Conflict in construction contracts

Jorss, Peter R. (1989) Conflict in construction contracts The University of Queensland:

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Author Jorss, Peter R.
Title of report Conflict in construction contracts
Formatted title

Publication date 1989
Place of publication The University of Queensland
Total pages 106
Language eng
Subjects 1503 Business and Management
Formatted abstract
Compared to the social and economic climate and the levels of co-operation between owners, superintending engineers, and contractor's of 20 years ago, today's poor contracts, uncertain economic climate and formidable competitive environment have led to an explosion of contractual claims and litigation. The increasing role of non-technical audit and review agencies has led to narrow legal interpretation of progressively more defensive, and more restrictive contract documents.

In the end, the owner must pay, because no contractor has the assets or financial backing to support a project involving major losses. It is in the interests of all parties therefore to re-assess the causes and resolution of conflicts under construction contracts.

This paper sets out to research the literature on four specific areas of conflict and look for links between them. These four areas are:
The Theoretical Conflict Model
The Theory of Conflict Resolution
Conflict Variables Under Construction Industry Contracts and Related Avoidance Strategies.
Techniques for the Resolution of Conflict within Construction Contracts.

A conflict diagnostic model is developed from the format used by Greenhalgh (1986). Each of the eleven conflict variables listed on this conflict diagnostic model is examined in detail for relevance to the construction industry.

The paper then examines in turn the various basic parameters or conflict variables which lead to disputes under construction contracts. Each of these conflict variables is discussed in some detail together with relevant avoidance strategies.

The paper then compares the traditional dispute resolution techniques of commercial arbitration and ligation with the modern "Alternative Dispute Resolution" techniques.

The relative efficiency of the various techniques is discussed together with comparative implementation times and costs. The advantages and disadvantages of each have been extracted from the literature surveyed.

The conclusion is drawn that there needs to be more attention to the elimination of the conflict variables listed; there needs to be wider acceptance of the cost effective, time efficient, confidential, and non-binding "Alternative Dispute Resolution" procedures.

In the long run there is considered to be need for a radical change in the training in Technical Universities and TAFE Colleges to encompass courses on management skills and practical construction techniques.

Further, there is a largely untapped field of applied research for post-graduate study and for research by industry bodies and professional associations in the fields of conflict management and resolution and construction industry disputes.

A model of a "construction contract" is drawn up in Figure 2.3 on page 15.

Throughout the paper the terms "owner" (from U.S. usage), "client" (common commercial usage) and ''principal'' (the standard legal term) have been used interchangeably for the organisation which requires the project to be constructed.

The terms "superintendent" and "engineer", (equivalent to the American "architect/engineer') have been used interchangeably for the person appointed by the owner to supervise the work of the contractor.

"Contractor" has been used throughout to mean the person bound to execute the project under the contract.

"Works" and ''project'' have been used interchangeably to mean the whole of the work to be executed in accordance with the contract.

The terms "bid" (U.S. practice) and "tender" (Australian and U.K. practice) have been used interchangeably for the offer made by the contractor and accepted by the owner to construct the works under the contract.

The methodology used has been to research the literature relevant to both the theory of conflict and disputation within the construction industry, by means of a personal search for references and a computer search carried out by the Main Library of the University of Queensland on behalf of the author. The information obtained has been put together in a logical format in the light of some 25 years experience in the construction industry, including strengths and weaknesses, checklists of procedures, and so on.

An informal ranking of the contract conflict variables under construction contracts has been attempted in terms of their perceived importance within the industry.

Document type: Research Report
Collection: MBA reports
Citation counts: Google Scholar Search Google Scholar
Created: Mon, 10 Jan 2011, 11:44:17 EST by Ning Jing on behalf of The University of Queensland Library