A model for proactive mediation of construction disputes

Alternative dispute resolution methods remain an area of interest and study because of the continued increase in the incidence of disputes, be they claims or litigation. Practice in the industry tends to stimulate litigation if negotiation of claims is unsuccessful. At variance with this is the declared preference of construction industry practitioners for mediation over arbitration and for arbitration over litigation. Mediation has had a high success rate when used in construction dispute resolution. The cost of mediation is significantly lower than litigation or arbitration. The probability of the parties to the dispute being able to work together effectively after the dispute has been resolved is higher, and the dispute can be resolved more quickly than by arbitration or litigation. This paper presents the findings of a study undertaken to identify a better process for construction contracting. An essential part of the new process is the use of proactive mediation. Proactive mediation is the use of a mediator prior to a dispute arising to help identify and address potential problems before they become difficult or unsolvable issues. The proposed methodology has been tested through a process which obtained the input of over 60 senior industry practitioners. Key words: mediation, construction management, contracts, claims, cost reduction, alternate dispute resolution, risk management.