Multistep Dispute Resolution in Design and Construction Industry

Abstract

The construction industry has a propensity to disputes dating back thousands of years, at least to the time of the Hammurabi Code. As a result, the industry devised alternative methods for dispute resolution to avoid the civil litigation. Since the late nineteenth century, the traditional two-step process has been included in standard construction contracts. The engineer first renders a determination, followed by binding arbitration if either the owner or contractor disagreed with the engineer's decision. In the last half of the twentieth century, the industry has reexamined this traditional two-step method. This examination has produced a multistep dispute resolution process consisting of ~1! loss prevention and dispute avoidance, ~2! direct negotiations, ~3! facilitated direct negotiations with preselected standing neutrals, ~4! issue specific outside neutral facilitated negotiations, and ~5! binding adjudication. This paper examines the evolution of this multistep dispute resolution process within the construction industry.