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Analysis of construction disputes

shows what decision is the most suitable to undertake

 

STUDENT PAPER

By Ugo Grahek

SKEMA Business School

Paris, France

 


 
Abstract

In our days, construction projects are everywhere around the world, whether in depend on building a school, a building or even a house. However, this sector currently suffers from many big issues which are the disputes that occur in its very own project and contract management.

The main objectives are to identify and understand the leading causes of disputes in construction projects. To do so, we will have to establish a root cause analysis, then identify and analyze the different alternatives solutions that are suitable to deal with the latter. At the end of those research and analysis, it will result in an indication on a clear understanding of the issues and on what solution to implement in project management such as the arbitration alternative or the prevention of disputes.

Keywords: Construction disputes, contractors, owners, contract issues, causes of disputes, alternative solutions, justiciable issues.

Introduction

We all one day asked ourselves “How long is it going to take?”, “Is the construction not finish yet?” or even “Why is there anybody working on this site anymore?”. In our society, Construction sites aren’t uncommon nor unfamiliar to citizens and are now occupying a big part in the daily life of an inhabitant of a city. Whether it is concerning an urban renewal, a road development, and repair or the creation of a new building, constructions are now everywhere around us. But the three previously asked questions are not often answered the right way as the response lives in the contracts and the management of the construction project.

Numbers are indeed blatant as in France, the number of litigations in this field has increased and represented more than “80% in 2014 while the delays and the abortions of projects have seen an increase of 20% between 2015 and 2017”[1]. However, when it comes to resolving issues to achieve constructions, it requires a lot of resources and time as in the USA, “it takes an average of 16.2 month and an average value of 29.6 million to resolve disputes”[2], while “in the Middle East, 13.7 months are required in order to solve an issue.”[3]

In fact, it is important to know that working on a construction project will include many different parameters and criteria that are going to decide whether it keeps a good timing, a sufficient budget and quality on what have been previously planned.

However, construction is one of the sectors that is commonly facing a lot of issues on several aspects, especially when it comes to disputes, which will impede the achievement and success of a project. As in every construction project, it requires different parties such as the owner, the contractors and the subcontractors which can lead to plenty of disagreement, disputes and justiciable issues.

As the latter is closely linked with justiciable issues and dilemmas, it requires a solution which is usually brought by a 3rd party such as a negotiation arbitration or a mediator which will assist the owners and contractors.

Project management and managers in construction are facing major issues in terms of how to approach the problem. As it is concerning the contracting steps and different criteria of such a project, contract and project managers must be in constant awareness of risks, matters and causes of disputes. In fact, they must integrate into their work that non-consideration of those causes, can lead to a project delayed or even the end of it. On another hand, if the causes and risk are acknowledged and known by the project members, it is easier to prevent the consequences that can lead to disputes.

Additionally, as future project manager in this area, it is important to highlight the different cases that can occur during a project or in a contract to avoid them.

To understand the latter and the previously stated numbers, we have to go through the main causes of disputes and issues that are, in fact common and well-known in this industry. The main reasons for failure come from mainly people, environment and measurement.

Indeed, the lack of education, experience and knowledge between contractors and employees, especially managers are relevant causes of disputes and lead to errors and omissions in the contract document. Those are one of the most common and major disputes in the construction area.

Also, and as said before, the environment has also a big role to play in root causes, differing site conditions is included in major causes and is becoming a more and more important problem to take into account in this project.

Finally, and without forgetting the measurement that leads to the failure of understanding each criteria of the contractual obligations by each contractor and the failure to correctly handle all the parameter written in the contracts are both issues that are appearing in this sector.

The aim of this paper will be to have a complete understanding and a strong analysis of the major causes of disputes and justiciable issues in the construction industry that leads to delays and failure of projects and work field.

A second goal is to understand how to facilitate the project management in this sector by identifying issues that impede the updates, creation and acquirement and the achievement of organization project strategic and tactical benefits.

We can now easily establish the question that we will be able to answer through this paper: How to understand the leading causes of construction disputes in project management?

More…

To read entire paper, click here

 

Editor’s note: Student papers are authored by graduate or undergraduate students based on coursework at accredited universities or training programs.  This paper was prepared as a deliverable for the course “International Contract Management” facilitated by Dr Paul D. Giammalvo of PT Mitratata Citragraha, Jakarta, Indonesia as an Adjunct Professor under contract to SKEMA Business School for the program Master of Science in Project and Programme Management and Business Development.  http://www.skema.edu/programmes/masters-of-science. For more information on this global program (Lille and Paris in France; Belo Horizonte in Brazil), contact Dr Paul Gardiner, Global Programme Director [email protected].

How to cite this paper: Grahek, U. (2019). Analysis of construction disputes shows what decision is the most suitable to undertake, PM World Journal, Vol. VIII, Issue II (February).  Available online at https://pmworldjournal.net/wp-content/uploads/2019/02/pmwj79-Feb2019-Grahek-analysis-of-construction-disputes-shows-decision.pdf

 



About the Author


Ugo Grahek

Paris, France

 

 

 Ugo Grahek is a French student at SKEMA Business School in Paris. For his two first year as a college student, he studied economic and management in ESDHEM (Lille, France) before been enrolled in an exchange program for one semester in North Carolina State University (NCSU, North Carolina, Raleigh, USA) in the same degree.

Then he enrolled in SKEMA Business School (Lille, France) where he started to follow the business track “Programme Grande Ecole” and integrated an exchange program of one semester in Suzhou (China). He recently pursued his education by integrating the specialization “Msc Project and Program Management and Business Development” in SKEMA BS Paris.

After finishing his studies and graduating, his main objective is to continue his adventure and improve his experiences in project management. He is willing to integrate a company in the construction sector.

Ugo Grahek can be contacted at [email protected] or on LinkedIn https://www.linkedin.com/in/ugo-grahek-a09701130

 

[1] A.F – The Monitor, (25/08/2017) Case study – The number of disputes in construction has increased: https://www.lemoniteur.fr/article/le-nombre-de-litiges-par-travaux-a-explose-en-deux-ans-selon-une-etude-de-la-clcv.838634

[2] E. Misonzhnik – National Real Estate Investor, (29/05/2015) – 5 most common causes of construction disputes: https://www.nreionline.com/construction/5-most-common-causes-construction-disputes

[3] R. Nelson Williams – Arcadis, (09/05/2017) – What are the most common causes of construction disputes in the middle east: https://www.arcadis.com/en/middle-east/our-perspectives/2017/05/what-are-the-most-common-causes-of-construction-disputes-in-the-middle-east-/