, as results there is generally no need to search for
up-to-date information through website. And with a widely discussion in
relevant field, the analyses in this project should be critical.
Firstly, the history of the development in dispute resolutions needs to be
studied as a fundamental knowledge of relevant field. Creighton¶s overview of
ADR (2000) gives a general idea about relevant field and useful specific
information on the development of ADR.
Secondly, according to Devilling (2008) and Steen¶s article (1994) the
limitations of litigation on resolving disputes in constructions were critically
specified, although the date of two articles are be separated by more than 10
years, however the opinions are generally similar. Therefore, the older
information and ideas are also useable.
Thirdly, with three available ADR methods in UK construction industry as
followed, the procedures and limitations of mediation, arbitration and
adjudication have been specifically described by Treacy et al (1995),
Gnaedinger (1997) and Dancaster (2008). By combining them together, the
gap in UK construction dispute resolutions was found as no appropriate
method for managing disputes in large constructions.
Finally, the procedures, strengths and weakness of DRB can be studied from
Thompson et al (2000) and Menassa et al (2010). Through the principle and
procedures of DRB, it can be seen that the gap can be generally filled by DRB.
To maintain a critical position of this project, the feasibility of introducing DRBwill be further analyzed.
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4. Discussion
The information above about the comparison information between existing
approaches and DRB, as far as the gaps in the field of dispute resolution in
large construction projects in UK, which leads to the consideration about
introducing DRB into UK construction industry.
In this section, this paper will focus on the performance of DRB in Model of
Dispute Development and Resolution, and the UK legal system and the
attitude of legal system towards ADR in construction industry as the
environment of DRB, and analyses the feasibility of introducing DRB into UK.
Essentially, the primary issue, this paper has talked about in preceding
section and wants to discuss in this section, is mainly about the dispute
management of DRB in complex and large construction projects.
Fundamentally, it is worthy to briefly describe the origin of construction
disputes and to understand how they will influence the projects. In terms of
those large construction projects, they are all long-term transactions with high
degree of complexity and uncertainty, and the prediction of all details during
process of project before the promotion is impossible, as a result, problems
and contractual changes always occur during the process and will not beclearly addressed by the contract, if these problem and changes are not
treated appropriately, then exchange to disputes (Mitropoulos et al, 2001).
These situations bring us three basis factors controlling the occurrence and
development of construction disputes, which are project uncertainty,
contractual problem, and opportunistic behaviors (Mitropoulos et al, 2001).
And there is not one primary factor as the principal cause of disputes, but a
combination of three key factors (Mitropoulos et al, 2001).
More specifically, first, ³uncertainty means that every detail of a project can
not be planned before work begins´ (Mitropoulos et al, 2001), especially
during large construction projects, with a high degree of uncertainty, many
initial plans and specifications have to be changed, and these changes break
the pro-decided balance of interests and relationships, as results, involved
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parties will have to deal with large number of unexpected situations during
projects. Second, ³A Contract is a promise or the set of promises for the
breach of which the law gives a remedy or the performance of which the law
in some way recognizes as a duty´ (Mitropoulos et al, 2001), in which the duty
and job of each participant has been decided specifically has a balancedsystem, but the changes and problems will significantly influence the balance,
where cause disputes (Mitropoulos et al, 2001). Third, as the changes and
problems are unavoidable, any proposal towards the contractual changes
may result in a disagreement by other parties, which because contractual
changes can break the pro-planned balance of interests and harm parties,
and usually no party will abandon or move their positions to fit the interests of
whole project, these selfish protections of self-interests by parties can be
generally named opportunistic behaviors (Mitropoulos et al, 2001). Moreover if
without an appropriate resolution, protection of self-interests by different
parties may drive them far away from settlement (Marcus, 1998). The three
factors combined together and influence projects, and the model of dispute
development and resolution can be presented as Figure 1 shows. Base on
this model, the performance of dispute review board (DRB) will be analyzed.
Sources: J ournal of construction engineering and management , p 223-231
FIG. 1. Model of Dispute Development and Resolution.
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Primarily, the main principle of dispute review board (DRB) is to settle dispute
³as soon as possible´ (Tompson et al, 2000). The periodical visiting and
meeting on the project not only help board members to be familiar with the
situations of project and parties and to know where disputes more likely occur,
but also help to build harmonious working relationships between parties. Andthe ³as soon as possible´ is contained one other significance by the creator,
which means to bring a dispute to the DRB as fast as that the involved parties
can not drive a satisfactory agreement (Jones, 2006).
Although the uncertainty as the mainly source of disputes can not be avoided,
however the situations of project which include uncertainties, contractual
problems and opportunism are all clearly understood by relevant
professionals and experts in DRB (Tompson et al, 2000). Even if the problems
occur, this first hand information, knowledge and experience can help board
members to settle the problem soon after they occur instead of submitting
claims to a resolution agency after small problems exchange to serious
disputes (Tompson et al, 2000). Marcus (1998) have similarly stated that,
almost all other ADR concepts address problems underlying the dispute long
after it has surfaced and usually after the project is completed, but the
philosophy of the DRB concept advocates that problems be exposed and
resolved during the proceeding of project.
On the other hand, an unsettled dispute inhibits communication and fosters an
adversarial relationship between owner and contractor, often resulting in even
more disputes (Ellison & Miller, 1995). Oppositely, as Tompson et al (2000)
stated that the existence of DRB in a project can encourage the parties to
consider the differences between each other more objectively and realistically
and to improve the condition of communication between different positions. As
a result, with more objective and unhindered communications, the
agreements will be much easier to achieve. In other words, with the reduction
of disagreement on problem, the likelihood of dispute is significantly reduced.
In addition, the existence of DRB also can imply and encourage parties to
resolving problems themselves and avoiding formal reference to the board
(Menassa et al, 2010). It can significantly improve the relationship between
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parties, make a cooperative team-work effort instead of traditional competitive
climate in construction industry.
It can be clearly seen from above that the principle of DRB base on the
prevention and improvement at beginning of the project as an active method.
The prevention means to prevent the unavoidable problems turning into
serious disputes, and also means to exchange serious disputes to small ones
and easier to settle. Unlike other passive dispute resolutions, get involved in
the situations long after the occurrence of problems, often after many small
problems combine together and become more complicated ones and turn into
serious disputes (Costello, 1999). Moreover, if submit disputes to a
inappropriate dispute resolution, which without a clear understand of the
situation, condition and development of the project and dispute, it will cause
an unacceptable time delay for people to get familiar with the project and
disputes. Often after a long period of preparation of formal documents and
long term hearing and competition, although the final decision is established,
but if the ³loser´ party can not accept the decision, the case is more likely to
be appealed to a more powerful resolution (Costello, 1999). During this
process, time and money have been seriously wasted, and parties have been
driven far away from the goal of whole project, because the climate of
adversary has arisen and harmed both parties and projects. On the other side,as mentioned before, the DRB pay lots of attention on the improvement of
relationship between parties which means to improve the condition and
opportunities for both project owner and contractor to have communication
with higher degree of objective and cooperative (Chan et al, 2009). Essentially,
all construction projects need two or more participants, this situation makes
the characteristic of all project present as a typical teamwork system and will
not change ever. However, most existing dispute resolving system focus
primarily on whose responsibility and who pay the final bills, the competitiveattitude by resolutions significantly drive involved parties away from
cooperation (Costello, 1999). As a result, during process of the project, the
adversary climate between parties negatively affects the settlement of early
problems and increases the possibility of serious disputes. Oppositely, with
the existence of DRB in a project, the periodical meeting will not replace the
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normal project progress meeting (Chan et al, 2009), which gives parties extra
chances to communicate with each other and have opportunities to discuss
any disagreement and possible changes and problems with confident
impartial professionals and experts.
On the other aspect, as informal and nonbinding are still the naturals of DRB,
there are some reasonable considerations about whether the decisions by
board members are compulsory enough for disputants to follow, and doubts
by Donohoe (2006) stated that legal system regards decisions by DRB as
³agreement to agree´ which are considered to be unenforceable in the law.
However, to be realistic, the construction projects have high degree of
complexity, expertise and uncertainty, and it is overly complex for anyone to
get involved to resolve a dispute temporarily. If there are suggestions from
relevant impartial experts and professionals who are also familiar with the
situations of project, it can be said that the previous suggestions are
significantly more convictive than most binding decisions by other formal
procedures. It is because that, firstly, the decision makers have not interests
get involved in the project and the selection of members are decided before
the promotion of project also before the occurrence of disputes, which results
in the completely impartial performance of board members and the high
degree of reliance of parties towards decisions. Secondly, through theperiodical meetings board members are familiar with and have confidence on
the situations of project, and discussions between parties and board members
can help each party clearly understand where will be the problem and where
is the appropriate positions for the advance of project. On the other hand, less
than have to, neither parties want to solve their disputes through litigation
(Steen, 1994). Therefore, although the decisions of DRB are nonbinding, but
the effectiveness, equity and authoritativeness of DRB make the decisions are
compulsory enough for parties to follow.
Through discussions above, basis for the ³Dispute Development and
Resolution Model´, it can be said that DRB tends to focus primary attention on
the origins and early stages of the Model which are uncertainty and problems
during projects, and have significant effectiveness on it. In most cases, the
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prevention and improvement are highly workable and suitable. According to
the pamphlet Avoiding and Resolving Disputes during Construction , the
publication indicated that the experience of dispute review board has proven
greatly successful (Frederick , 1997 ). The California Department of
Transportation and the State of Hawaii used dispute review board on complexprojects (Frederick , 1997).o n the other hand, the existence of DRB have
significantly positive affect the communication conditions between parties
through periodical meetings and impartial involvement, with the unhindered
communications, the possibility of that small problems and contractual
changes exchange into disputes can be significantly reduced. In addition,
because of the effectiveness, equity and authoritativeness of DRB, the
decision from board members are authoritative and highly acceptable for
parties, which make settlements much easier to achieve during the progress
of project. The analyses about DRB according to the dispute Model shows
that DRB as a nonbinding dispute resolution specifically target at construction
project is significantly effective and authoritative.
In terms of UK, the legal system and the attitude of legal system towards ADR
in construction industry as the environment of DRB are also needed to be
analyzed. As mentioned before, although the DRB was created in the USA,
but basically as Loosemore (2009) stated that there are many similaritiesbetween the UK and the USA in the structure of legal systems and also in
how disputes are resolved, as they both accord with the English common law
and the law of precedent. The similar legal structure between the UK and the
USA can be the judicative foundation of using DRB in the UK. In some
aspects, the use of alternative dispute resolution needs to be suitable and
supported by law (Cheung, 1999), it is because that if a decision made by an
informal resolution and without the confirmation by courts or the effectiveness
of the informal resolution without the ratification by legal system, then therewill be no construction choosing this resolution to solving problems, unless the
problems were successfully settled, or it will be the waste of time and money
because the decisions by this resolution helpless and useless in further
approaches or litigation. Therefore, UK and the USA share generally the
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same legal system and principle is very important and beneficial for the use of
DRB in UK.
However, there are significantly different attitudes between UK and the USA
towards the origin of construction disputes (Brooker & Lavers, 1997). Scholars
in the UK believe that the primary root of the disputes in construction projects
is the contracts, they further stated that the improvement of contracts will
cause the better management of project and therefore control disputes
(Brooker & Lavers, 1997). It makes UK scholars pay more attention on how to
improve the structure and the expressions in contractual contracts, instead of
research on dispute resolutions. But fortunately, according to Brooker &
Lavers (1997), the U.K. and U.S. construction agencies have recognized and
paid attention on the same basic problems in construction projects, which are
³adversarial attitudes and disputes arising primarily due to lack of
communication, distrust, misinterpretations of contracts, uncertainties of
project and responsibilities´. These basic problems highly resemble the
situations which the DRB tends to improve. In addition, if introduce DRB into
UK construction, it will not cause any conflicts within existing contractual
institutions in UK (Loosemore, 2009). As a process of reform the management
of disputes and the complement of contrasts, adding the DRB to a project
does not replace any part of the contract or the existing institutions. And thereare only simple modifications on contracts to provide DRB as an additional
process without any changes on the standard of contractual documents
(Menassa et al, 2010). In other words, although the UK and USA have
different considerations on how to deal with the problem in construction, but it
is about generally the same factors. Moreover, towards these factors, the
DRB has proved highly effective through preceding discussions.
In other aspect, although in the past, most decisions made by ADR can not be
accepted by British legal systems (Brooker & Lavers, 1997), however through
some observations on recent construction cases, significant changes in the
attitude of English judiciary towards ADR can be found, and these changes
drive the position of English Law to accept ADR within the civil justice system
(Donohoe, 2006). As Mr. Justice Lightman claimed that ³most ADR methods
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are not in law compulsory, but alternative dispute resolution is at the heart of
today¶s civil justice system´. In addition, according to Donohoe (2006), despite
British law will not enforce the use of ADR on construction projects, but it
strongly encourage parties to choose ADR as the dispute resolution.
Moreover, further stated by Donohoe (2006) that harsh cost punishment byEnglish courts will be pressed on those parties who unreasonably reject the
decisions by ADR before proceeding the case to litigation. This situation gives
a significantly advantageous condition of promoting ADR in UK construction.
As a significantly effective ADR method, the feasibility and necessity of
introducing DRB into UK construction is undeniable.
To sum all the discussions above, firstly, base on the dispute Model and three
basis factors of construction disputes, DRB draw significant attention on the
early stage of disputes, and to improve the condition of communications
between parties, it is proved that DRB can effectively reduce the opportunities
of occurrence of disputes and promote cooperation relationship between
parties, then make authoritative and appropriate decisions. Secondly, with
regards to the UK legal system and its attitude towards ADR, information
shows that the negative attitude of UK legal system towards ADR is positively
changing, and the support of using ADR in construction cases by UK legal
system is strong, which significantly increase the feasibility and necessity of introducing DRB into UK for construction. In addition, through literature review
it has been proved that in large and complex construction project such as
tunnel and highway, there is not an appropriate and effective approach for
dispute management in UK, but this problem can be fixed by introducing DRB
into UK construction industry.
5. Conclusion
In UK construction industry, the existing construction dispute resolutions can
be divided into two mainstreams which are litigation and ADR methods, and
there are three available methods belong to ADR which are mediation,
arbitration and adjudication.
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Through the literature review, it has been shown that litigation as the strictest
and most powerful resolution is not appropriate and necessary for most
construction disputes, not only because it is a costly and time consuming
procedure, but also due to its adversarial nature and the lack of consideration
about the specific project context. In the other aspect, the limitations of litigation in resolving construction disputes lead to the use of ADR methods as
alternatives. Although to some extent the mediation, arbitration and
adjudication are effective in some construction situations. However the
limitations of them have been clearly described by literatures such as
mediation only give nonbinding suggestions and without any evaluation on
decisions which result in very low persuasions towards disputants, and
arbitration have a negative trend of development on increasingly high degree
of routinization and systematism in recent years which result in a clumsy
simulation of litigation and share same limitations with litigation, despite
adjudication is supported by law and have a effective and efficient procedure,
but its effectiveness and efficiency are significantly limited in large and
complex constructions. These descriptions indicate the gap in field of UK
construction dispute resolution that the litigation and arbitration are the only
choice for resolving disputes in large constructions.
After studying the procedure, principle and performance of DRB, it has beenproved that the gap on dispute resolution in large constructions can be
appropriately filled by introducing DRB into UK. it is because that DRB not
only contain the advantages of existing ADR method such as effectiveness,
efficiency and privacy, but also improve the limitations of existing approaches
such as primarily focus on the early stage of dispute and reduce the possibility
of dispute by improve the relationships and communicated condition between
parties and make efficiently convictive decisions. In addition, the analyses
underlying the Model of Dispute Development and Resolution proved thatDRB is actually effective on resolving disputes in construction and significantly
helpful to maintain a cooperative relationship between parties which is greatly
important for the development of construction industry.
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Finally, the feasibility analyses underlying the British legal system and the
attitude of legal system towards ADR as the environment of DRB shows that
the attitude of legal system towards ADR are significantly positive changing to
support the use of ADR in UK, moreover there are not any conflicts found
between DRB and existing contractual institutions, which extremely increasethe feasibility of introducing DRB into UK.
Although this research has its limitations, but through all these analyses and
discussions, it can be said that DRB is significantly suitable and helpful for UK
construction industry.
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