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Introduction
In the construction process, stakeholders must work as a team to deliver a project on time with
the specified quality. Often, however, parties to the process are unable to place the team concept
above individual profit motives, and consequently, disputes arise creating delays and additional
costs for each participant (Hohns, 79). The construction industry is regarded as one of the most
conflict and dispute ridden industries, which has resulted in it being one of the most claim
orientated sectors. Thus, with the noticeable growth of disputes due to complexity of nowadays
projects more efficient means of settling disputes are needed. Traditionally, Litigation in the
courts has been the resort for disputing parties to settle their differences, often a costly and long
winded means of resolving a dispute, but that is changing (Cook, 2016). For some years there
has been growing dissatisfaction with litigation and arbitration as a means of settling
construction disputes, and increasingly parties have been turning to alternative dispute resolution
(ADR).
Alternative Dispute Resolution (ADR) is a term used to describe a range of procedures designed
to provide a way of resolving a dispute as an alternative to litigation, as the ADR methods offer
several perceived advantages over litigation to an extent that courts often require parties to
pursue these alternatives before litigating (Cornell Law School, 2018). ADR originated in the
United States in the 1970s in response to dissatisfaction with traditional litigation as a means of
dispute resolution. As the volume of litigation increased dramatically, the cost, delay and
uncertainty of outcome were motivating factors in the development of alternative methods. The
continued expansion of ADR can be attributed to the following advantages (Barkai, 2003):
1. Usually reduced cost and almost always reduced time to reach a settlement.
2. Privacy of proceedings (no public record).
3. Disputants involved in formulation of settlement agreement (except in arbitration).
4. No excessive pre-trial proceedings.
 5. Neutral third party usually has technical subject expertise.
6. Flexibility of rules and procedures. Parties involved in setting or modifying guidelines.
7. Preservation of business relationships due to softening of adversarial roles (win-win).
ADR methods tend to fall into one of two categories:
 Adjudicative ADR
 Non-Adjudicative ADR
The former involves an independent third party reaching a decision on the merits of the dispute
regardless of the disputants’ interests and his decision is final and binding, whereas the latter
focuses on assisting the two parties to negotiate a satisfactory settlement.

ADR Methods that are most commonly used

Alternative Dispute Resolutions can be found usually in the last clause of a contract. There are
binding and non-bonding methods as aforementioned, and this will be stated in the contract as
well as when the chosen method will become mandatory (Nabatova, 2017).

Non-Adjudicative ADR Methods

Negotiation
This is the least formal ADR method and the most common due to its simplicity and due to the
fact that most disputes begin with negotiations, attempting to resolve the issue. The negotiations
are private, and unbounded by the presentation of evidence. If agreement is reached, it is
enforceable as a contract.
Pros of Negotiation:
 The most inexpensive and the fastest ADR method.
 Private, risk-free and more flexible than court trials.
 Maintains good relationships between parties.
Cons of Negotiation:
 This method doesn’t guarantee a resolution or good-faith.
 It can be a stalling tactic, where a party cans benefit from the delays associated.
 The method lacks the help of a neutral third party.

Mediation
Mediation is a third-party process in which a neutral third party, the mediator, assists the parties
to reach a negotiated settlement but the mediator has no power to decide the issues in dispute.
There are a variety of mediation styles or approaches and they can vary from pure facilitators
who assist the parties in their negotiations to evaluators who express views on merits and
outcomes to encourage settlement. Where commercial mediators tend to use the evaluative style
(Barkai, 2003). Also a significant variation from other ADR methods is the use of private
meeting where the mediator meeting with one party alone due to the mere fact that the mediation
is not going to decide the dispute. However, if an agreement is reached it can be enforceable as a
contract.
Mediation as a non-adjudicative ADR method finds great value in an “interest-based” approach
to dispute resolution. And since mediation is non-binding informal process there are no strict
rules to the procedure conduction (Nabatova, 2017). However, the consultations are private and
confidential and can’t be used in further proceedings.
Pros of Mediation:
 Parties can control their case and directly engage through the negotiation of the
settlement.
 The mediator reviews the dispute objectively, hence assist the parties in exploring
alternatives.
 Mediation can take place at an early stage in the dispute, hence settlement can be reached
more quickly than in litigation.
 Reduced legal and overhead costs.
 Parties enhance the likelihood of maintaining their business relationship
 Mediation, unlike litigation, can look forward to a creative solution without requiring the
finding of fault.
Cons of Mediation:
 All parties’ rights may not be adequately protected as this method values an “interest
approach”.
 If claim could be settled in small claims court, mediation may be prohibitively expensive
 Incompetent mediators may hinder resolution and as a result, if the parties do not come to
an agreement, the dispute will remain unresolved, the cost of mediation will have been
wasted.
Conciliation
this method is like mediation but in which the third party, the conciliator, takes the initiative to
bringing the two parties together and in suggesting possible solutions in order to achieve an
agreed settlement. Some people argue that the term conciliation has the same meaning as
mediation and there is not an accepted difference between them. As some times one of the term
is used for a type of evaluative mediation in which the mediator proposes solutions to the parties;
sometimes the other term is used for a more facilitative mediation style in which the mediator
never proposes solutions. Hence, the use of the terminology is dependent on the country but the
concept behind them is the same (Barkai, 2003).
Early Neutral Evaluation – Project Neutral
In this case, both terminologies can hold the same concept where both methods depend on an
impartial professional person, who can serve in different roles depending on the preferences of
the stakeholders. In EVE, the third party’s responsibility is providing a non-binding resolutions
only. However, in Project Neutral method this party can act as mediator: evaluator or facilitator
depending on stakeholder’s preferences. Hence, project neutral can be described as a one-person
dispute resolution board. As a result, the pros of such method are:
  Experienced individual monitoring the progress, who is ready to act promptly and stay in
contact with the stakeholders.
 Recommendations and conclusions given to the parties, and also allows to reduce costs
and delays.
Adjudicative ADR methods
Arbitration
Arbitration aka private trial or rent-a-judge is a binding process, subject to appeal on very limited
grounds. This method involves an independent impartial third party for resolving the dispute,
which is usually specialized subject expertise. It is an alternative to litigation, however, some
people question whether arbitration is an ADR method or not, due to its relatively expensive,
formal and time-consuming process, also due to the fact that the parties would benefit from its
avoidance by the successful implementation of other ADR methods (Nabatova, 2017). Despite
all the limitations, arbitration is considered the frequent last resort for dispute resolution when
non-binding methods fail. But, in order to proceed with arbitration only when there is a
contractual agreement. Without a contract, one party cannot force another party to use arbitration
and in this case litigation is the only way to resolve the dispute if negotiations fail (Barkai,
2003).
Differences between arbitration and litigation (Nabatova, 2017):
Arbitration Litigation
Private ADR method of dispute resolution Public Traditional method of dispute
resolution
More cost/time effective than litigation Expensive time consuming
Judged by professionals experienced in the Judged by court judges and/ or jury
field, selected by parties
More informal Procedures highly formalized
Binding, final, can’t be appealable without Binding, but easier appealable, which can
both parties agreed to reopen the case cause long-time and costly delays in settling
many cases

Cons of arbitration:
 Unsatisfactory outcome may not be appealed or addressed by other judge.
 Successful outcome is dependent on quality of arbitrator.
 Sometimes decision may not be supported by reasoned opinion.
Adjudication
this binding ADR method may be confused with arbitration due to the fact that both involves a
third party, in this case is called adjudicator, usually an expert in the subject matter in dispute.
The process consists of an abbreviated court-like procedure under the direction of the
Adjudicator. The adjudicator considers the claims of both parties and making a decision based on
their written submittals and details of their argument, with copies of any letters, reports or any
other evidence. The adjudicator decision is based on this information, along with taking into
consideration what is generally considered to be good practice in the construction industry.
Though, arbitration and adjudication may seem similar, they still have differences (Callum
M.,2103):
 the adjudicator may resolve and consider several issues at a time, but the arbitrator can
only consider one issue at a time.
 Adjudication decision must be made within the 28-day period without demanding any
appeals for extension.
 Adjudication final reward is less formal and stronger, and can be appealable through
court.
Pros of Adjudication:
 The process is quick and can often be undertaken in just a few weeks, hence minimizing
disruption to the parties to a long term construction or project dispute.
 The process is binding, pending a final determination of the dispute by way of litigation
or arbitration in which the court or an arbitral tribunal may affirm the Adjudicator's
decision. So it is appealable.
 In practice few adjudicated disputes are subsequently referred to litigation or arbitration.
 Less costly than litigation
 The parties can select the adjudicator.
Cons of Adjudication:
 The expert determination is not supported by statute /or reasoned opinion.
 The expert’s decision must be enforced by commencing court proceedings.
 The expert’s powers are limited.
Expert Determination
Expert Determination is an ADR method in which a third-party who is an expert in the subject
matter is appointed to decide the dispute. The parties agree on the person either prior or after the
dispute. This method is best suited in disputes regarding technical issues, rather than detailed
legal issues. The decision in this case is binding on the parties.
Dispute board (Dispute Review Board, Dispute Resolution Board (DRB) or Dispute
Adjudication Board (DAB))
Dispute Board as a ADR method can be formulated in different ways. The procedure is based on
contract rather than statute, and the parties to a contract are able to agree to a formulation that
suits their interest. Today, some standard contracts have DBs as part of their terms, of which the
mostly recognized are the FIDIC contracts. It is a procedure where a board, normally of three
independent and well-established individuals, is appointed at the commencement of a large
construction project and considers project issues and recommends resolutions of disputes. hence,
the DB has two basic responsibilities. The first is to become familiar with the project during
construction and play useful role in preventing disputes, and second major responsibility is
conducting hearings on any disputes referred to it.
Normally, the employer and contractor each appoint one member and the third member is chosen
by the first two. Each appointed person must be approved by both the owner and the general
contractor and each appointed person must be neutral and impartial (DRBF, 2007). The total cost
of the DBs ranges from 0.05% to 0.25%, depending of the complexity and size of the project
(DRBF, 2007). Furthermore, the dispute resolution process can be described as following and in
compliance with the example of conduction stated by the Dispute Resolution Board Foundation
(DRBF, 2007):
 Prior negotiations between the owner and the contractor with fully disclosing each other’s
position, regarding the dispute.
 Note by the claimant to the DRB chair, DRB other members and other party.
 Prehearing submittal sent to all DRB members and another party.
 The owner must provide facilities for the hearing at or near the site.
 The hearing process with both parties’ personnel directly involved in conflict.
 The DRB’s recommendations given as a written report to both parties.
 The owner and the contractor shall submit written acceptance/rejection or ask the DRB
for clarification of reconsideration.

DRB vs DAB
Disputes Boards can be setup either as a Review Board or an Adjudication Board. In the former,
the board’s findings are recommendations rather than binding decisions and the losing was not
obliged to follow the recommendation. The dispute could thereafter be taken to a higher
authority where a binding decision could be made. On the other hand, the later provides interim
binding decisions, and as adjudication the award of legal costs is at the discretion of the Board
unless this is excluded by the terms of the contract.
Pros of having Dispute Boards for a project:
 Claims can be avoided, as problems can be depicted and if existed the board will
encourage parties to settle them amicably. Thus resolving the arising problems quickly.
 Cost effective and more beneficial method, comparing to arbitration and litigation, which
have high costs.
 Resolution rate reflecting success is very high compared to other methods (Levin,
P.,1998).
Combined ADR Methods
Med/Arb
this involves combination of the mediation and the arbitration methods. In general, the parties
attempt to mediate the dispute and may resort to arbitration if no agreement can be reached, or if
the matter is not resolved completely during mediation. In this case, the mediator is entitled to
decide the issues as an arbitrator.
Med/Ad
This is also a hybrid ADR method as the aforementioned (Med/Arb) method. however, in this
method the appointed third-party proceeds as if they were an adjudicator, but after meeting with
the parties’ personnel and expert witnesses, gives a preliminary view regarding the dispute. If the
parties settle or agrees during a given period, the agreement is written. But if there is no
agreement then the third-party proceeds as adjudicator and decide on the dispute matter and the
decision is final and binding.
Conclusion
Finally, there is no clear best ADR method to use in construction disputes (Barkai, 2003). All the
aforementioned ADRs have their pros and cons, however, all have proved successful for
resolving disputes. And probably the best ADR process would be a combination of these
methods, for example, start with negotiation and then use DRB to resolve more complicated
disputes, if no agreement is reached use mediation to resolve the conflicts and finally resort to
arbitration as a final and last option.
References
Douglas Gray Morton, 1989. ALTERNATIVE DI8PUTE RESOLUTION IN
THECONSTRUCTION PROCESS: A COURSE OF STUDY FOR CONSTRUCTION
MANAGERS.
DRBF. (2007). Deciding to Have a Dispute Review Board [online]. Retrieved: 09.11.2018.
Available: http://www.drb.org/manual_access.htm
Herbert Smith Freehills LLP.(2012, Dec 17). ADR in construction disputes: arbitration and
dispute boards are not the only answer. Retrieved Nov 09, 2018, from https://www.lexology.com
Hohns, Muray, 1979. Preventing And Solving Construction Contract Disputes.
John Barkai, 2003. Using Alternative Dispute Resolution Techniques In Construction Disputes.
Leydecker, Oddy, Phillips.(2012, Oct 02). PROS AND CONS OF COMMON ADR
PROCESSES. Retrieved Nov 09, 2018, from https://hsfnotes.com
Levin, P. (1998). Construction Contract Claims, Changes & Dispute Resolution. 2nd ed. Reston,
VA: American Society of Civil Engineers. IBSN 0-7844-02 76-0
NA.(2018, Feb 02).Understanding The Pros And Cons Of Alternative Dispute Resolution For
Businesses. Retrieved Nov 09, 2018, from https://fhnylaw.com
Victoria Nabatova, 2017. Alternative dispute resolution in the construction industry.