STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA

STUDY OF CONSTRUCTION DISPUTES & IT’s

RESOLUTION THROUGH ARBITRATION FOR

AHMEDABAD CITY OF GUJARAT STATE OF INDIA

By

SHAH ABHISHEK SHAILESH

(130080714018)

Guided by: Dr. RAJIV BHATT

Associate Professor,

Civil Engineering Department

A.D.Patel Institute of Technology

New VallabhVidyanagar, Gujarat

Co Guided by: Prof. J.J.BHAVSAR

Associate Professor and PG Coordinator (M.E - C.E.M),

B.V.M. Engineering College,

VallabhVidyanagar, Gujarat

A Thesis Submitted to

Gujarat Technological University

in Partial Fulfillment of the Requirements for

The Degree of Master of Engineering in

Construction Engineering & Management

MAY - 2015

BIRLA VISHVAKARMA MAHAVIDYALAYA ENGINEERING COLLEGE

VALLABH VIDYANAGAR

i

CERTIFICATE

This is to certify that research work embodied in this thesis entitled “STUDY OF

CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH

ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF

INDIA” was carried out by SHAH ABHISHEK SHAILESH (130080714018)

studying at Birla Vishvakarma Mahavidyalaya (BVM) Engineering College (008) for

partial fulfillment of Master of Engineering degree Construction Engineering and

Management to be awarded by Gujarat Technological University. This research work

has been carried out under our guidance and supervision and it is up to my satisfaction.

Date: / / 2015

Place:

Dr. RAJIV BHATT

Associate Professor




Prof. J.J.BHAVSAR

Associate Professor and PG

Coordinator (M.E C.E.M),

B.V.M. Engineering College,


Prof. (Dr) L. B. ZALA

Professor and Head


B.V.M. Engineering College

VallabhVidyanagar

Dr. F. S. UMRIGAR

Principal


VallabhVidyanagar

Seal of Institute

ii

COMPLIANCE CERTIFICATE


CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION

FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA” was carried out by

Mr. Abhishek. S. Shah (Enrollment No. 13008071418) studying at BIRLA

VISHVAKARMA MAHAVIDYALAYA – 008 for partial fulfillment of Master of

Technology degree to be awarded by Gujarat Technological University. He has

compiled to the comments given by Dissertation phase – I as well as mid semester

Thesis Reviewer to my satisfaction.

Date: / /2015

Place:

ABHISHEK S SHAH

PG Scholar

ME (CEM), Civil Engineering

Department

BVM Engineering College

Vallabh Vidhyanagar, Gujarat

Dr. RAJIV BHATT

Associate Professor




PROF. (Dr) L. B. ZALA

Professor and Head




DR. F. S. UMRIGAR

Principal


Vallabh Vidhyanagar,

Gujarat

iii

PAPER PUBLICATION CERTIFICATE




INDIA” carried out by SHAH ABHISHEK SHAILESH (Enrollment No.

130080714018) studying at Birla Vishvakarma Mahavidyalaya (BVM) Engineering

College (008) for partial fulfillment of Master of Engineering degree to be awarded

by Gujarat Technological University, has published article entitled “RANKING OF

“CAUSES OF DISPUTES” AND “USE OF DISPUTE RESOLUTION

METHODS” FOR CONSTRUCTION INDUSTRY IN GUJARAT” for

publication by the National Conference “Recent Research & Development In Core

Discipline Of Engineering” at Vadodara Institute of Engineering during 25th and 26th

April 2015.

Date: / /2015

Place:

ABHISHEK S SHAH

PG Scholar

ME (CEM), Civil Engineering

Department

BVM Engineering College

Vallabh Vidhyanagar, Gujarat

Dr. RAJIV BHATT

Associate Professor




PROF. (Dr) L. B. ZALA

Professor and Head




DR. F. S. UMRIGAR

Principal


Vallabh Vidhyanagar,

Gujarat

(Seal of the Institute)

iv

THESIS APPROVAL CERTIFICATE




INDIA” carried out by SHAH ABHISHEK SHAILESH Enrollment

No.130080714018 studying at Birla Vishvakarma Mahavidyalaya (BVM)

Engineering College (008) is approved for the degree of Master of Engineering with

specialization of Construction Engineering and Management by Gujarat

Technological University.

Date: / /2015

Place:

Name: Name:

v

DECLERATION OF ORIGINALITY

I hereby certify that I am the sole author of this thesis and that neither any part of this

thesis nor the whole of the thesis has been submitted for a degree to any other

University or Institution.

I certify that, to the best of my knowledge, my thesis does not infringe upon anyone’s

copyright nor violate any proprietary rights and that any ideas, techniques, quotations,

or any other material from the work of other people included in my thesis, published

or otherwise, are fully acknowledged in accordance with the standard referencing

practices. Furthermore, to the extent that I have included copyrighted material that

surpasses the bounds of fair dealing within the meaning of the Indian Copyright Act,

I certify that I have obtained a written permission from the copyright owner(s) to

include such material(s) in my thesis and have included copies of such copyright

clearances to my appendix.

I declare that this is a true copy of my thesis, including any final revisions, as approved

by my thesis review committee.

Date: / / 2015

Place:


130080714018

Dr. RAJIV B BHATT

COLLEGE CODE: 001

vi

ACKNOWLEDGEMENT

I am very much thankful to Mr. F.S.Umrigar Principal, BVM Engineering College

& Mr. L.B.Zala Head of the Civil Engineering Department, for having permitted

me to carry out this Dissertation work in my area of interest.

I wish to express my deep sense of gratitude to my Guide,

Dr. Rajiv. B. Bhatt (Associate Professor, Civil Engineering Department ,

A.D.Patel Institute of Technology) and Co-guide Mr. J.J.Bhavsar (PG co-

ordinator, BVM Engineering College) for his able guidance and useful suggestions,

which helped me a lot in completing the Dissertation work, in time. A great many

thanks to all other respected faculty members and the whole Institution of BVM

Engineering College.

I would also thank Mr. Akalkotkar Sir (H.O.D of Construction Project

Management branch of PG course at GANPAT University, Kherva) for their very

helpful guidance throughout my thesis work.

I would also like to thank Arbitrators Mr. D.V.Patel and Mr. A.T.Doshi for their great

support and help during the thesis work.

I would also like to thanks all the respondents of the survey work who has contributed

their time and effort and gave their valuable responses.

ABHISHEK.S.SHAH

130080714018

M.E. – CONSTRUCTION ENGINEERING AND MANAGEMENT,

BVM ENGINEERING COLLEGE,

V.V.NAGAR,

GUJARAT

vii

TABLE OF CONTENTS

Sr. No. Table of Content Page

No.

Certificate i

Compliance Certificate ii

Paper Publication Certificate iii

Thesis Approval Certificate iv

Declaration of Originality v

Acknowledgement vi

Table of Content vii

List of Figure x

List of Table xii

List of Abbreviations xvi

Abstract xvii

CHAPTER – 1 ( INTRODUCTION ) 1 - 3

1.0 Background 1

1.1 Problem statement 2

1.2 Objectives 2

1.3 Need for the study 3

1.4 Scope of the work 3

CHAPTER - 2 ( LITERATURE REVIEW ) 5 - 35

2.0 Introduction 4

2.1 Background 5

viii

2.1.1 Conflict 5

2.1.2 Claims 5

2.1.3 Dispute 5

2.1.4 Change 6

2.1.5 Constructive change 6

2.1.6 Change order 6

2.1.7 Dispute conflict concept 7

2.1.8 Conflict management 7

2.2 Literature review of research paper and its summary 8

2.2.1 Factors affecting disputes given by different authors in previous

studies

16

2.2.2 Overall findings of Global Construction Dispute 2014 18

2.2.3 Rank to the Dispute causes in Global 18

2.2.4 Rank to Alternative Dispute Resolution Method 18

2.2.5 Rank to the Dispute causes in ASIA 19

2.2.6 Rank to the Dispute causes in US 19

2.2.7 Rank to the Dispute causes in UK 20

2.2.8 Rank to the Dispute causes in Middle East 20

2.3 Data required for making claims 20

2.4 Types of construction disputes 21

2.5 List of Causes of claims 21

2.6 Most frequent causes of claims 23

2.6.1 Payment related claims 24

2.6.2 Change claims 24

2.6.3 Delay claims, 24

2.6.4 Extra work claims 25

2.6.5 Contact claims 25

2.6.6 Different pricing and measuring claims 25

2.6.7 Different site condition Claims 25

2.6.8 Acceleration claims 25

2.6.9 Damage claims 26

2.6.10 Contract termination claims 26

2.7 Claim settlement methods 26

ix

2.7.1 Negotiation 29

2.7.2 Mediation 29

2.7.3 Conciliation 29

2.7.4 Mini trial 30

2.7.5 Adjudication 30

2.7.6 Arbitration 30

2.7.7 Litigation 31

2.8 Supporting documents for the claims 31

2.9 Clauses in Tender to Avoid or Settle Claims 33

CHAPTER-3 ( RESEARCH METHODOLOGY ) 36 - 40

3.1 Introduction 36

3.2 Data Collection Method 36

3.2.1 Desk Study 36

3.3 Questionnaire Design 36

3.4 Data Analysis Method 37

3.4.1 Weighted Average Method 37

3.4.2 Relative Importance Index Method 38

3.4.3 Spearman Rank Correlation Coefficient 38

3.5 Sample Size 39

CHAPTER – 4 ( DATA COLLECTION & ANALYSIS) 41 - 55

4.0 Introduction 41

4.1 Data Collection 41

4.2 List of Respondents 42

4.3 Data Analysis 44

4.4 Overall ranking by all in General 45

4.4.1 Rank to Causes of Construction Dispute 45

4.4.2 Rank to Impact of Construction Dispute 46

4.4.3 Rank to Dispute Resolution Method 46

4.5 Rank by Individual 47

4.5.1 To causes of Construction Dispute 47

4.5.2 To Impact of Construction Dispute 48

x

4.5.3 To Dispute Resolution Method Used 49

4.6 Spearman’s Rank Correlation Method 50

4.6.1 Spearman’s Rank Correlation for Causes of Construction

Dispute

50

4.6.1.1 Between Architect and Contractor 50

4.6.1.2 Between Architect and Developer 51

4.6.1.3 Between Contractor and Developer 52

4.6.2 Spearman’s Rank Correlation for Impact of Construction

Dispute

53




4.6.3 Spearman’s Rank Correlation for Dispute Resolution Method

Used

54




CHAPTER – 5 ( RESULTS AND DISCUSIONS ) 56 – 71

5.0 Introduction 56

5.1 Comparison of Rank of Each Category by All Individual 56

5.1.1 Rank to Causes of Construction Dispute by All Individual 56

5.1.2 Rank to Impact of Construction Dispute by All Individual 58

5.1.3 Rank to Dispute Resolution Method by All Individual 59

5.2 Percentage and Rank to Major Causes of Dispute 60

5.2.1 Percentage and Rank to Major Causes of Dispute in General 60

5.2.2 Percentage and Rank to Major Causes of Dispute by Architect 61

5.2.3 Percentage and Rank to Major Causes of Dispute by Contractor 62

5.2.4 Percentage and Rank to Major Causes of Dispute by Developer 63

5.3 Percentage and Rank to Impact of Construction Dispute 64

5.3.1 Percentage and Rank to Impact of Construction Dispute in

General

64

xi

5.3.2 Percentage and Rank to Impact of Construction Dispute by

Architect

65


Contractor

66


Developer

67

5.4 Percentage and Rank to Dispute Resolution Method Used 68

5.4.1 Percentage and Rank to Dispute Resolution Method Used in

General

68

5.4.2 Percentage and Rank to Dispute Resolution Method Used by

Architect

69


Contractor

70


Developer

71

CHAPTER – 6 ( CASE STUDY ) 72 - 75

6.0 Introduction 72

6.1 General Details 72

6.2 Facts Agreed by both the parties 72

6.3 Reasons for Disputes 73

6.4 Claims by Claimant on Respondent 73

6.5 Issues of the Case 73

6.6 List of Supporting Documents along with Claim Submission 74

6.7 Arbitrator’s Finding and Decisions on the issues 74

6.8 Statement of Award amount 75

CHAPTER – 7 ( CONCLUSION ) 76 - 78

7.1 Conclusion 76

7.2 Recommendation 76

7.3 Future Study Scope 78

7.4 Limitations of the study 78

xii

REFERENCES 79 - 82

APPENDIX

Appendix - A : Questioner Form A1 – A4

Appendix - B : Data Collected about Causes of Construction

Dispute

B1 – B3

Appendix – C : Data Collected about Impact of Construction

Dispute

C1 – C3

Appendix - D : Data Collected about Dispute Resolution

Method Used

D1 – D3

Appendix – E : Research Paper - 1 E1 – E13

Appendix – F : Research Paper - 2 F1 – F9

Appendix – G : Research Paper Certificates G1 – G2

Appendix – H : Plagiarism Report H1 – H2

Appendix – I : Review Card and Action Taken I1 – I7

xiii

List of Figure

Sr. No. Figure Page No.

Figure-1 Claims Settlement Methods 27

Figure-2 Claims Settlements Methods 27

Figure-3 Alternative Dispute Resolution Methods 28

Figure-4 Rank by All Individual to Causes of Construction

Dispute 57

Figure-5 Rank by All Individual to Impact of Construction

Dispute 58

Figure-6 Rank by All Individual to Dispute Resolution Method 59

Figure-7 CCD Vs Its Percentage by All 60

Figure-8 CCD Vs Its Percentage by Architect 61

Figure-9 CCD Vs Its Percentage by Contractor 62

Figure-10 CCD Vs Its Percentage by Developer 63

Figure-11 ICD Vs Its Percentage by All 64

Figure-12 ICD Vs Its Percentage by Architect 65

Figure-13 ICD Vs Its Percentage by Contractor 66

Figure-14 ICD Vs Its Percentage by Developer 67

Figure-15 DRM Vs Its Percentage by All 68

Figure-16 DRM Vs Its Percentage by Architect 69

Figure-17 DRM Vs Its Percentage by Contractor 70

Figure-18 DRM Vs Its Percentage by Developer 71

xiv

List of Table

Sr. No. Table Page

No.

Table – 1 Factors affecting Dispute by different Authors 16

Table – 2 Overall findings of Global Construction Dispute 2014 18

Table – 3 Rank to the Dispute causes in Global 18

Table – 4 Rank to Alternative Dispute Resolution Method 18

Table – 5 Rank to the Dispute causes in Asia 19

Table – 6 Rank to the Dispute causes in US 19

Table – 7 Rank to the Dispute causes in UK 20

Table – 8 Rank to the Dispute causes in Middle East 20

Table – 9 Population for Survey Work 39

Table – 10 Rate of Responses 41

Table – 11 List of Respondents 42

Table – 12 Overall Rank to Causes of Construction Dispute 45

Table – 13 Overall Rank to Impact of Construction Dispute 46

Table – 14 Overall Rank to Dispute Resolution Method Used 46

Table – 15 Individual Rank to Causes of Construction Dispute 47



Table – 18 CCD – Spearman’s Rank Correlation Between Architect &

Contractor

50

Table – 19 CCD – Spearman’s Rank Correlation Between Architect &

Developer

51

Table – 20 CCD – Spearman’s Rank Correlation Between Contractor

& Developer

52

Table – 21 ICD – Spearman’s Rank Correlation Between Architect &

Contractor

53

Table – 22 ICD – Spearman’s Rank Correlation Between Architect &

Developer

53

xv

Table – 23 ICD – Spearman’s Rank Correlation Between Developer &

Contractor

54

Table – 24 DRM – Spearman’s Rank Correlation Between Architect &

Contractor

54

Table – 25 DRM – Spearman’s Rank Correlation Between Architect &

Developer

55

Table – 26 DRM – Spearman’s Rank Correlation Between Contractor

& Developer

55

Table – 27 Rank to CCD by All Individual 56

Table – 28 Rank to ICD by All Individual 58

Table – 29 Rank to DRM by All Individual 59

Table – 30 Percentage and Rank to CCD in General 60

Table – 31 Percentage and Rank to CCD by Architect 61

Table – 32 Percentage and Rank to CCD by Contractor 62

Table – 33 Percentage and Rank to CCD by Developer 63

Table – 34 Percentage and Rank to ICD in General 64

Table – 35 Percentage and Rank to ICD by Architect 65

Table – 36 Percentage and Rank to ICD by Contractor 66

Table – 37 Percentage and Rank to ICD by Developer 67

Table – 38 Percentage and Rank to DRM in General 68

Table – 39 Percentage and Rank to DRM by Architect 69

Table – 40 Percentage and Rank to DRM by Contractor 70

Table – 41 Percentage and Rank to DRM by Developer 71

Table – 42 Statement of Awarded Amount 75

xvi

List of Abbreviations

CCD Causes of Construction Dispute

ICD Impact of Construction Dispute

DRM Dispute Resolution Method

xvii

“STUDY OF CONSTRUCTION DISPUTES & IT’s

RESOLUTION THROUGH ARBITRATION FOR

AHMEDABAD CITY OF GUJARAT STATE OF INDIA”

By


(130080714018)

Guided by: DR. RAJIV BHATT

H.O.D (Civil Department)



ABSTRACT

The Indian government is investing millions of dollars every year in new facilities to

improve the infrastructure of the country. Construction projects are complex,

uncertain, have long construction periods, involve many parties, and require the

integration of different work components (Civil, Mechanical and Electrical) to work

together as a single unit. The projects require highly specialized designs, detailed plans

and specifications, high-risk constriction methods, effective management, skill full

supervision, and close coordination. Thus, claims are common in such projects.

Today, construction projects are the subject of more claims than in any other industry.

Claims appear to hinder the completion of construction and cause delays in delivering

projects. These claims are undesirable because they require significant time and

resources to resolve, and because they cause adversarial relationships among the

parties involved. It is therefore in the common interest of all involved parties to

prevent them, minimize them, or resolve them as amicably as possible. Identifying

common claim types and their causes is essential in devising ways and means to

minimize and hopefully avoid them in future projects.

This thesis presents the results of a pilot study of the types, and causes of construction

claims in the Construction industry.

xviii

From present study it is found that “Finance and payment issues” is having first rank

among all causes for generation of dispute. Second rank was given to “Poor work

quality” by the respondents. “Extra items” is having third rank and “Design errors” is

having fourth rank in causes of disputes. “Inclement weather” is having lowest rank.

Respondents felt that disputes in construction industry damages the reputation of both

the parties. This is found by getting first rank for “Damaging company reputation” in

Impact matters. Further, respondents have given lowest rank to “Dispute Escalation”

matter. Respondents have given first rank to “Negotiation” method for dispute

resolution and last rank is given to “Litigation” method.

The recommendations to prevent/reduce claims in construction projects are then

presented. It is expected that the study of this thesis will help construction firms to

avoid the main causes of claims and, accordingly, minimize delays and cost overruns

in construction projects.

CHAPTER 1

INTRODUCTION

PAGE NO. 01 - 03

CHAPTER – 1: INTRODUCTION

M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 1

1.0 Background:

India is a developing country. The construction sector of India is growing rapidly.

There are many ongoing Infrastructure projects in India of Billions of Dollars where

the delay or stoppage of work due to any reason cannot be acceptable. In this rapidly

growing construction industry many times claims arise between client and

contractors.

Construction Claim can be defined as a request by either party to the contract, usually

the Contractor, for compensation for damages caused by failure of the other party to

fulfill his part of obligations as specified in the contract. The compensation is usually

in the form of the additional payment or an extension of time (EOT).

Construction claims are measured by many project participants to be one of the most

disturbing and unpleasant events of a project. Today, construction projects are the

subject matter of more claims than in any other industry. The high competition has

forced contractors to submit projects with minimum profits in order to stay in

business. In addition to their multiparty nature, projects are becoming more complex

and risky. This has placed an added burden on contractors to construct increasingly

sophisticated and risky projects with less resources and profits. Under these

circumstances, it is not surprising that the number of claims within the construction

industry continues to increase.

During the execution of a project, several issues arise that cannot be resolved among

project participants. Such issues typically involve contractor requesting for either time

extension or for additional cost, or sometimes both. Such requests by the contractor

are referred as Claims.

However if the owner does not agree to the claims put out by the contractor and there

are differences in the interpretations, the issue takes the form of dispute. Claims are

becoming an inevitable and unavoidable stress in modern projects involving new

technology, specifications and high expectations from the owner.

There are many reasons for claims time, machinery, material, manpower, money,

price escalation, accident on site, change in design and many other are major reasons



for dispute between two parties which results into disputes, if the disputes are Claims

and Counterclaims.

To solve these Claims, certain dispute resolution techniques are available like

arbitration, conciliation, mediation and dispute resolution board.

1.1 Problem Statement

In any construction work there are mainly Client or Developer, Contractor, Sub-

contractors, Architects, Structure Designer, Project management consultancy (PMC)

etc. working together on the project. Many times due to delay of work, delay in

clearance of running bill, cost over-run, design errors etc can create conflict between

either two parties mentioned above, which may convert into the claims. However,

What are the main causes that lead them into a construction dispute?

What are the impacts of construction disputes?

Which are the disputes resolution techniques available in construction

industry?

Above important issues needs to be studied.

1.2 Objective:

The main objective of study is...

To find out various aspect of claims management and suggest various

measures for avoidance of claims.

To identify and analyze the types of claims and their causes in construction

projects.

To study Causes of Construction Dispute, their Impact and Dispute Resolution

Method Used to resolve these disputes.

Study of the Dispute Resolution case study of any real cases.



1.3 Need for study:

Claim is essentially an outcome of loss or damage occurred. In most cases for claim,

both the engineer and contractor really start thinking about the matter after the claim

arises. They are seldom prepared in advance.

It is essential for the contractor / client to estimate the exact value of loss or damage

incurred due to the increased cost and extension of time.

Moreover it is necessary to view the current scenario in the construction industry for

the level of practice used in the claim process of the clients consultants and the

contractor and what should be done to manage claims if they arise.

In addition it is essential to study the various ways in which the claims could be

avoided and how this can be resolved even if they occur for an amicable working in a

project.

1.4 Scope of work:

It is necessary to study the various aspects of Claims Management by the Contractor,

Developer, Architect and Consultant.

It is necessary to correlate the ability of Contractor, Client and Consultant to deal with

claim process with organizational parameters like financial growth, size of the

company, financial turnover, management system and their attitude towards claims.

CHAPTER 2

LITERATURE

REVIEW

PAGE NO. 04 - 35

CHAPTER – 2: LITERATURE REVIEW


2.0 Introduction:

Since 1990’s, the concept of claim management has spread broadly among many

companies in construction sector as it works well against the clients by providing

supplementary profits to contractors. On the other hand, client’s understandable

disappointment at being enforced to release large additional payments beyond the

sums initially budgeted and assumed to be sufficient, damages the relation with the

contractor. A survey study by Semple at al. (1994) concludes that the most common

causes are increases in scopes, weather conditions, restricted access, and acceleration,

in addition to the above causes Adrian (1993) indicated relatively low profitability of

the construction industry, changing of product delivery, and other factors like;

inadequate bid information, faulty or late owner-supplied equipment or material,

inferior quality of drawings or specifications, and stop-and-go operations. Based on

91 projects, concluded that the most crucial sources of claims are unclear or

inadequate documentation, late instructions, variations initiated by the

employer/engineer, measurement related issues, inclement weather, and time

extension assessment. The difference between how firms manage these claims,

however, can impact their profitability both in the short term and the long term.

Consequently, a good background with efficient knowledge is essential during both

interpretation and application of Claim methodology in order to reach satisfying

results, that is, knowledge is defined as one of the key elements through which an

organization can reach to success. As indicated increased globalization, changing

workforce patterns and technology has led the transition to the knowledge era in

which knowledge, not physical labour, remittances and assets, has become the most

critical resource of an organization and the fountain of organizational and personal

power. In addition to above statement, it is also crucial to be able to utilize the

gathered information and knowledge in an efficient way so that an effective claim

management strategy is determined and the claimant can take advantage of it.



2.1 Background:

2.1.1 Conflict:

“It is Serious disagreement and agreement about something important” (Collins,

1995) [4]

While Willmot and Hocker (1998) [5], provide a detailed definition of conflict as “An

expressed struggle between at least two independent parties who perceive

incompatible goals, scare resources, and interference from other achieving those

goals”.

2.1.2 Claims:

Claim is basically, a contract adjustment due to changes or additions to the original

contract.

Considering various definitions, a construction claim can be defined as ‘a request by

either party to the contract for compensation for damages caused by failure of the

other party to fulfil his part of obligations or expectations as specified in the contract.

“For the assertion of a right to money, property or remedy”(Powell- Smith and

Stephenson, 1993) [6]. While Likewise, Semple et al. (1994) [7] define a claim as “A

request for compensation for damages incurred by any party to a contract”

2.1.3 Dispute:

“Any contract question or controversy that must be settled beyond the jobsite

management” (Diekmann and Girard, 1995) [8]

Claims that remain protested after completing the claims procedure become disputes

between the contracting l parties. The dispute resolution process to be followed is

often times identified in the contract documents. Disputes may be addressed through

arbitration, alternate dispute resolution techniques or litigation.



(Source: Sigitas Mitkus and Tomas Mitkus / Procedia - Social and Behavioral Sciences 110 ( 2014 ) 777 – 786)

Sigitas Mitkus has explained that Conflicts occur if Risks are not clearly assigned,

Claims occur if Conflicts are not clearly managed and Disputes occur if Claims are

not clearly resolved.

2.1.4 Change:

A change occurs when the scope of the contract work is modified or is impacted not

due to the fault or negligence of the contractor. Changes are compensable in money

or time or both.

2.1.5 Constructive Change:

A constructive change occurs when the owner or designer 3 fails to recognize a

contractor's entitlement to a changed condition in a timely manner.

2.1.6 Change Order:

The formal contract document that modifies the original contract is known as Change

order. A Change Order is a written instruction prepared by the Architect and signed

by the Owner, Contractor and Architect, stating their agreement upon all of the

following:

1. A change in the work;

2. The amount of the adjustment in Contract Sum, if any; and

3. The extent of the adjustment in the Contract Time, if any



2.1.7 Dispute-Conflict Concept

Survey of the literature on conflicts and disputes in construction reveals confused

usage of the terms. The terms “conflict”, “dispute”, and “claim” are used

separately or in pairs and frequently without clear indication of the precise meaning

of each use. There is often lack of clarity as to whether the researcher is referring to

“claims” per se (that is claims which are resolved between the parties and do not

therefore become dispute), or to “disputes” (that is those claims which are not resolved

and escalates to disputes), or conflict that is not either appeared as claim or dispute.

Is there a difference between conflict and dispute? Some authors interchange the two

terms, others point to conceptual differences, even if they are blurred. However,

'Conflict' and 'dispute' are two distinct notions. Conflict, it is proposed, exists

wherever there is incompatibility of interest, and therefore is pandemic. Conflict can

be managed, possibly to the extent of preventing a dispute resulting from the conflict.

Dispute is associated with distinct justifiable issues. Generally the process of dispute

resolution lends itself to third party intervention. It is concluded that effective

management of conflicts and disputes would be furthered by separating the two fields,

and particularly by applying a more stringent structuring (Peter, Michael and Edward,

1998).

John Burton (1990) has suggested that Disputes are short-term disagreements that are

relatively easy to resolve. Burton has referred the conflicts as Long-term, deep-rooted

problems that involve seemingly non-negotiable issues and are resistant to resolution

of the problem.

Douglas Yarn (1999) has observed that conflict is a state rather than a process. People

who have opposing interests, values, or needs are in the state of conflict, which may

be manifest, in which case it is brought forward in the form of a dispute which cannot

exist without a conflict.

As per Costantino and Merchant (1996), Conflict is the process of expressing

dissatisfaction, disagreement, or unmet expressions. Conflict is ongoing, intangible

and amorphous.



Loosemore and Djebarni (1994) has commented that whilst there is little

consensus among sociological scholars on a specific definition of conflict as a

common denominator is that for conflict to occur there must be an incompatibility of

needs and a perception by one party that this incompatibility interferes with the

attainment of that person’s needs.

In 1993 Brown and Marroit has subscribed a similar definition. “A conflict exists, in

the mind of an individual, when he/she perceives a situation of incompatibility among

objectives, whereas a dispute is a conflict of which both parties are conscious and

which is the subject toalteration between them.

Further Brown and Marriot (1993) has defined the dispute as a class or kind of

conflict, which manifest itself in distinct, justifiable issues which involves

disagreement over issues which are capable of resolution by negotiations, meditation,

or third party adjudication.

As per Brown and Marriot (1993), “An actual ‘dispute’ will not exist until a claim is

asserted by one party which is ‘disputed’ by the other”

In similar vein Fenn et al (1997) suggested that, “The Conflict exists when there is an

incompatibility of interest. When a conflict becomes irreconcilable and the

mechanisms for avoiding it are exhausted, or inadequate, techniques for resolving the

dispute are required.”

2.2 Literature review of Research Papers and its Summary:

Cakmak et al. has aimed to analyze the main causes of disputes which occur in the

construction industry. In order to reach this aim, a literature review was undertaken

by him to identify the common causes of construction disputes. In this paper there are

mainly 7 categories of construction disputes are listed down they are mainly Owner

related, Contractor related, Design related, Contract related, Human Behavior related,

Project related and lastly External factors. In each of these categories of construction

disputes there are several causes of claims are also listed down by the owner.



Love et al. has analyzed the reasons for disputes in Australian construction industry

and says that Disputes are become an endemic element of the Australian construction

industry. If they are not resolved quickly then they can escalate causing schedule

delays, lead to claims that require litigation proceedings for resolution and destroy

business relationships. Author has said that research over the last two decades has

revealed that factors such as scope of work changes, poor contractual documentation,

unforeseen ground conditions, and contractual ambiguities are contributors of

disputes. While this is widely known, disputes still exist over such issues. Before

disputes can be avoided an understanding of what the underlying conditions that

contributes to their occurrence needs to be determined so that mechanisms can be put

in place to prevent them from arising. In this paper the literature is examined and a

series of causal models are developed by the author to demonstrate the

interdependency between key variables that contribute to disputes. The developed

models are used to identify a number of strategies that can be adopted to reduce the

urgent occurrence of disputes in construction.

Lian et al. has said that Extension of time (EOT) has become a common construction

action in many construction projects, particularly when ordinary forms of contract is

applied; and it has been treated as an allowable delay in ordinary construction

contract. Contractor and supervising engineer often spend considerable time to verify

and evaluate the delays. A variety of techniques have been employed for such

assessments. However, the effectiveness of techniques adopted has been a critical

factor in attracting multinational organization for their participations in construction

industry in Malaysia. The purpose of the study was therefore to analyze different EOT

evaluation techniques used in Malaysia, and to probe reasons for delays in the

submission and assessment of EOT. Issues such as treatment of float time and

concurrent delay, agreed programmes, scheduling software and late payment had also

been pointed out.

During these research work author has sent overall 70 sets of questionnaires to several

companies includes architecture firms, consultant firms, developer, contractors and

also some government bodies. These 70 respondents were carefully chosen. Out of 70

respondents, 36 of them responded, which report for 51.4% response rate.



Conclusions and findings on the suitability of different techniques used were obtained

from the analysis of literature review and questionnaire survey from a consolidation

of practitioners. The outcome of the study provides recommendations for solution for

EOT related issues as well as improving the contractual procedures.

Edwi et al. has said that Purpose of this research paper is encounter differences with

the local Chinese parties with Architect/ Contractor and Developer because of the

Unfamiliar with the Chinese culture and ways of doing business, foreign. With

reference to the characteristics of Chinese culture on disputes, this paper studies the

problem areas of dispute and of resolving disputes in international construction

projects in China. The objectives are to: examine the fundamentals of Chinese culture

and ways of doing business; examine the characteristics of international projects and

investigate any differences in the dispute problems arising from China International

Projects; identify the most popular dispute resolution mechanism(s) for international

projects in China; and recommend possible ways to reduce and resolve disputes of

these projects.

After literature review, author prepared a questionnaire which was designed for face-

to-face interviews with 40 practitioners to collect their opinions.

And the results show that the problem areas giving rise to disputes are mainly related

to contractual matters. To reflect the characteristics of international projects in China,

cultural and legal matters are also found to be the sources of problem. Arbitration is

the most popular method, after negotiation, for resolving disputes in international

construction projects in China.

The limitation of the research was that the number of interviewees in this study could

be improved and further study could include experts in Mainland China.

Shreastha et al. has said that the Delay claims are the common occurrence in

construction projects, which are result from many issues, including differing site

conditions, access restrictions, and disputes of the contract documents. Different

analysis methods of a delay claim can range from scheduling to cost analysis. Methods

in use today can incur exponential costs, and can last for years on end. Using a survey,



this study collected the data regarding practices in delay claim analysis from

professionals within the construction industry. The survey emphasized the defining

qualities of a delay claim, the processes, and the requirements for resolving a claim.

The results showed that the analysis of schedules and other contract documents were

major resources when analyzing and resolving a delay claim. The top three

subcontractors who submitted the most delay claims are concrete, earthwork, and

steel.

This study determined the crucial qualities of a delay claim, their processes, and the

requirements for resolving a claim. When analyzing and resolving a delay claim, the

results showed that analysis of schedules and contract documents was a major

resource. The owners generally acknowledged the delay claim after it is submitted,

inquired about the validity, and cost of the claim.

Cheung et al. has described the Construction dispute resolution as a topical research

area. These studies typically start from dispute identification and subject matter is the

most commonly used approach. However, this approach does not take account of the

contextual factors that may in fact the true causes. This prompts the diagnostic

approach. This chapter gives an overview of these two approaches to identify

construction disputes. In addition, a third approach that draws on the concepts of

bounded rationality and opportunism is proposed. Minefields and manifestations of

opportunism in construction contracting in relation to occurrence of construction

disputes are also discussed. Accordingly, an anatomy of construction disputes is

provided. It is suggested that construction disputes are mostly contractual but can also

be speculative where people factor is a major trigger.

Sinha et al. has suggested that following are the root causes of disputes identified by

Kumaraswamy (1997) unfair risk allocation, unrealistic time/cost/quality targets by

the client, adversarial industry culture, inappropriate contract type, and unrealistic

information expectations. Proximate causes identified included: inadequate brief,

slow client responses, inaccurate design information, inaccurate design

documentation, inappropriate contract form, inadequate contract administration, and

inappropriate contractor selection.



Mitropoulos and Howell (2001) suggest that a combination of factors of uncertainty,

contractual problems and opportunistic behavior can lead to disputes.

The author has concluded that client who understands their scope should be able to

select a procurement option that best meets their needs. The requirement of contractor

involvement during the design process can improve constructability and reduce the

probability of design changes. When there is scope uncertainty and no contractor

involvement during design then the likelihood of scope changes increases, which may

increase project costs and time and lead to claims and disputes. Project scope,

contractual conditions, particularly the allocation of risk and responsibi lity and

procurement strategy are key elements to be considered by the organization as this

will influence their planning and resourcing and their ability to achieve project

outcomes.

Ossama et al, has discussed the appropriateness of contractual methods towards

dispute avoidance and resolution (DAR) for industrial projects in Saudi Arabia. It

focuses on the private industrial sector in the Eastern Province. A survey was

conducted using the principles of quota sampling where 93 questionnaires were

distributed to 11 owners, 59 contractors and 23 consultants. The survey consisted of

20 statements that measured the parties' attitude and opinion towards contractual

methods recommended for dispute avoidance and resolution (DAR) during the

construction phase. Respondents indicated their level of agreement on a 5-level scale.

The results reflect the appropriateness of these techniques for industrial projects. The

five contract administration methods for dispute avoidance and resolution (DAR)

covered in this study are: Allocating Fair Contract Risk, Drafting Dispute Clauses,

Team Building, Provision of a Neutral Arbitrator, and Binding Arbitration.

Zaneldin et al. has said that The United Arab Emirates (UAE) government is

investing millions of dollars every year in new facilities to improve the infrastructure

of the country. Infrastructure development has been phenomenal in view of the

relatively brief period since the country’s establishment. In view of this, the

construction industry is considered the largest single industry in UAE. Yet, it is also

very complex and the most fragmented industry as it involves multidisciplinary

participants and several stake holders. Today, construction projects are the subject of



more claims than in any other time in history. Claims appear to hinder the completion

of construction and cause delays in delivering projects. This research presents the

results of a pilot study of the types, causes, and frequency of construction claims in

the emirates of Dubai and Abu Dhabi in UAE using a questionnaire survey that was

conducted in the two emirates. The data received from the survey respondents is

analyzed and recommendations to prevent/reduce claims in construction projects are

then presented. It is expected that the findings of this research will help construction

firms avoid the main causes of claims and, accordingly, minimize delays and cost

overruns in construction projects.

Olive du Preez et al. has identified some skills which is required by professionals to

effectively apply conciliation in their daily tasks and to determine whether a basic

understanding of conciliation would improve the overall application of claims

management. It is concluded in the research paper that placing emphasis on

conciliation will add value to claims management relating to procurement and the

prevention of differences developing into disputes. The added value will also have a

positive effect on time and cost management. Though stakeholders are of the opinion

that they can rely on their inherent skills to facilitate conciliation effectively, the data

analysis suggests that the skills and attributes are lacking. Conciliation is thus

considered as a key and important element in the claims management process.

K. C. Iyer et al. has said that contract time and cost overruns are common in any

construction project which gives rise to claims and that claims mostly leads to the

construction dispute. If these disputes are not handled properly then it can consume

time and money of all parties to the contract. In these research paper author has

analyzed and study the Arbitration case for delay claims. In this paper author has

attempts to identify questions related to disputes for Indian scenario through literature

reviews, arbitration awards, court cases and discussions with professionals. In this

paper author has tried to list out questions for each reason of delay claim.

In this paper author has identifies the various delay factors which are influencing by

the decisions of arbitrators. The factors are identified as questions asked by the

arbitrators and viewed as per the thought process of arbitrators or judges. Author has

told that these questions were extracted through literature, arbitration awards, court

cases and discussions with professionals.



Ashwini Arun Salunkhe et al. has highlighted the types of construction delays due

to which project suffer time and cost overrun. Construction delay is considered to be

one of the recurring problems in the construction industry and it has an adverse effect

on project success in terms of time, cost and quality. In this paper author has studied

the factors that influence the construction process and outlines the effect of delay in

large construction projects. In this paper author has studied the performance of year

2012 with respect to ongoing and also completed projects. Author has concluded that

time and cost overrun have been a major problem in construction industry. The

reasons for time overruns as reported by various project implementing agencies are

delay in land acquisition, delay in equipment erection, inadequate mobilization by the

contractor, delay in forest clearance, fund constraints, change in scope of work,

cancellation of tender, law & order problem, delay in supply of equipment, slow

progress of civil work, escalation in cost. Author has also identified the causes of delay

by Owner and Contractor.

Keval J. Shah et al. has said that it is widely accepted that a project is successful

when it is finished on time. But, due to so many reasons, large number of construction

projects fails to follow the planned schedule and hence delayed. So, careful study and

planning of each and every activity of a construction project becomes very important

in order to minimize delays. In this paper author has presented the causes of delay

occurring on an ongoing bridge construction project with respect to construction of

bridge girders of three spans of a major bridge across the river Sabarmati,

Gandhinagar, Gujaratas a case study. This study was aimed to investigate the

important causes of delay in construction of bridge girder. Activities on site with

respect to construction of girder were thoroughly observed and comparison done

between planned and as executed schedule by author. As per the author most of

reasons for delays are related with contractor’s performance such as site management,

labour productivity, and lack of expert proficiency in supervision etc. Same as delay

in drawing and delay in design come under client’s responsibility. It was evident that

consultant has a less responsibility. Some of the causes were to be addressed are

beyond the control of all the project parties such as differing si te conditions,

unforeseen weather etc. As per author the overall responsibility of delay, is more

responsible to contractor.



Tomas Mitkus et al. has analyzed that the causes of conflicts due to which claims are

arising between client and contractors in the construction industry. Author has said

that analysis of articles on this topic has revealed that most of contemporary authors

refer to externally visible signs of conflicts as to the causes thereof. The authors of the

present article look at the conflict in construction in a different light – from the aspect

of communication. Author has said that construction contract agreement which

regulates the relationships between the client and the contractor is also viewed as a

product of communication. The author has said that authors hypothesize that the main

cause of conflicts in the construction industry is unsuccessful communication between

the client and the contractor. The hypothesis has been confirmed by the conducted

research studies. In addition, author has found out these two major causes for conflict

were unfair behavior of the parties to a construction contract agreement and

psychological defense mechanisms. In this paper the author has analyzed, a

construction contract agreement as a product of communication between the parties

to a construction contract agreement. Which means that the most frequent cause of

construction conflicts is unsuccessful communication between the parties to a

construction contract agreement. Other causes of conflicts in the construction industry

identified in this article include unfair behaviour of construction participants and

psychological defence mechanisms.



2.2.1 Factors affecting disputes given by different authors in previous studies:

TABLE -1 FACTORS AFFECTING DISPUTE BY DIFFERENT AUTHORS

[SOURCE: (KUMARA SWAMY, 1997)]

No Subject matters of construction disputes References

1

Change of scope

Hewit

(1991)

Change work conditions

Delay

Disruption

Acceleration

Termination

2

Ambiguous contract documents Spittler and

Jentzen

(1992)

Competitive/adversarial attitude and

Dissimilar perceptions of fairness by the participants

3

Determination of the agreement

Watts and

Scrivener

(1993)

Payment related

The site and execution of work

Time related

Final certificate and final payment

Tort related

4

Contract terms

Heath et al.

(1994)

Payments

Variations

Extensions of time

Re-nomination and

Availability of information

5

Payment

Conlin et

al(1996a, b)

Performance

Delay

Negligence

Quality and administration as headings of construction

Disputes

6 Variation due to site conditions



Variations due to client changes

Kumaraswa

my (1997)

Variations due to design errors

Unforeseen ground conditions

Ambiguities in contract documents

Interferences with utility lines

Variations due to external events

Exceptional inclement weather

Delayed design information and

Delayed site possession

7

Variations

Yates

(1998)

Ambiguities in contract documents

Inclement weather

Late issue of design information/drawings

Delayed possession of site

Delay by other contractors employed by the client (e.g.

Utility companies)

Postponement of part of the project

8

Project uncertainty

Mitropoulos

and Howell

(2001)

Contractual problems

Opportunistic behaviour,

Contractors’ financial position and

Cost of conflict and culture

9

Payment,

Brooker

(2002)

Delay

Defect/quality and

Professional negligence

10

Valuation of variations Sheridan

(2003) Valuation of final account and

Failure to comply with payment provisions



2.2.2 Overall findings of Global Construction Dispute 2014

TABLE-2: OVERALL FINDINGS OF GLOBAL CONSTRUCTION DISPUTE 2014

Region Dispute Values in US $ Length of Disputes in Month

2010 2011 2012 2013 2010 2011 2012 2013

MIDDLE

EAST

56.3 112.5 65 40.9 8.3 9 14.6 13.9

ASIA 64.5 53.1 39.7 41.9 11.4 12.4 14.3 14

US 64.5 10.5 9 34.3 11.4 14.4 11.9 13.7

UK 7.5 10.2 27 27.9 6.8 8.7 12.9 7.9

EUROP 33.3 35.1 25 27.5 10 11.7 6 6.5

GLOBALY 35.1 32.2 31.7 32.1 9.1 10.6 12.8 11.8

2.2.3 Rank to the Dispute causes in Global

TABLE–3: RANK TO THE DISPUTE CAUSES IN GLOBAL

SOURCE: GLOBAL CONSTRUCTION DISPUTES REPORT 2014

2013

Rank

Cause 2012

Rank

1 Failure to properly administer the contract 3

2 Failure to understand and/ or comply with its

contractual obligations by the Employer/Contractor/

Subcontractor

2

3 Incomplete design information or Employer

requirements

New

4 Failure to make interim awards on extensions of time

and compensation

4

5 Poorly drafted or incomplete and unsubstantiated claims 1

2.2.4 Rank to Alternative Dispute Resolution Method

TABLE–4: RANK TO ALTERNATIVE DISPUTE RESOLUTION METHOD


2013

Rank

Method of Alternative Dispute Resolution 2012

Rank

1 Party to Party Negotiation 3

2 Arbitration 2

3 Adjudication 1



2.2.5 Rank to the Dispute causes in Asia

TABLE–5: RANK TO THE DISPUTE CAUSES IN ASIA


2013

Rank

Cause 2012

Rank

1 Failure to make interim awards on extensions of time and

compensation

2

2 A failure to properly administer the contract 5

3 A biased PM or Engineer -

4 An unrealistic contract completion date being defined at tender

stage

-

5 Employer imposed change -

2.2.6 Rank to the Dispute causes in US

TABLE–6: RANK TO THE DISPUTE CAUSES IN US


2013

Rank

Cause 2012

Rank

1 Errors and/ or omissions in the Contract Document 2

2 Failure to make interim awards on extensions of time and

compensation

5

3 Differing site conditions 4

4 Incomplete design information or Employer requirements (for

D&B/D&C)

-

5 A failure to properly administer the contract -



2.2.7 Rank to the Dispute causes in UK

TABLE–7: RANK TO THE DISPUTE CAUSES IN UK


2013

Rank

Cause 2012

Rank

1 Employer/ Contractor/ Subcontractor failing to understand and/ or

comply with its contractual obligations

1

2 Failure to properly administer the contract 3

3 Incomplete design information or Employer requirements (for

D&B/D&C)

-

4 Poorly drafted or incomplete and unsubstantiated claims -

5 Employer imposed change -

2.2.8 Rank to the Dispute causes in Middle East

TABLE – 8 RANK TO THE DISPUTE CAUSES IN MIDDLE EAST


2013

Rank

Cause 2012

Rank

1 A failure to properly administer the contract 1

2 Employer imposed change 3

3 Employer/ Contractor/ Subcontractor failing to understand and/ or

comply with its contractual obligations

-

4 Errors and/ or omissions in the Contract Document -

5 An unrealistic contract completion date being defined at tender

stage

-

2.3 Data required for making Claim

It is essential that for every claim, the contractor provide to the engineer

appropriately documented claims, which sets out:

The name and brief description of the claim, that is claim identification;

The provisions of the contract on which the claim is based (and which provide



for it to be a risk allocated to the principal requiring additional payment and/or

extension of time),

Details any additional work undertaken or costs incurred,

Valuation of the claim, supported by sufficient details (and proof if required),

Details of any delay and time extension due, keep contemporary records: to

support the claim; and permit the Engineer to examine them (FIDIC Clause)

2.4 Types of construction disputes

There are several types of construction claims out of which major ones are listed down

below after studying the research papers, journals, books and other study material

2.5 Causes of Claims:

There are many kind of conflicts occur in construction industry between the parties

which mostly converts into the claims. After taking the opinion of experts like

experienced contractor, client, Designers, Arbitrator, Professors of the construction

sector as well as after reviewing the research papers related to construction claims.

Following are the main causes of claims:

Delay in Supply of Drawings,

Delay in Handing over the Site,

Delay in Supply of materials,

Delay Claims

Price Acceleration Claims

Change of work order Claims

Extra item, and Veriation Claims

Diferent Site condition Claims

Damage Claims

Loss of profit Claims

Wrongful withholding of Deposits Claims



Delay in Payments,

Delay in Starting work,

Delay in Completing the work,

Work actually done but not measured and paid,

Refund of maintenance deposit,

Loss due to extra overheads on account of extension of time limit,

Loss due to idle machinery and idle labour,

Due to Design errors,

Due to inadequate or incomplete specifications,

Due to inadequate information related to design.

Due to Inadequate bid information,

Due to Inadequate time for bid preparation,

Due to Change in work scope,

Due to Changes in plans and specifications during construction,

Due to Insufficient plans and specifications,

Due to Extra items and Variations,

Due to Non granting of Completion by Engineer in charge.

Due to Partiality by the Engineer,

Due to Unrealistic expectations,

Due to Poor management and administration of the construction site.

Due to Ambiguities in contract documents,

Due to Different interpretations of the contract provisions,

Due to Inadequate investigation of site,

Due to Unbalanced bidding,

Due to coating very low rates in the Tender,

Due to Changes made or changes which occur not at the request of the owner,

Due to Extension of time (EOT),

Due to financial failure of the contractor,

Due to technical inadequacy of the contractor,

Due to Poor quality of construction work and use of wrong equipment,

Due to Failure to follow authorized procedures,

Due to Employers’ Lack of Construction Knowledge,

Due to damages occur to adjacent buildings during the work,

Due to Strikes by Workers,



Due to Failure of parties to cooperate with each other in the performance of

the work.

Due to Accidents,

Due to Natural Calamity,

Due to Increase in Material / Fuel Cost,

Due to Court intervention,

Due to Weather conditions,

Due to Unforeseen ground conditions.

2.6 Most frequent causes of Claims

From the list of above claims most of the claims mostly settled down between the

parties by their mutual understanding as well as by Negotiation but some of the claims

which are frequently occurs and which may not settle create the disputes between the

parties are listed and explained below. These type of claims which do not settle and

converts into the dispute can be solved by the Advanced Dispute Resolution Methods.

Payment Related Claims

Change of work order Claims

Delay Claims

Extra item, and Veriation Claims

Contractual Claims

Difference in Measuring Claims

Diferent Site condition Claims

Price Acceleration Claims

Damage Claims

Contract termination Claims



2.6.1 Payment related Claims:

In the construction industry most of claims arise for the not payment or delayed

payment of running bills, Final bills, unreasonably deduction of money from bills

without any strong reason, delay in payment of security deposit, maintenance deposit

etc. as well as construction work which contractor have done, construction material

or plant which have provided, consulting services which have been provided, interest

on overdue progress payments, Contractor’s losses and additional expenses due to

work being deleted from the contract while work suspended under the protection of

the Act at the end of the contract, a claim under the Act can be made for the final

payment. However, claims under the Act are claims for the interim payments, pending

the resolution of your final entitlement under the contract.

2.6.2 Change Claims:

Almost every construction project encounters change. Whether it’s a change to the

scope of work, a revision to the specifications, or an impact to the means and methods

of performing the work, changes can significantly impact a project’s cost and

schedule. Due to change in work scope the claim may take place between the

contractor and client. Due to change in work scope or change in design the quantity

of work may increase or decrease and if it is the work from which contractor is going

to get the maximum profit then he can claim for increased rates for performing the

work or extra money for completing the work.

2.6.3 Delay Claims

Construction delay claims, or disputes related to schedule impacts, are one of the most

common types of disputes in the construction industry. Delays should be investigated

thoroughly and carefully as the results may vary widely. Some may not affect the

whole project, that is, their impact is solely the cost of resources working at a reduced

efficiency. These activities are considered to have float time within the programme,

and their influence on the project is limited. Whereas, some delays do impact the

project completion and accordingly their financial implications are much greater.

Completion of project within the prescribed time scale, budget and with appropriate

technical performance/quality is an important measure of a successful management

of construction project. Delay claims typically relate to unanticipated project events

and/or circumstances which extend the project and/or prevent work from being



performed as originally planned. There are many common causes for schedule delays

on a construction project. Any project faces delays and disruptions especially the

mega/complex projects of today, with many interfaces.

Delay refers to the lack of performance or the extension of time required to complete

a project that results from unexpected events. Delay may be caused by the contractor,

the owner, third parties, or by unanticipated natural or artificial site conditions.

2.6.4 Extra Work Claims

Extra work is any work that is ordered by the owner after construction has started that

was not included in the original contract. The extra work being performed by the

contractor is a result of a clarification of the contract documents. However, the

contractor believes that he is performing extra work, while the owner believes the

work was part of original contract.

2.6.5 Contractual Claims

Contractual claims concerns matters with regard to the contract itself. This includes

any disagreement on the responsibility or liability of some parts that are not included

in the documents. The main reason of these types of claims is poorly written contracts.

2.6.6 Difference in Pricing and Measuring Claims

These types of claims deal with the disagreement regarding measurements at the final

stage in the construction. Also, these claims include the differences in pricing by the

contractor and the owner of some of the materials. Also, the change and the extra

work usually create some differences in pricing.

2.6.7 Different Site Conditions Claims

A changed condition refers to some physical aspect of the project or its site that differs

materially from the indicated by the contract documents or that is of an unusual and

differs materially from the conditions ordinarily encountered.

2.6.8 Acceleration claims

Acceleration occurs when the owner requires the contractor to complete construction

of the project earlier than the time the contractor was entitled to base on a properly



adjusted schedule. Acceleration refers to the owners directing the contractor to

accelerate his performance so as complete the project at an earlier date the current

date of work advancement will permit. It occurs when the contractor is ordered, either

directly or constructively, to speed up performance in some way. These types of

claims may occur in big projects but for residential houses, these are rare especially

nowadays where the rate of houses rental is smaller.

2.6.9 Damage Claims

Property damages may occur due to the act of the owner or due to safety related

problems. This type of claims is very rare because usually contractors have the total

responsibility for the site.

2.6.10 Contract Termination

When contract termination has occurred before the contractor has begun the work, the

contractor may be entitled to recover the loss of the expected profit, or the difference

between the contract price and the anticipated cost of the work. If the owner has

terminated the contract after the contractor has begun the work, the contractor may be

entitled to recover the loss in various ways. If the contractor has completed the work

in full compliance with the contract prior to termination, he should expect to recover

the full contract price. Recovery and liability under terminated contracts varies

widely.

2.7 Claims Settlement methods:

When the contractor discovers the problem, he should try to eliminate or avoid it. If

he cannot do so, then he should write to a letter to the owner to make a formal claim.

This is the first step in claim procedure. The problem is approached during regular

meeting s, or a special meeting may be arranged to settle or discuss this dispute. If all

that did not succeed, then mediation could be friendly way for settling the claim.

Otherwise, arbitration or litigation could be other ways to solve the claims. These

methods could be as under:

http://www.disputesinconstruction.com/construction-expert-terminated-fixed-price-contracts/



FIGURE-1: CLAIMS SETTLEMENTS METHODS

The above figure shows that to solve the claims generally Owner and Contractor use

the Negotiation method first. If the claim is not settled by Negotiation then Mediation

method is use to solve the claims by help of Mediator. If the claim is still not settled

by Mediation method then Arbitration method is use to solve the claims by help of

FIGURE-2: CLAIMS SETTLEMENTS METHODS

(Source: www.justindemerchant.com/adr-in-the-construction-context/)



Arbitrator which is appointed by the court and whose decision is enforced by law and

it is agree by both the parties. And at the last if the result of Arbitrator is not accepted

by either party of claim then the last option to resolve the claim is Litigation by the

help of court.

The figure shows that as we go from bottom to top the cost incurred in the method is

also increasing. It also shows that Mediation, Mini-trial and Adjudication is Non-

Binding while Arbitration and Litigation is Binding to both the parties.

FIGURE-3: ALTERNATIVE DISPUTE RESOLUTION METHODS

(Source:www.publicprocurementguides.treasury.gov.cy/OHS-

EN/HTML/index.html)



The above figure shows that in methods like Amicable Settlement, Mediation and

Conciliation the involvement of the parties in the decision is higher and these methods

are Informal methods. While Arbitration, Adjudication and Litigation is Formal

method to settle the disputes and involves low degree of involvement of the different

parties in the decision.

2.7.1 Negotiation:

Direct negotiation is a common dispute resolution process in which parties

themselves, or their representatives, try to resolve the dispute without involving any

neutral third party. It is a voluntary and an unstructured process agreed by both parties,

privately and confidentially. The features that contribute to the success of direct

negotiation include avoiding taking entrenched positions in the dispute, but rather

seeking solutions, which meet the needs and interest of both parties. However, the

success of negotiation depends on interpersonal communication skills of the parties

during the entire process. Negotiation would be the first port of call when a dispute

occurs and should resolve a dispute at this stage.

2.7.2 Mediation:

Mediation is a private, quick, cheap process (compared to either arbitration or

litigation) where a third party makes possible dialogue between the parties in order

that the parties can reach their own decision that is initially non-binding. The parties

can however, agree to be bound by their final decision.

2.7.3 Conciliation:

Conciliation is a process similar to mediation except that the conciliator can express

an opinion on the merits of the case and is required to recommend a solution if the

parties fail to agree (Dighello 2000, Agarwal 2001). The power of the conciliators is

conferred by status.

In conciliation however, the third party neutral does not always meet together with

the parties. The conciliator’s role is also broader than in the mediation as it includes

advising the parties on the possible result of the dispute if it were resolved in either

arbitration or litigation.



In conciliation, the process begins with identification of the issues, then the options

for resolution are explored, the conciliator advises on likely outcome of dispute in

other forums and in light of this the options for resolution are considered; and ideally

a consensual agreement is then reached.

2.7.4 Mini-trial:

Another process involving neutral third party in a dispute is the mini-trial. In mini-

trial, the case is heard not by judge, but by the senior professional or other high-level

business people from both sides. The representative should have full settlement

authority. A third party neutral usually joins the party representative listening to the

proofs and argument, and can make any necessary decision to regulate the process.

Following the presentations, the parties’ representatives meet, with or without the

neutral, to negotiate a settlement. Frequently, the neutral will serve as a mediator

during the negotiations or be asked to offer a non-binding opinion on the potential

court outcome.

2.7.5 Adjudication:

A statutory dispute resolution method. The Construction Act (Part II of the Housing

Grants, Construction and Regeneration Act 1996) allows any party to a building

contract, subcontract or appointment to refer a dispute to an adjudicator, who must

then be appointed within seven days and must reach his decision within a further 28

days. The adjudicator's decision is binding unless and until the dispute is resolved by

a judge or arbitrator.

2.7.6 Arbitration:

Arbitration is a process where a third party who is independent of parties, but may be

selected by them, makes an award determining the dispute. The Award is binding and

can be enforced by courts.

Arbitration is the settlement of a dispute by the decision not of a regular and ordinary

court of law but of one or more persons chosen by parties themselves who are called

arbitrators. Thus, arbitration is out-of-court proceeding where the arbitrator acts as a

judge.



Arbitration is a dispute resolution process in which one or more neutral third parties

hear the evidence and arguments of each disputant and make a decision for them. The

outcome is one of a win/lose situation. The decision of the arbitrator is legally binding

and, often, there is no provision for appeal to a court of law. There are exceptions,

such as misconduct of the arbitrator. Rules of evidence used in arbitration depend on

the prior agreement between the parties. It may take a long time, same as for a

litigation process, and may even be more costly.

2.7.7 Litigation:

Litigation (used when all other venues failed) is a dispute resolution method that is

inquisitorial and adversarial, where by the disputant initiates legal action against the

other party by going to court (Agarwal 2001). It has a win/lose outcome and rarely

satisfies both parties (Fisher et al 1991). It is costly and results into much delay for

the disputants and may not do justice to the parties. However, the benefit of litigation

is that the court has authority to find out the “truth” from the parties and the

enforcement of the order or judgment is supported by other law enforcement agencies.

It is also used when parties have low resources and need an umpire or when they

cannot agree to other forms of dispute resolution.

2.8 Supporting Documents (Evidence) for the claim:

Keep all bid documentation and record any pre-contractual agreements,

representations and understandings in writing and ensure they are in the contract

or can be relied upon at a later stage.

Ensure that a fully signed written agreement is in place before commencing work

on a project. While oral agreements are generally enforceable, written ones are

easier to prove.

Read and be familiar with all contract terms, especially the notice provisions.

Failure to provide notification of a potential claim could preclude a party from

bringing its claim.

Keep all project correspondence. It is often helpful to organize project

correspondence according to each key party and whether the correspondence is

incoming or outgoing. For example, it is important to remember that in order to

litigate a delay claim, it is generally necessary to reconstruct the project in detail



on a daily basis.

Record all relevant conversations and send follow up correspondence. Parties may

proceed on a project for months based on a particular representation or

understanding, only to find out later during litigation that the other party denies

everything. Where there is no response to correspondence, a court may find that a

failure to respond affirms what was said in the letter.

Take pictures or videos at all stages of the project. Nothing can help a judge or

lawyer more to understand a problem or deficiency on a project than an illustrative

picture of it.

Keep all plans and drawings and ensure that you have accurate records of all

amendments or addendums.

Make sure a project diary is kept along with diaries for key personnel. Diaries

should record: 1) the weather; 2) manpower, visitors and contractors on site; 3) key

deliveries; and 4) any notable event such as problematic or hidden site conditions

or events that may cause delay or affect productivity. Ensure that entries express

facts, rather than opinions.

Maintain an as-planned schedule and regularly update it with an as-built schedule.

There are several computer programs available to schedule and track progress. The

end product of a proper scheduling exercise is a plan that should tell a contactor or

owner what sequence work should be done in, when it should start, what work has

to be completed first, when successor activities should start, and when it should

finish. Having an accurate schedule for a project and regularly updating it will

provide a valuable tool for tracking and recording delay and the impact of that

delay.

Record all key events, especially ones that may lead to a claim, and specifically

record: 1) when the event occurred; 2) what it was; 3) who noticed it; 4) the

projected impact it may have on cost and time; 5) whether notice was given and to

whom; and 6) response to notice.

Record all change orders and claims for extras and when they were submitted for

approval, and separate those that are approved from those that are not. A contractor

who has failed to get approval for a change orders should always diligently express

and protest their ongoing concerns in writing. When doing so, the contractor should

adhere to the contractual notice requirements. Parties should also be aware of the

ability to give notice that they are performing under protest.



Document the additional costs caused by an event. It is particularly important to

keep proper accounting and employee payroll records pertaining to additional

overhead and employee costs.

Finally, contact legal counsel as early as possible. Contractual interpretation and

strategic decisions made early can greatly enhance prospects for success in a

construction

2.9 Clauses in Tender to Avoid or Settle Claims

Payment terms and running bills:

Invoice/ Bill should be sent in triplicate. [Please mention our LOI/Work Order no in

the invoice without fail]. Original invoice, Measurement Sheet Materials Test

Certificates if any should be sent to project with a copy to head office for reference.

Mode of payment of running bills:

Running Bills become payable at after deduction as per following and after approval

from management within 30 working days from the date of receipt of the bill at HO,

after deducting there from Payments shall be released for the work executed in all

respects as per BOQ, drawings and specifications.

Retention money deposit will be deducted from RA bills @ 5 % of the value of the

bill amount.

Security deposit at 5 % of the contract value exceed than tendered value.

RA bill must be submitted along with the names of the laborers employed for the

work, salaries/payment made to them, amount of P.F. deducted from the salary made

to the labours and employer’s contribution amount deposited in RPFC against each

and copy of challans for the amount deposited in RPFC office till the previous month

duly certified by project office, failing which no payment will be made for the RA bill

submitted by the Contractor.

The payment will be made to the Tenderer after completion of the work as full and

final settlement in general. However, as a special condition, intermediate payment can



be considered which will not be more than 15% of the actual work done. Other

deduction either statutory or other work reason, if any.

Earnest Money Deposit.(EMD) / Security Deposit (SD) / Retention Money

The tender must accompany Earnest money deposit only by demand Draft of

Nationalized OR HDFC/ICICI/AXIS/IDBI Bank only for the amount as stated above.

Cheque or Bank Guarantee will not be accepted. Earnest money deposit paid as above

will be refunded to unsuccessful tenderer only after finalizing of tender. Successful

tenderer has to pay full amount of Security Deposit @ 5% of the contract value

including EMD by Demand draft of Nationalized Bank /IDBI /HDFC /AXIS /ICICI

within 7 days from the date of issue of LOI. Payment against the work as well as detail

work order will be issued only after submission of Security Deposit. If you fail to pay

security deposit within 7 days from the date of LOI, order will be deemed to be

cancelled and EMD paid by you shall be forfeited.

Earnest Money Security deposit and Retention Money will not bear any interest. If

successful tenderer does not pay initial security deposit or does not commence work

as per tender / LOI/ Work Order E.M.D. paid will be liable to be forfeited. Security

deposit paid by the successful tenderer shall be liable to be forfeited by the owner, if

he does not able to carry out the work in accordance with the terms and condition of

the tender / LOI/Purchase Order/ Work Order. This will not also prejudice that owner

will complete the work at your risk and cost. Tender received without E.M.D. will be

outright rejected. No relaxation on EMD/SD for any small-scale industry shall be

considered. Security deposit will be refunded within three months after the completion

of defect liability period of Twelve Months from the date of completion of work, on

demand by Contractor.

Retention money deposit will be deducted from RA bills @ 5 % of the value of the

Contract amount, which will be released after one year from completion of work. The

retention money shall be released only after receiving NOC from the Architect.

Warranty for total water proofing work to be given for 5 years period. Security Deposit

@ 5% for the water proofing work amount to be retained for warranty period.



Work Completion time Schedule.

Work Completion time is the essence of the contract and if Work Completion time is

not made as stipulated, owner shall be at liberty to procure the material at tenderer’s

Risk and cost and if thereby any extra expenditure is involved, the same shall be

debited to tenderer’s account, if owner is unable to procure the material from alternate

source in time and if corporation suffers any consequential loss, tenderer will have to

bear the same. Bank in that case will forfeit the security deposit and will also have the

right to recover the claim against party for damage incurred.

Work Completion time Penalty.

The work should be completed within stipulated time limit. If work is not completed

as per work completion time penalty will be levied @ 0.1 % of contract value per day

from the date of delaying the said work up to the maximum 10 % of contract value.

This will not absolve the contractor from the responsibility of getting the balance work

done by client at his risk and cost through any other contractor.

Loss and Damages:

Any loss or damages or deterioration of the Building in transits shall be at the cost of

the bidders. It shall be at the discretion of the corporation to reject, damaged or spoiled

material, if so noticed. During the work, if any property of client damaged than book

value/ repair cost + 20 % of same should be recovered from bidder.

Prices:

Prices quoted by the tenderer should be firm and no price increase will be allowed to

the tenderer during the project execution.

Defect Liability Period. :

The work should have defect liability period of 12 Months from the date of completion

/ Date of Final Bill certified by Architect.

In case of any dispute or difference of opinion in the interpretation of any of the terms

and conditions of this tender, the decision of the owner shall be final and binding to

all.

CHAPTER 3

RESEARCH

METHODOLOGY

PAGE NO. 36 - 40

CHAPTER – 3: RESEARCH METHODOLOGY


3.1 Introduction

In this chapter the work methodology or work procedure has been described in detail.

Authors have planned to carry out the work by study of claims through survey

questioner and after collecting the data the data was analyzed by two different

methods, First is Weighted Average method and Second is Relative Importance Index

method. And the results of the data were cross checked by Spearmen’s Rank

Correlation method.

3.2 Data Collection Method

There are two approaches of data collection were adopted in a study. Fieldwork

research is the primary data collection and the other one is desk study which is the

secondary data collection (Naoum, 2007).

3.2.1 Desk study

According to Naoum (2007), desk study approach also called as secondary data

collection method because the data are obtained from other sources, which mean they

are not obtained first hand. Secondary information can be stored either in a statistical

or descriptive format (Naoum, 2007). Naoum (2007) defines statistical format as the

official statistics collected by the state and its agencies, and these statistics are

normally available in public libraries and in most university libraries. On the other

hand, descriptive format is to analyse and critically appraise the contents of an

archival document such as diaries, newspaper, observations, etc. (Naoum, 2007).

3.3 Questionnaire Design

In this research, quantitative research was adopted by using questionnaires to collect

the sufficient data due to the consideration for time constrain. The data has been

collected by using survey approach. The survey questionnaires have been distributed

to the clients, contractors and consultant firms by hand and through an email.

There are total of 8 questions which have been categorized into 3 sections in the

survey questionnaire. Section A (Question 1 to 5) is demographics information which

are intended to solicit respondent’s information and such information will be used to

determine the profile of respondents. The respondents are requested to answer

question pertaining the location of their company based in, the type of their



organization, their profession in construction industry, their working experience in

construction industry and the primary type of projects which they are involved in.

Along with various types of approach to scaling responses in survey research, Likert

scale approach has been adopted for the following questions in the survey’s Section

B, Section C and in the Section D. In the Likert scale approach there are basically five

point method, which are: (1) Strongly disagree, (2) Disagree, (3) Neutral, (4) Agree

and (5) Strongly agree. In the Section B the opinion of respondent about the main

reasons which may arise the construction disputes is been ask, In the Section C the

opinion of respondents about the impacts that may be caused by construction disputes

is been ask, and in the Section D the opinion of respondents regarding dispute

resolution techniques which are been using in case of construction claims in

construction industry.

3.4 Data Analysis Method

In these thesis work the EXCEL software was used to calculate and analyze the

statistical data which was collected by the questionnaire survey other than that

complete statistical tests can also perform in that software. The collected data from

the questionnaire survey will be analyzed by using EXCEL software so as to carry out

the data analysis in this research.

3.4.1 WEIGHTED AVERAGE METHOD

Data of all these tables were analyzed by a weighted average was calculated for each

type of claims as follows:

Weighted Average Index = (Wi* Xi) / N;

Where, Wi is the weight assigned to the ith option;

Xi is the number of respondents who selected the ith option;

And N is the total number of respondents (70 in this study).



3.4.2 RII INDEX METHOD

Data of all these tables were analyzed by a RII Index was calculated for each type of

claims as follows:

RII Index = Σ W/ (A*N)

Where, W = weight given to each factor by the respondents, ranges from 1 to 5,

A = highest weight (i.e. 5 in this case) and

N = total number of respondents.

3.4.3 Spearman Rank Correlation Coefficient

Spearman rank correlation is a non-parametric test that is used to measure the

degree of association between two variables.

It was developed by Spearman, thus it is called the Spearman rank correlation.

Spearman rank correlation test does not assume any assumptions about the

distribution of the data and is the appropriate correlation analysis when the

variables are measured on a scale that is at least ordinal.

The following formula is used to calculate the Spearman rank correlation:

Where:

P= Spearman rank correlation

di= the difference between the ranks of corresponding values Xi and Yi

n= number of value in each data set

Source: http://www.statisticssolutions.com/correlation-pearson-kendall-spearman/

What does this P value mean?

The closer P is to +1 or -1, the stronger the likely correlation. A perfect positive

correlation is +1 and a perfect negative correlation is -1. If we get the value of P nearer

or equal to 1 then the result is perfect and if the value of P is nearer or equal to -1 then

the result is not perfect there might be some error in the data.



Source: http://geographyfieldwork.com/SpearmansRank.htm

3.5 Sample Size

The below formula of Creative Research Systems, 2001 was used to determine the

sample size of unlimited population:

SS = [Z2 × P × (1-P)] / C2

Where,

SS = Sample Size.

Z = Z Value (e.g. 1.96 for 95% confidence interval).

P = Percentage picking a choice, expressed as decimal, (0.50 used for sample size

needed).

C = Confidence interval (0.1)

POP = Population

SS = [1.962 × 0.5 × (1- 0.5)] / .12 = 96.04

Table – 9: Population for Survey Work

CITY BUILDER/

DEVELOPER

CONTRACTOR/

ENGINEER ARCHITECT

AHMEDABAD 859 663 192

Total 1714

(Source: auda.org.in)

Number of Builder / Developers, Contractors / Engineers and Architects in

Ahmedabad are taken from Ahmedabad Urban Development Authority (AUDA)

So total number of population is 1714



Correction for finite population:

POP

SS

SSSSnew 1

1

99.90

1714

104.961

04.96

newSS

So, total responses to be collect are 91.

CHAPTER 4

DATA COLLECTION

AND ANALYSIS

PAGE NO. 41 - 55

CHAPTER – 4: DATA COLLECTION AND ANALYSIS


4.0 INTRODUCTION:

In this chapter author has discussed about how they have collected the

data and analyzed that data by different methods. In this chapter the

author has gave the rank to different categories of questioner survey by

Weighted Average Index and RII Index and the result is cross checked by

Spearman’s Rank correlation method.

4.1 DATA COLLECTION:

It was planned to collect the feedbacks from various stakeholders of construction

industry from Ahmedabad city of Gujarat state of India. The survey has included

Architects, Contractors and Developers. This research work includes use of Weighted

Average Method (W.I) and Relative Importance Index method (R.I.I).

Table - 10: Rate of Responses

Sr.

No Respondent

Questionnaire

Distributed

Responses

Received

Percentage

of

Responses

1 Owner 52 36 69.23%

2 Contractor 38 23 60.52%

3 Architect 23 11 47.83%

Total 113 70 61.95%

4 By mail 38 0 0%

During the data collection stage, total 113 questionnaires were distributed out of

which 70 feedbacks were received back. Out of the total responses, 36 were from

Contractors, 23 from Developers, and 11 were from Architects.



4.2 LIST OF RESPONDENTS:

Table -11: List of Respondents

LIST OF RESPONDENTS

Respondent Name Category Company Name

1 Abhishek Madhu Developer Rajsyai Corp. Ltd.

2 Dilip Shah Architect Het Enterprise Ltd.

3 Bharat Chauhan Contractor Raj Contractors Ltd.

4 Sujal Parikh Consultant SPA

5 Dineshbhai Developer Vrundavan

6 Dixit Desai Architect Shyam Design

7 Praful Patel Developer Akshay Org.

8 Raghuveer Chavada Developer S&S Developer

9 Nirav Shah Developer Shyam Vandna

10 Naresh Patel Contractor

11 Dilip Amin Contractor Delta

12 Amit Gajera Contractor Vrundavan Infra.

13 Mahesh Poriya Contractor Shyam Vandna

14 Hira Bharwad Developer Vrundavan Infra.

15 Chirag Parekh Architect Creative Touch Design

16 Ankita Shah Architect Shayona Designe

17 Dhrumal Shah Contractor Ratnakar Const.

18 Vijay Savaliya Contractor Shivam Const.

19 Yogesh Patel Contractor Patel Infra.

20 Kamlesh Poriya Contractor Shyam Shradha

21 Kishor Mistry Contractor

22 Mahesh Modi Contractor Applied Engineers

23 Pankaj Poriya Contractor P & P Const.

24 Tushar Patel Architect Ved Design

25 Jaydeep Raval Contractor J & R Contractors

26 Shaeem Vora Consultant Rehman Consultancy



27 Nishit Parmar Contractor Virgo Contractors

28 Hiren Pandya Architect Hetu Architect

29 Ghanshyam Patel Developer Radhe Developers

30 Akshay Desai Developer H N Safal

31 Jesal Vora Contractor Sun Heart Tiles Pvt. Ltd.

32 Chandresh Dave Contractor

33 Ranjit Chudasma Architect

34 Amit Trivedi Contractor Narayankrupa Infra.

35 Samir Jadav Contractor Spartan Builders Pvt Ltd.

36 Manish Dhruva Consultant Multi Link Infra

37 Jayesh Shah Developer Goyal & Co.

38 Jigarbhai Developer Seventh Avenue

39 Keyur Kathariya Developer Akshar Stadiya

40 Nilay Desai Developer Vrundavan Heights

41 Hemal Shah Contractor Fraylend

42 Rahul Deliwala Architect Delta Designers

43 Pragnesh Vora Contractor Navkar Contractors

44 Prakash Tank Contractor Romix Constructions

45 Digvijay

Chudasama Developer

Maruti Construction Pvt

Ltd.

46 Nilesh Dagli Contractor B Safal Pvt Ltd.

47 Jigneshkumar Contractor Jindal Infra Pvt Ltd.

48 Kiran Parekh Contractor Kiran Contractors

49 Ankit Makwana Contractor Manav Land Developers

50 Jagdish Bhatt Contractor

51 Shaktisinh Developer Unique Infraspace Pvt Ltd.

52 Manoj Mandaliya Developer Deep Group of Companies

53 Rajeshbhai Contractor Sangani Infra India Pvt

Ltd.

54 Govind Patel Contractor Shayona Shikhar

55 Bhavin Jiyani Developer B.R.Developer



56 Jignesh Pawar Contractor Coffor India

57 Shailesh Shah Developer Takshshila

58 Abhijit Dixit Developer Dharmadev

59 Yash Patel Contractor Post Tensioning Sevices

LLP

60 Amit Contractor Satyam Buildtech

61 Jatin Patel Contractor J.K.Associates

62 Nikhil Soni Contractor BRIXO

63 Praful Prajati Developer Swati

64 Aashish Patel Developer Aaryan Embassy

65 Deep Bhabhera Contractor Deep Builders Pvt Ltd.

66 Bharat Bhatt Contractor Unique Infraspace Pvt Ltd.

67 Bhaumik Vyas Developer Ozone India Ltd.

68 Nimesh Parikh Contractor Magnanimous Infra Pvt

Ltd.

69 Shubham Bhavsar Developer Shubh Aarambh

70 Dharmesh Dave Developer D & C Developers

The above table shows the list of respondents who have spend their valuable time

and effort during the survey work

4.3 DATA ANALYSIS:

In these thesis work the EXCEL software was used to calculate and analyze the

statistical data which was collected by the questionnaire survey other than that

complete statistical tests can also perform in that software. The collected data from

the questionnaire survey will be analyzed by using EXCEL software so as to carry out

the data analysis in this research.



4.4OVERALL RANKING BY ALL IN GENERAL:

4.4.1 RANK TO CAUSES OF CONSTRUCTION DISPUTE:

Table–12: OVERALL RANK TO CAUSES OF CONSTRUCTION DISPUTE

Rank to Causes of Construction Dispute

No. Question

Wei.

Avg

Index

Wei.

Avg.

Rank

RII

Index

RII.

Rank

A Finance and Payment Issue 4.67 1 0.934 1

B Time Overrun 4.40 7 0.88 7

C Cost Overrun 4.46 6 0.891 6

D Price Escalation 3.61 14 0.723 14

E Work Change Orders 4.47 5 0.894 5

F Poor Communication 3.93 12 0.786 12

G Design Errors 4.56 4 0.911 4

H Inclement Weather 3.11 17 0.623 17

I Extra Items 4.60 3 0.92 3

J Unforeseen Site Condition 3.71 13 0.743 13

K Poor Work Quality 4.63 2 0.926 2

L Incomplete information in Tender 4.29 9 0.857 9

M Delay in issuing Site, Drawings,

Materials 4.37 8 0.874 8

N Return of Security Deposit 3.20 16 0.64 16

O Unfair allocation of Risk 3.26 15 0.651 15

P Delay in Clients Response 4.17 11 0.834 11

Q Mistakes in Contract Document 4.23 10 0.846 10





“Return of Security Deposit” is having second lowest rank while “Unfair allocation

of Risk” is having third lowest rank.



4.4.2 RANK TO IMPACT OF CONSTRUCTION DISPUTE:

Table–13: OVERALL RANK TO IMPACT OF CONSTRUCTION DISPUTE

Rank to Impact of Construction Dispute

No. Question Wei. Avg

Index

Wei. Avg

Rank

RII

Index

RII

Rank

1 Damaged business

relationship 4.64 2 0.929 2

2 Increased project costs 4.49 3 0.897 3

3 Project Delays 4.39 6 0.877 6

4 Undermine team spirit 3.54 7 0.709 7

5 Damaging company

reputation 4.67 1 0.934 1

6 Dispute escalation 3.37 8 0.674 8

7 Poor client satisfaction 4.41 5 0.883 5

8 Delay in project completion 4.49 4 0.897 4



Impact matters. “Damaged Business Relationship” is having second rank to Impact

of Dispute. Further, respondents have given lowest rank to “Dispute Escalation”

matter.

4.4.3 RANK TO DISPUTE RESOLUTION METHOD USED:

Table–14: OVERALL RANK TO DISPUTE RESOLUTION METHOD USED

Rank to Dispute Resolution Method Used

No. Question Index Rank Index Rank

A Adjudication 2.8 5 0.56 5

B Arbitration 1.99 6 0.4 6

C Dispute Review Board 1.4 7 0.28 7

D Expert Determination 4.37 3 0.87 3



E Litigation 1.27 8 0.25 8

F Mini-trial 3.36 4 0.67 4

G Mediation 4.53 2 0.91 2

H Negotiation 5 1 1 1

Respondents have given first rank to “Negotiation” method for dispute resolution,

second rank to “Mediation”, third to “Expert Determination” and last rank is given to

“Litigation” method, second last rank is given to “Dispute review Board”, while

“Arbitration” has secured third last rank.

4.5 RANKS BY INDIVIDUAL:

4.5.1 TO CAUSES OF CONSTRUCTION DISPUTE:

TABLE–15: INDIVIDUAL RANK TO CAUSES OF CONSTRUCTION DISPUTE

Rank given by all Individual to CCD

No. Major Causes of Dispute Rank by

Architect

Rank by

Contractor

Rank by

Developer

1 Finance and Payment Issue 1 1 3

2 Time Overrun 7 8 2

3 Cost Overrun 6 7 1

4 Price Escalation 9 14 11

5 Work Change Orders 3 5 5

6 Poor Communication 6 12 9

7 Design Errors 2 4 4

8 Inclement Weather 11 16 14

9 Extra Items 5 3 2

10 Unforeseen Site Condition 9 13 10

11 Poor Work Quality 4 2 2

12 Incomplete information in

Tender 6 9 7

13 Delay in issuing Site,

Drawings, Materials 5 6 7



14 Return of Security Deposit 10 17 13

15 Unfair allocation of Risk 11 15 12

16 Delay in Clients Response 9 10 8

17 Mistakes in Contract

Document 8 11 6

From above table it is clear that “Finance and Payment Issue” has secured first rank

as per Architect and Contractor, while Cost overrun has secured first rank from the

Developers point of view. As per Architect second major cause for dispute is “Design

Errors”, while as per Contractor and Developer the second major cause for dispute is

“Poor work Quality”. Now third major cause for dispute as per Architect is “Work

Change Orders”, while as per Contractor third major cause for dispute is “Extra

Items”, and as per Developer it is “Finance and Payment Issue”.

4.5.2 TO IMPACT OF CONSTRUCTION DISPUTE:

TABLE – 16: INDIVIDUAL RANK TO IMPACT OF CONSTRUCTION DISPUTE

Rank given by all Individual to ICD

No. Impact of Construction

Dispute

Rank by

Architect

Rank by

Contractor

Rank by

Developer

1 Damaged business

relationship 1 1 3

2 Increased project costs 3 4 2

3 Project Delays 5 5 4

4 Undermine team spirit 7 6 6

5 Damaging company

reputation 2 2 1

6 Dispute escalation 8 7 5

7 Poor client satisfaction 6 3 3

8 Delay in project

completion 4 3 2



“Damaged Business Relationship” is ranked as greatest and top most impact of

construction dispute as per Architect and Contractor while by Developer it is ranked

as 3rd top most impact. “Damaging Company Reputation” is ranked as 1st by

Developer so it mean as per developer Damaging company Reputation is the top most

impact of construction dispute. “Poor Client Satisfaction” has secured 3 rd rank as per

Contractor and Developer.

4.5.3 TO DISPUTE RESOLUTION METHOD USED:

TABLE – 17: INDIVIDUAL RANK TO DISPUTE RESOLUTION METHOD USED

Rank given by all Individual to DRM

No. Dispute Resolution

Method

Rank by

Architect

Rank by

Contractor

Rank by

Developer

A Adjudication 5 5 5

B Arbitration 6 6 6

C Dispute Review Board 7 7 7

D Expert Determination 3 3 3

E Litigation 8 8 8

F Mini-trial 4 4 4

G Mediation 2 2 2

H Negotiation 1 1 1

With concerned to the use of Dispute Resolution method all individual has same view

point. All the three individuals it means Architect, Contractor and Developer has gave

same rank as per below. “Negotiation” method is firstly used by all, then after

“Mediation” is used, then “ Expert Determination”, then “Mini-Trial”, then

“Adjudication”, then “Arbitration”, then “Dispute Review Board”, and at the last

“Litigation”.



4.6 SPEARMAN’S RANK CORRELATION METHOD:

4.6.1 SPEARMAN’S RANK CORRELATION FOR CAUSES OF

CONSTRUCTION DISPUTE (CCD)

4.6.1.1 BETWEEN ARCHITECT AND CONTRACTOR:

TABLE – 18: CCD - SPEARMAN'S RANK CORRELATION BETWEEN A&C

CCD - Spearman's Rank Correlation between Architect & Contractor

No. Question Rank by

Architect

Rank by

Contractor Difference Difference^2

1 Finance and Payment

Issue 1 1 0 0

2 Time Overrun 7 8 1 1

3 Cost Overrun 6 7 1 1

4 Price Escalation 9 14 5 25

5 Work Change Orders 3 5 2 4

6 Poor Communication 6 12 6 36

7 Design Errors 2 4 2 4

8 Inclement Weather 11 16 5 25

9 Extra Items 5 3 2 4

10 Unforeseen Site Condition 9 13 4 16

11 Poor Work Quality 4 2 2 4


Tender 6 9 3 9


Drawings, Materials 5 6 1 1

14 Return of Security Deposit 10 17 7 49

15 Unfair allocation of Risk 11 15 4 16

16 Delay in Clients Response 9 10 1 1


Document 8 11 3 9

205

Here, n=17, n2=28, d2= 205

p=1 - 6*(∑d2)/n*(n2-1) = 0.75

Here, Spearman’s rank is 0.75 which is nearer to 1 so result is Reliable.



4.6.1.2 BETWEEN ARCHITECT AND DEVELOPER:

TABLE – 19: CCD - SPEARMAN'S RANK CORRELATION BETWEEN A&D

CCD - Spearman's Rank Correlation between Architect & Developer


Architect

Rank by

Developer Difference Difference^2

1 Finance and Payment

Issue 1 3 2 4









10 Unforeseen Site

Condition 9 10 1 1



Tender 6 7 1 1



14 Return of Security

Deposit 10 13 3 9




Document 8 6 2 4

118

Here, n=17, n2=289, d2= 118

p=1 - 6*(∑d2)/n*(n2-1) = 0.856




4.6.1.3 BETWEEN CONTRACTOR AND DEVELOPER:

TABLE – 20: CCD - SPEARMAN'S RANK CORRELATION BETWEEN C&D

CCD - Spearman's Rank Correlation between Contractor & Developer


Contractor

Rank by


1 Finance and Payment Issue 1 3 2 4









10 Unforeseen Site Condition 13 10 3 9



Tender 9 7 2 4



14 Return of Security Deposit 17 13 4 16




Document 11 6 5 25

167

Here, n=17, n2=289, d2= 167

p=1 - 6*(∑d2)/n*(n2-1) = .80




4.6.2 SPEARMAN’S RANK CORRELATION FOR IMPACT OF

CONSTRUCTION DISPUTE (ICD)


TABLE–21: ICD - SPEARMAN'S RANK CORRELATION BETWEEN A&C

ICD - Spearman's Rank Correlation between Architect & Contractor

No. Question Rank as

per

Architect

Rank as per

Contractor Difference^2

1 Damaged business relationship 1 1 0




5 Damaging company reputation 2 2 0



8 Delay in project completion 4 3 1

13

n=8 n2=64 d2= 13 p=1 - 6*(Σd2)/n*(n2-1) = 0.845



TABLE – 22: ICD - SPEARMAN'S RANK CORRELATION BETWEEN A&D

ICD - Spearman's Rank Correlation between Architect & Developer

No. Question Rank as per

Architect

Rank as per

Developer Difference^2









30

n=8 n2=64 d2= 30 p=1 - 6*(∑d2)/n*(n2-1) = 0.643





TABLE – 23: ICD - SPEARMAN'S RANK CORRELATION BETWEEN C&D

ICD - Spearman's Rank Correlation between Contractor & Developer


Contractor

Rank by

Developer Difference^2









15

n=8 n2=64 d2= 15 p=1 - 6*(Σd2)/n*(n2-1) = 0.82


4.6.3 SPEARMAN’S RANK CORRELATION FOR DISPUTE RESOLUTION

METHOD USE


TABLE – 24: DRM - SPEARMAN'S RANK CORRELATION BETWEEN A&C

DRM - Spearman's Rank Correlation between Architect & Contractor


Architect

Rank by

Contractor Difference Difference^2

A Adjudication 5 5 0 0

B Arbitration 6 6 0 0

C Dispute Review

Board

7 7 0 0

D Expert

Determination

3 3 0 0

E Litigation 8 8 0 0

F Mini-trial 4 4 0 0

G Mediation 2 2 0 0


0

n=8 n2=64 d2= 0 p=1 - 6*(Σd2)/n*(n2-1) = 1

Here, Spearman’s rank is 1 which is nearer to 1 so result is Reliable.




TABLE – 25: DRM - SPEARMAN'S RANK CORRELATION BETWEEN A&D

Spearman's Rank Correlation between Architect & Developer


Architect

Rank by




C Dispute Review Board 7 7 0 0

D Expert Determination 3 3 0 0



G Mediation 2 2 0 0


0

n=8 n2=64 d2= 0 p=1 - 6*(Σd2)/n*(n2-1) = 1



TABLE – 26: DRM - SPEARMAN'S RANK CORRELATION BETWEEN C&D

DRM - Spearman's Rank Correlation between Contractor & Developer


Contractor

Rank by




C Dispute Review Board 7 7 0 0

D Expert Determination 3 3 0 0



G Mediation 2 2 0 0


0

n=8 n2=64 d2= 0 p=1 - 6*(Σd2)/n*(n2-1) = 1


CHAPTER 5

RESULT AND

DISCUSSION

PAGE NO. 56 - 71

CHAPTER – 5: RESULT AND DISCUSSION


5.0 Introduction

In this chapter the author has discussed the results and their discussion from the

survey data. The author has discussed the results of Causes of Construction Dispute,

Impact of Construction Dispute and Dispute Resolution Method in general, and by

individually. The author has also described the percentage of CCD, ICD and DRM

by graphs.

5.1 Comparison of Rank of Each Category by All Individual

5.1.1 Rank to Causes of Construction Dispute by All Individual

TABLE-27: RANK TO CCD BY ALL INDIVIDUAL

No. Causes of Construction

Dispute

Rank by

Architect

Rank by

Contractor

Rank by

Developer

1 Finance and Payment Issue 1 1 3

2 Time Overrun 7 8 2

3 Cost Overrun 6 7 1

4 Price Escalation 9 14 11

5 Work Change Orders 3 5 5

6 Poor Communication 6 12 9

7 Design Errors 2 4 4

8 Inclement Weather 11 16 14

9 Extra Items 5 3 2

10 Unforeseen Site Condition 9 13 10

11 Poor Work Quality 4 2 2

12 Incomplete information 6 9 7


Drawings, Materials 5 6 7

14 Return of Security Deposit 10 17 13

15 Unfair allocation of Risk 11 15 12

16 Delay in Clients Response 9 10 8


Document 8 11 6



FIGURE-4: RANK BY ALL INDIVIDUAL TO CAUSES OF CONSTRUCTION DISPUTE

0 5 10 15 20

Finance and Payment Issue

Time Overrun

Cost Overrun

Price Escalation

Work Change Orders

Poor Communication

Design Errors

Inclement Weather

Extra Items

Unforseen Site Condition

Poor Work Quality

Incomplete information in Tender

Delay in issuing Site, Drawings,Materials

Return of Security Deposit

Unfair allocation of Risk

Delay in Clients Response

Mistakes in Contract Document

RANK

CA

US

ES

OF C

ON

ST

RU

CT

ION

DIS

PU

TE

RANK BY ALL INDIVIDUAL TO CCD

Rank by Developer

Rank by Contractor

Rank by Architect



5.1.2 Rank to Impact of Construction Dispute by All Individual

TABLE-28: RANK TO ICD BY ALL INDIVIDUAL

No. Impact of Construction

Dispute

Rank by

Architect

Rank by

Contractor

Rank by

Developer

1 Damaged business

relationship 1 1 3




5

Damaging company

reputation 2 2 1



8

Delay in project

completion 4 3 2

FIGURE-5: RANK BY ALL INDIVIDUAL TO IMPACT OF CONSTRUCTION DISPUTE

1

3

5

7

2

8

6

4

1

4

5

6

2

7

3

3

3

2

4

6

1

5

3

2

0 2 4 6 8 10

Damaged business relationship

Increased project costs

Project Delays

Undermine team spirit

Damaging company reputation

Dispute escalation

Poor client satisfaction

Delay in project completion

RANK

IMP

AC

T O

F C

ON

ST

RU

CT

ION

D

ISP

UT

E

RANK BY ALL INDIVIDUAL TO ICD

Rank by Developer

Rank by Contractor

Rank by Architect



5.1.3 Rank to Dispute Resolution Method by All Individual

TABLE-29: RANK TO DRM BY ALL INDIVIDUAL

No. Dispute Resolution

Method

Rank by

Architect

Rank by

Contractor

Rank by

Developer

A Adjudication 5 5 5

B Arbitration 6 6 6

C Dispute Review Board 7 7 7

D Expert Determination 3 3 3

E Litigation 8 8 8

F Mini-trial 4 4 4

G Mediation 2 2 2

H Negotiation 1 1 1

FIGURE-6: RANK BY ALL INDIVIDUAL TO DISPUTE RESOLUTION METHOD

5

6

7

3

8

4

2

1

5

6

7

3

8

4

2

1

5

6

7

3

8

4

2

1

0 2 4 6 8 10

Adjuducation

Arbitration

Dispute Review Board

Expert Determination

Litigation

Mini-trial

Mediation

Negotiation

RANK

DIS

PU

TE

RE

SO

LU

TIO

N M

ET

HO

D

RANK BY ALL INDIVIDUAL TO DRM

Rank by Developer

Rank by Contractor

Rank by Architect



5.2 Percentage and Rank to Major Causes of Dispute

5.2.1 Percentage and Rank to Major Causes of Dispute in General

TABLE-30: PERCENTAGE AND RANK TO CCD IN GENERAL

No. Major Causes of Dispute Percentage Rank

Q-1 Finance and Payment Issue 93.43 1

Q-2 Time Overrun 88.00 7

Q-3 Cost Overrun 89.14 6

Q-4 Price Escalation 72.29 14

Q-5 Work Change Orders 89.43 5

Q-6 Poor Communication 78.57 12

Q-7 Design Errors 91.14 4

Q-8 Inclement Weather 62.29 17

Q-9 Extra Items 92.00 3

Q-10 Unforeseen Site Condition 74.29 13

Q-11 Poor Work Quality 92.57 2

Q-12 Incomplete information in Tender 85.71 9

Q-13 Delay in issuing Site, Drawings, Materials 87.43 8

Q-14 Return of Security Deposit 64.00 16

Q-15 Unfair allocation of Risk 65.14 15

Q-16 Delay in Clients Response 83.43 11

Q-17 Mistakes in Contract Document 84.57 10

FIGURE-7: CCD VS IT’S PERCENTAGE BY ALL

From above graph we can say that, in general Finance and Payment issue is securing

1st rank with 93.43% choice, the 2nd rank is secured by Poor work quality with 92.57%,

while Extra items are securing 3rd rank with 92% choices. The last rank is secured by

Inclement Weather with only 62.29% choices. Return of Security Deposit is securing

2nd last rank with just 64% choices.

1 7 6

14

512

4

17

3

13

29 8

16 15

11 10

0102030405060708090

100

MAJOR CAUSES OF DISPUTE

CCD VS. IT'S PERCENTAGE BY ALL



5.2.2 Percentage and Rank to Major Causes of Dispute by Architect:

TABLE-31: PERCENTAGE AND RANK TO CCD BY ARCHITECT



















FIGURE-8: CCD VS IT’S PERCENTAGE BY ARCHITECT

From above graph we can say that, as per Architect Finance and Payment issue is

securing 1st rank with 92.73% choice, the 2nd rank is secured by Design Errors with

90.91%, while Work Change Order is securing 3rd rank with 89.09% choices. The last

rank is secured by Inclement Weather and Unfair allocation of Risk with only 61.82%

choices. Return of Security Deposit is securing 2nd last rank with just 63.64% choices.

1

7 69

36

2

11

59

46 5

10 11

9 8

0102030405060708090

100

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MAJOR CAUSES OF CONSTRUCTION DISPUTE

CCD Vs IT'S PERCENTAGE BY ARCHITECT



5.2.3 Percentage and Rank to Major Causes of Dispute by Contractor:

TABLE-32: PERCENTAGE AND RANK TO CCD BY CONTRACTOR

No. Question Percentage Rank


















FIGURE-9: CCD VS IT’S PERCENTAGE BY CONTRACTOR

From above graph we can say that, as per Contractor Finance and Payment issue is

securing 1st rank with 93.89% choice, the 2nd rank is secured by Poor work Quality

with 93.33%, while Extra Items are securing 3rd rank with 92.78% choices. The last

rank is secured by Return of Security Deposit with only 64.44% choices. Inclement

Weather is securing 2nd last rank with just 65% choices.

18 7

14

5

12

4

16

3

13

29 6

17 15

10 11

0102030405060708090

100

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MAJOR CAUSES OF DISPUTE

CCD VS. IT'S PERCENTAGE BY CONTRACTOR



5.2.4 Percentage and Rank to Major Causes of Dispute by Developer:

TABLE-33: PERCENTAGE AND RANK TO CCD BY DEVELOPER



















FIGURE-10: CCD VS IT’S PERCENTAGE BY DEVELOPER

From above graph we can say that, as per Developer Cost overrun is securing 1st rank

with 95.65% choice, the 2nd rank is secured by Time overrun, Extra Items and Poor

work Quality with 93.91%, while Finance and Payment issue is securing 3rd rank with

93.04% choices. The last rank is secured by Inclement Weather with only 58.26%

choices. Return of Security Deposit is securing 2nd last rank with just 63.48% choices.

3 2 1

11

59

4

14

2

10

27 7

13 128 6

0

20

40

60

80

100

120

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MAJOR CAUSES OF CONSTRUCTION DISPUTE

CCD VS IT'S PERCENTAGE BY DEVELOPER



5.3 Percentage and Rank to Impact of Construction Dispute

5.3.1 Percentage and Rank to Impact of Construction Dispute in General:

TABLE-34: PERCENTAGE AND RANK TO ICD IN GENERAL

Sr. No. Impact matter Percentage Rank

1 Damaged business relationship 92.86 2

2 Increased project costs 89.71 3

3 Project Delays 87.71 6

4 Undermine team spirit 70.86 7

5 Damaging company reputation 93.43 1

6 Dispute escalation 67.43 8

7 Poor client satisfaction 88.29 5

8 Delay in project completion 89.71 4

FIGURE-11: ICD VS IT’S PERCENTAGE BY ALL

From above graph we can say that in general Damaging Company Reputation is

securing 1st rank with 93.43%, with 91% Mediation is securing 2nd rank, and Expert

Advice is securing 3rd rank with 87% choices. While Litigation is at last position with

just 25% choices and Dispute review board is securing second last rank with 28%

choices.

2 3 6

7

1

8

5 4

0102030405060708090

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IMPACTS OF CONSTRUCTION DISPUTE

ICD VS IT'S PERCENTAGE BY ALL



5.3.2 Percentage and Rank to Impact of Construction Dispute by Architect:

TABLE-35: PERCENTAGE AND RANK TO ICD BY ARCHITECT

No. Impact of Construction Dispute Percentage Rank

Q-1 Damaged business relationship 94.55 1

Q-2 Increased project costs 89.09 3

Q-3 Project Delays 85.45 5

Q-4 Undermine team spirit 67.27 7

Q-5 Damaging company reputation 92.73 2

Q-6 Dispute escalation 61.82 8

Q-7 Poor client satisfaction 80.00 6

Q-8 Delay in project completion 87.27 4

FIGURE-12: ICD VS IT’S PERCENTAGE BY ARCHITECT

From above graph we can say that as per Architect Damaging Business Relationship

is securing 1st rank with 94.55%, Damaging Company Reputation is securing 2nd rank

with 92.73%, and Increased Project Cost is securing 3rd rank with 89.09% choices.

While Dispute Escalation is at last position with just 61.82% choices and Undermine

Team Spirit is securing second last rank with 67.27% choices.

13

5

7

2

8

64

0

10

20

30

40

50

60

70

80

90

100

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ICD VS IT'S PERCENTAGE BY ARCHITECT



5.3.3 Percentage and Rank to Impact of Construction Dispute by Contractor:

TABLE-36: PERCENTAGE AND RANK TO ICD BY CONTRACTOR










FIGURE-13: ICD VS IT’S PERCENTAGE BY CONTRACTOR

From above graph we can say that as per Contractor Damaging Business Relationship

is securing 1st rank with 93.89%, Damaging Company Reputation is securing 2nd rank

with 92.22%, and Poor client satisfaction and Delay in project completion is securing

3rd rank with 89.44% choices. While Dispute Escalation is at last position with just

67.78% choices and Undermine Team Spirit is securing second last rank with 75.56%

choices.

14 5

6

2

7

3 3

0

10

20

30

40

50

60

70

80

90

100

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ICD VS IT'S PERCENTAGE BY CONTRACTOR



5.3.4 Percentage and Rank to Impact of Construction Dispute by Developer:

TABLE-37: PERCENTAGE AND RANK TO ICD BY CONTRACTOR










FIGURE-14: ICD VS IT’S PERCENTAGE BY DEVELOPER

From above graph we can say that as per Contractor Damaging Company Reputation

is securing 1st rank with 95.65%, Increased Project Cost is securing 2nd rank with

91.30%, and Poor client satisfaction and Damaged Business Relationship is securing

3rd rank with 90.43% choices. While Undermine Team Spirit is at last position with

just 65.22% choices and Dispute Escalation is securing second last rank with 69.57%

choices.

3 2 4

6

1

5

3 2

0

20

40

60

80

100

120

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ICD VS IT'S PERCENTAGE BY DEVELOPER



5.4 Percentage and Rank to Dispute Resolution Method Used

5.4.1 Percentage and Rank to Dispute Resolution Method Used in General:

TABLE-38: PERCENTAGE AND RANK TO DRM IN GENERAL

No. Dispute Resolution Method Percentage Rank

A Adjudication 56.00 5

B Arbitration 39.71 6

C Dispute Review Board 28.00 7

D Expert Determination 87.43 3

E Litigation 25.43 8

F Mini-trial 67.14 4

G Mediation 90.57 2

H Negotiation 100.00 1

FIGURE-15: DRM VS IT’S PERCENTAGE BY ALL

From above graph we can say that with 100% Negotiation is securing 1st rank, with

91% Mediation is securing 2nd rank, and Expert Advice is securing 3rd rank with 87%

choices. While Litigation is at last position with just 25% choices and Dispute review

board is securing second last rank with 28% choices.

5

6

7

3

8

4

21

0

20

40

60

80

100

120

PE

RC

EN

TA

GE

DISPUTE RESOLUTION METHOD

DRM VS IT'S PERCENTAGE BY ALL



5.4.2 Percentage and Rank to Dispute Resolution Method Used by Architect:

TABLE-39: PERCENTAGE AND RANK TO DRM BY ARCHITECT








G Mediation 85.45 2


FIGURE-16: DRM VS IT’S PERCENTAGE BY ARCHITECT

From above graph we can say that as per Architect with 100% Negotiation is securing

1st rank, with 85.45% Mediation is securing 2nd rank, and Expert Determination is

securing 3rd rank with 83.64% choices. While Litigation and Dispute Review Board

is at last position with just 21.82% choices and Arbitration is securing second last rank

with 38.18% choices.

5

6

7

3

7

4

2

1

0

20

40

60

80

100

120

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DISPUTE RESOLUTION METHOD USED

DRM VS IT'S PERCENTAGE BY ARCHITECT



5.4.3 Percentage and Rank to Dispute Resolution Method Used by Contractor:

TABLE-40: PERCENTAGE AND RANK TO DRM BY CONTRACTOR








G Mediation 91.11 2


FIGURE-17: DRM VS IT’S PERCENTAGE BY CONTRACTOR

From above graph we can say that as per Contractor, with 100% Negotiation is

securing 1st rank, with 91.11% Mediation is securing 2nd rank, and Expert

Determination is securing 3rd rank with 90% choices. While Litigation is at last

position with just 26.11% choices and Dispute Review Board is securing second last

rank with 30% choices.

5

67

3

8

4

21

0

20

40

60

80

100

120

PE

RC

EN

TA

GE


DRM VS IT'S PERCENTAGE BY CONTRACTOR



5.4.4 Percentage and Rank to Dispute Resolution Method Used by Developer:

TABLE-41: PERCENTAGE AND RANK TO DRM BY DEVELOPER








G Mediation 92.17 2


FIGURE-18: DRM VS IT’S PERCENTAGE BY DEVELOPER

From above graph we can say that as per Contractor, with 100% Negotiation is

securing 1st rank, with 92.17% Mediation is securing 2nd rank, and Expert

Determination is securing 3rd rank with 85.22% choices. While Litigation is at last

position with just 26.09% choices and Dispute Review Board is securing second last

rank with 27.83% choices.

5

67

3

8

4

21

0

20

40

60

80

100

120

PE

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TA

GE


DRM VS IT'S PERCENTAGE BY DEVELOPER

CHAPTER 6

CASE STUDY

PAGE NO. 72 - 75

CHAPTER – 6: CASE STUDY


6.0 Introduction:

In this chapter authors have collected one case study of very well known dispute

resolution method named as “Arbitration” from the Mr. D.V.Patel, Arbitrator of

Gujarat high court who has entered into the matter in 2005 and gave the award in

2013 so it has taken total 8 years to make the final award. The details of this case

study are given below.

6.1 General Details:

1. Following are the general details regarding the Arbitration case:

2. Project Name: “Constructing Percolation Tank ”

3. Project Place: “At Dhandhasan Taluko Bhiloda”

4. Claimant: “A”

5. Respondent: “B”

6. Arbitrator: “Shri D.V.Patel” sole Arbitrator

6.2 Facts agreed by both the parties:

1. Name of Work: “Constructing Percolation Tank”

2. Estimated Tender Cost: Rs. 854090/-

3. Sanctioned Tender Cost: Rs. 580761/- (-32% below Estimated Cost)

4. Work order issued date: 11/12/2003

5. Time limit for completion of work: 9 months

6. Stipulated date for completion of work: 10/09/2004

7. Security Deposit: Rs. 21500/- as FDR of Mehasana Co-operative bank

8. Actual date of Completion of work: Work not started and not completed

9. Dates of payment of Running Account Bills: No R.A.Bills paid

10. Date of Payment of Final bill: No Final Bills paid

11. Date of Legal notice of Claim by Claimant: 10/02/2005

12. Date of order to relieve Claimant from Contract: 01/09/2005

13. Date of Return of Security Deposit in form bank to Claimant: 07/09/2005

14. Date of Petition of Claimant to High Court of Gujarat: 20/07/2007



6.3 Reasons for Disputes:

1. Failure in handing over the possession of site by respondent due to

continuous oppose by villagers against the construction work.

2. Delay in giving line out as per design and drawings.

6.4 Claims by Claimant on Respondent:

1. Return of Security Deposit

2. Extra overhead expenses

3. Idle Machineries and Labour charges

4. Loss of Anticipated Profit

5. Work done but not paid

6. Interest @ 18% on amount of claims

7. Cost of Arbitration Proceedings

6.5 Issues of the Case:

1. Whether the work is completed by claimant and if yes, on what date?

2. Whether Respondent proves that Claimant made breach of Contract

agreement?

3. Whether Claimant proves that Respondent made breach of Contract

agreement?

4. Whether Claimant proves that he is entitled to Claim No.1 for Return of

Security Deposit and loss of interest on Security Deposit?

5. Whether Claimant proves that he is entitled to Claim No. 2 for extra overhead

expenses during extended period of contract, and if so how much amount?

6. Whether Claimant proves that he is entitled to Claim No.3 for Idle Machineries

and Labour charges, and if so how much amount?

7. Whether Claimant proves that he is entitled to Claim No.4 for Loss of

Anticipated Profit, and if so how much amount?

8. Whether Claimant proves that he is entitled to Claim No.5 for work done but

not paid, and if so how much amount?



9. Whether Claimant proves that he is entitled to Claim No.6 for Interest @18%

on amount of Claims, and if so how much amount?

10. Whether Claimant proves that he is entitled to Claim No.7 on account of cost

of Arbitration proceedings, and if so how much amount?

11. What is the final Awarded amount?

6.6 List of Supporting Documents along with Claim Submission

1. Claimant has submitted Xerox copies of following vouchers to support Expenses

claimed by him:

2. To, Dharmendrasinh Zala total payment of Rs. 60000/- for rent of JCB No. GJ-

09-H-9009

3. To, Dilipsinh Champavat total payment of Rs. 50000/- for rent of Dumper No. GJ-

09-Y-5582

4. To, Ravindra.D.Patel total payment of Rs. 46000/- for rent of Tractor No. GJI-

5022

5. To, Alpesh.R.Patel total payment of Rs. 14000/- for rent of Tenker No. GJD-1925

6. To, Dalji Pandya total payment of Rs.50000/- for rent

7. To, Savitaben Kabaji Parmar payment of Rs.10000/- for Labour work.

8. To, Ramesh Dalaji payment of Rs.10000/- for Labour work.

6.7 Arbitrator’s Findings and Decisions on these issues are as under:

Issue No. 1 – Not Agree


Issue No. 3 – Agree










6.8 The Statement of Award amount:

The Statement of Award amount to Claimant towards his claims is as

under:

Table – 42: Statement of Awarded Amount

Claim

No.

Description of Claim by

Claimant

Amount

Claimed

Amount

Awarded

1 Return of Security Deposit 7095/- NIL

2 Extra Overhead expenses 77434/- 12000/-

3 Idle Charges of Machineries &

Labour 630000/- NIL

4 Loss of Anticipated Profit 116152/- 29038/-

5 Work done but not paid 150000/- 15000/-

6 Interest @ 18% on amount of

Claims Not Stated 47931/-

7 Cost of Arbitration Proceedings 40000/- NIL

TOTAL 1020681/- 103969/-

There is no objection from Either side of the contract against the judgment given by

the sole Arbitrator Mr. D.V.Patel. Arbitrator had direct respondent to pay the amount

of RS.103969/- to Claimant within one month from the date of this Award. i.e. latest

by 30/09/2013.

And he has also mentioned that if the amount of Award is not paid by the Respondent

on or before 30/09/2013 then the Respondent has to pay simple interest at 18% per

Annum as per sub section 7(b), section (31) of the ARBITRATION &

CONCILIATION ACT 1996, on awarded amount of Rs.103969/- from 30/09/2013 to

the actual date of payment.

This Award was published on 31st August 2013 in presence of representative of both

the parties.

CHAPTER 7

CONCLUSION

PAGE NO. 76 - 78

CHAPTER – 7: CONCLUSION


7.1 Conclusion

Based on the results of this research, the following conclusions can be drawn:

1. Finance and payment issues are the main important cause of claims because they

result in a financial problem and disputes between the owner and the contractor.

2. The most serious and harmful Impact of Construction dispute is damaging

company reputation.

3. Negotiation is the most frequently using method to resolve the construction

dispute.

4. Documents are a very important part in the contract. At the time of writing the

agreement, everything is usually acceptable for all parties, but the problem come

during the project, when they con not make any changes to the contract.

5. Owners usually try to deduct money from the last payment and the reason they

give is that the quality of work is not good or there are some errors in execution.

Such execution errors or quality depend on how skilled the labours and the

management are.

6. One of the major claim factors is that both owners and contractors do not put a

good plan before starting a project. The owner usually does not know what he

needs exactly. Also, contractors usually do not use any type of scheduling which

may result in delay.

7.2 Recommendation

1. It is recommended that the clauses in the contract related to the payment should

divide the total prices of the contract into smaller, more numerous payments. This

may make it easier to be paid by the owner on time. This may reduce delay in

payment.



2. If there is a financial institution that is funding the project like the REDF, the

contractor is recommended to have direct contact with it. The contractor may

collect the payments directly from the financial institutions after he gets approval

from the owner’s representative.

3. It is recommended to have a standard contract which is flexible. It should be

prepared carefully to describe the rights and responsibilities of the contractors as

well the rights and responsibilities of the owners and engineer.

4. Careful preparation of the contract documents will help to avoid disputes.

Therefore, the documents will help to avoid disputes. The scope of the project

should be clear, correct, adequate and concise. Also, the contractor should ask the

owner to write the change orders instead of giving oral change orders.

5. The owner is recommended to use the experience of the consultant before signing

the contract.

6. Coordination of design documents is extremely important. Written specifications

should be reviewed to avoid ambiguities and conflicts between architectural and

engineering drawings.

7. The contractor should take care of his work quality by getting skilled labor

and using good management techniques.

8. The government should establish a set of procedures to control the quality of the

construction work. Also, it should develop licensing contractors to make it more

difficult to get certified.

9. The best solution to claim lies in establishment of partnership between the

owner and the contractor. Each party should try to solve the problems from the

first moment they arise.



7.3 Future Study Scope

In future, the Infrastructure projects will be execute in large number compare to

present and in Infrastructure projects generally large number of Claims and Disputes

can take place so it will be necessary in future to study and research about the causes

of dispute, their Impact on Construction project and Dispute resolution method used

to solve that disputes.

The study shall be carry out at every 2 to 3 years by an authorized institute of survey

to identify the Causes of dispute, their Impact and to resolution method, and publish

the result to Architect, Contractor and Developer for their awareness in construction

industry.

The study has been carried out in the Ahmedabad region of Gujarat state only which

can be done in different regions of the country.

7.4 Limitations of the study:

The sample size selected for the survey conducted of the contractors, clients

and consultants is not as per required size due to constraint of time and non-

responsive behaviour of stockholders.

Moreover it is restricted to the city of Ahmedabad only.

The answers provided to the questions of the survey questionnaire are

entirely based on the interpretation of the contractors, consultants, and

clients.

REFERENCES

PAGE NO. 79 - 82

REFERENCES


REFERENCES:

[1] Ashwini Arun Salunkhe, Rahul S. Patil,” Effect of Construction Delays on

Project Time Overrun: Indian Scenario”, IJRET: International Journal of

Research in Engineering and Technology eISSN: 2319-1163 | pISSN: 2321-

7308

[2] Brown, H., & Marriott, A. (1993).ADR principles and practice. London: Sweet

and Maxwell.

[3] Burton, J. (1990). Conflict: Resolution and prevention. Basingstoke/New

York: Macmillan/St.Martin’s Press.

[4] Collins (1995). Collins Cobuild English Dictionary. Harper Collins, London.

[5] Diekmann, J.E., Girard, M.J. (1995). Are contract disputes predictable? ASCE

Journal of Construction Engineering and Management, 121(4), pp.355-363

[6] Easton, G. R. (1989). ‘‘Construction claims.’’ Dept. of Civ. Engg.,

Loughborough University, U.K.

[7] Edwin H.W. Chan and Henry C.H. Suen (2004), “Dispute resolution

management for international construction projects in China”, Emerald

Management Decision Vol. 43 No. 4, pp. 589-602

[8] Emre Cakmak and Cakmak.P.I (2014), “An analysis of causes of disputes in

the construction industry using analytical network process”, Procedia - Social

and Behavioural Sciences 109, 183 – 187

[9] Fenn, P., Lowe, D., & Speck, C. (1997).Conflict and dispute in construction.

Construction Management and Economics, 15(6), 513–518.

[10] K.C.Iyer, Nitin Chapalkar,” Factors Influencing Decisions on Delay Claims in

construction contracts for Indian Scenario”, Australasian Journal of

Construction Economics and Building.

[11] Keval J. Shah1, Prof. M. R. Apte,” Causes of Delay in Construction of Bridge

Girders”, IOSR Journal of Mechanical and Civil Engineering (IOSR-JMCE)

e-ISSN: 2278-1684,p-ISSN: 2320-334X, Volume 12, Issue 1 Ver. IV (Jan-

Feb. 2015), PP 08-12

[12] Lew Yoke-Lian, S. Hassim, R. Muniandy, and Tan Mee-Ling, “ The

Assessment of Applications for Extension of Time Claims in Malaysian

REFERENCES


Construction Industry”, IACSIT International Journal of Engineering and

Technology, Vol. 4, No. 4, August 2012

[13] Manvendra Sinha, Dr. A. S. Wayal, “Dispute Causation in Construction

Projects”, IOSR Journal of Mechanical & Civil Engineering (IOSR-JMCE)

ISSN: 2278-1684, PP: 54-58

[14] M. Osama Jannadia, Sadi Assaf, A. A. Bubshait, Allam Naji, “Contractual

methods for dispute avoidance and resolution(DAR)”, International Journal of

Project Management 18 (2000) 41±49

[15] Olive du Preez,” Conciliation: A founding element in claims management”,

Procedia - Social and Behavioral Sciences 119 ( 2014 ) 115 – 123

[16] P.E.D Love, P.R. Davis, J. M. Ellis, S.O.Cheung, “A SYSTEMIC VIEW OF

DISPUTE CAUSATION”

[17] Peter E. D. Love, David J. Edwards, and Zahir Irani, “Work Stress, Support,

and Mental Health in Construction”, journal of construction engineering and

management © asce / june 2010

[18] Powell-Smith, V., and Stephenson, D. (1993).Civil Engineering Claims.

Blackwell Science, Oxford, UK

[19] Pramen P Shrestha, Kishor Shrestha, “Delay Claim Analysis in the

Construction Industry”, 50th ASC Annual International Conference

Proceedings.

[20] Ramdane Djebarni, “The impact of stress in site management effectiveness”,

Construction Management and Economics (1996) 14, 281–293

[21] Sai On Cheung and Hoi Yan Pang, “Conceptualising Construction Disputes”,

Construction Dispute Research, Springer International Publishing Switzerland

2014

[22] Semple, C, Hartman F T and Jergeas, G (1994) Construction claims and

disputes: causes and cost/time overruns. Journal of Construction Engineering

and Management, 120(4), 785-795.

[23] Tomas Mitkus, Sigitas Mitkus,” Causes of Conflicts in a Construction

Industry: a Communicational Approch”, Procedia - Social and Behavioral

Sciences 110 ( 2014 ) 777 – 786 [24] Wilmot, W.W., and Hocker, J.L.(1998). Interpersonal Conflict. McGraw-Hill,

Boston

REFERENCES


[25] Zaneldin.E.K. (2006), “Construction claims in United Arab Emirates: Types,

causes, and frequency”, International Journal of Project Management , 24,

453–459

[26] Zaneldin.E.K. (2006),“Construction claims in the united arab emirates: types,

causes, and frequency” 21st Annual ARCOM Conference, 7-9 September

2005, SOAS, University of London. Association of Researchers in

Construction Management, Vol. 2, 813-22

Website:

[1] http://www.teamcs.co.uk/construction-dispute-resolution.html

[2] http://sourceable.net/asia-the-global-hotbed-for-large-construction-disputes-

report/#

[3] http://www.pinnellbusch.com/library/articles/drj-Feb99.php

[4] http://www.arcadis-us.com/Global_Construction_Dispute_Trends.aspx

[5] http://sportsconflict.org/resource/interests-rights-power/

[6] http://www.publicprocurementguides.treasury.gov.cy/OHS-

EN/HTML/index.html?6_7_1_methods_of_resolution_of_differences.htm

[7] http://www.conflictdynamics.org/blog/2011/11/anger-and-conflict/

[8] http://dawsonjenner.com/why-are-we-fighting-conflict-in-the-construction-

industry/

Thesis:

A STUDY ON THE ISSUES OF CONSTRUCTION DISPUTES IN MALAYSIA

AND SINGAPORE by CHUA SHU CING Faculty of Engineering and Science,

University of Tunku Abdul Rahman

QUANTIFICATION OF ACCELERATION CLAIMS: A SIMPLIFIED

APPROACH, by AL_ ÖZGE ILGAR, THE GRADUATE SCHOOL OF NATURAL

AND APPLIED SCIENCES OF MIDDLE EAST TECHNICAL UNIVERSITY

http://www.teamcs.co.uk/construction-dispute-resolution.html

http://sourceable.net/asia-the-global-hotbed-for-large-construction-disputes-report/

http://sourceable.net/asia-the-global-hotbed-for-large-construction-disputes-report/

http://www.pinnellbusch.com/library/articles/drj-Feb99.php

http://www.arcadis-us.com/Global_Construction_Dispute_Trends.aspx

http://sportsconflict.org/resource/interests-rights-power/

http://www.publicprocurementguides.treasury.gov.cy/OHS-EN/HTML/index.html?6_7_1_methods_of_resolution_of_differences.htm

http://www.publicprocurementguides.treasury.gov.cy/OHS-EN/HTML/index.html?6_7_1_methods_of_resolution_of_differences.htm

http://www.conflictdynamics.org/blog/2011/11/anger-and-conflict/

http://dawsonjenner.com/why-are-we-fighting-conflict-in-the-construction-industry/

http://dawsonjenner.com/why-are-we-fighting-conflict-in-the-construction-industry/

REFERENCES


MANAGEMENT OF CONTRACTUAL CLAIMS IN THE ROAD ON

STRUCTION INDUSTRY IN GHANA BY ADU-BOATENG SAMUEL KYEREFO

(BSc.), to THE DEPARTMENT OF BUILDING TECHNOLOGY, KWAME

NKRUMAH UNIVERSITY OF SCIENCE AND TECHNOLOGY

Books:

Designing conflict management systems: a guide to creating productive and healthy

organizations (Cathy A. Costantino, Christina Sickles Merchant)

Dictionary of Conflict Resolution,(Yarn, Douglas H.)

https://www.google.co.uk/search?tbo=p&tbm=bks&q=inauthor:%22Cathy+A.+Costantino%22

https://www.google.co.uk/search?tbo=p&tbm=bks&q=inauthor:%22Christina+Sickles+Merchant%22

http://www.abebooks.co.uk/servlet/BookDetailsPL?bi=9282291944&searchurl=an%3Ddouglas+h+yarn

APPENDIX A

SURVEY FORM

PAGE NO. A1 – A4

APPENDIX - A

M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page A1

Birla Vishvakarma Mahavidyalaya

Mota Bazaar,

Vallabh Vidya Nagar,

Anand, Gujarat 388120

TO WHOM IT MAY CONCERN

Dear Sir/ Madam,

RE: SURVEYING - FINAL YEAR PROJECT

I am a post graduate student from Birla Vishvakarma Mahavidyalaya pursuing in 3rd

Semester of Masters in Engineering, in Gujarat Technological University.

I will be thankful to you if you can kindly allow me to conduct the questioner survey

with you or your technical staff to learn and understand the most critical factors of

construction claims for claim generation between any two parties in your company or

in your whole working experience upto now. This will helps me a lot for my Final

Year Project entitled:

“Construction Claims Management”

Your co-operation will be greatly appreciated and contribute extremely to my

education as well as to reduce the number of claims occurring per year in our Indian

construction industry.

Please fill free to contact me for any further information.

Thank you.

Yours faithfully,

Abhishek S Shah

Contact number: 9067676819

E-mail: [email protected]

APPENDIX - A


A STUDY ON THE FACTORS AFFECTING THE CONSTRUCTION

DISPUTES (NOTE: Please (√) tick your answers.)

Section A: Demographics Information

The following questions are intended to ask for information that will be used to

determine the profile of respondents.

1) Name of your company:

2) What is the type of your organization?

Architects

Developer

Contractors

Consultant

3) What is your profession?

Architect

Engineer

Quantity Surveyor

Others:____________________

4) How many year of working experience do you have in construction industry?

Less than 2

2-5 years

6-9 years

10 or more than 10 years

5) What is the primary type of projects you are involved in?

Residential

Commercial

Infrastructure

Others:____________________

APPENDIX - A


Section B: Causes of Construction Disputes Please rate the following causes that may lead to construction disputes.

Major Causes of Dispute

Strongly

Agree Agree Neutral Disagree

Strongly

Disagree

5 4 3 2 1

Finance and payment issues

Time overrun

Cost overrun

Price escalation

Work change orders

Poor communication

Design errors

Inclement weather

Extra Items

Unforeseen site condition

Poor work quality

Incomplete information in

Tender or Specification

Delay in issuing Site,

Drawings, Specifications,

Materials

Return of Security Deposit

Unfair allocation of risk

Delay in client’s response

Mistakes in Contract document

Section C: Impacts of Construction Disputes

Please rate the following impacts that may be caused by construction disputes.

Impacts of Construction

Dispute

Very

High

Impact

High

Impact

Nominal

Impact

Low

Impact

Negligible

Impact

5 4 3 2 1

Damage business

relationship

Increase project costs

Project delays

Undermine team spirits

Damaging company

reputation

Dispute escalation

Poor client satisfaction

Delay in project completion

APPENDIX - A


Section D: Dispute Resolutions

Please tick the following dispute resolutions methods based on its frequency in

practicing in construction industry.

Dispute Resolution Method

Used

Always

Used

Mostly

Used

Very

Often

Used

Rarely

Used

Never

Used

5 4 3 2 1

Adjudication

Arbitration

Dispute review board

Expert determination

Litigation

Mini-trial

Mediation

Negotiation

Name : _______________________________________

Contact Number : _______________________________________

Email : _______________________________________

Company : _______________________________________

(Your identity will be kept secret)

***********End of Questionnaire, Thank You!!************

Your information and responses will be kept confidential and top secret.

Thank you for your kind support.

APPENDIX B

DATA COLLECTION

ABOUT CAUSES OF

CONSTRUCTION

DISPUTE

PAGE NO. B1 – B3

APPENDIX - B

M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page B1

CAUSES OF CONSTRUCTION DISPUTE

Respond

ent A B C D E F G H I J K L M N O P Q

1 5 5 5 3 4 5 4 3 5 4 5 4 5 4 5 5 4

2 5 4 5 3 4 5 4 3 4 4 4 5 5 4 4 4 5

3 4 4 3 3 3 4 3 2 4 4 5 4 4 4 3 4 4

4 4 3 3 3 4 5 4 3 3 3 4 3 4 3 3 3 3

5 5 4 4 3 4 4 4 3 4 3 4 4 4 3 3 3 4

6 5 5 4 3 3 5 4 3 4 3 4 4 5 3 2 3 3

7 4 5 5 4 4 3 5 3 4 5 3 4 4 3 3 2 2

8 5 5 5 4 4 5 4 3 4 3 4 4 5 3 3 4 4

9 5 5 5 5 4 3 4 3 5 4 5 5 5 4 4 4 5

10 4 4 4 3 5 3 5 2 4 4 5 5 4 3 4 2 4

11 5 5 5 4 5 5 5 3 4 4 4 4 5 3 3 4 4

12 5 5 5 3 4 4 4 3 4 4 5 4 4 3 3 4 3

13 4 5 4 2 5 5 4 4 4 4 4 4 5 3 2 3 4

14 4 5 5 3 4 3 5 3 5 3 5 4 4 4 3 5 4

15 4 3 4 4 4 4 4 3 4 4 4 3 3 3 3 4 4

16 5 4 4 4 5 4 5 3 4 5 5 5 5 4 3 4 3

17 5 4 5 3 4 5 4 3 4 4 5 5 5 4 4 4 4

18 5 5 4 5 4 4 4 4 4 3 4 3 3 3 3 3 4

19 5 4 4 4 5 5 5 4 5 4 5 5 5 4 3 4 4

20 5 4 4 5 4 3 4 5 4 4 5 4 4 5 4 5 4

21 4 3 4 4 5 4 5 3 4 3 3 4 5 4 4 4 4

22 5 4 5 3 4 5 4 3 4 3 5 4 5 3 5 4 3

23 5 5 5 5 5 4 5 3 5 2 5 4 4 3 4 5 5

24 4 3 3 4 5 5 5 4 5 3 4 4 4 3 4 4 4

25 4 5 4 5 5 4 5 3 5 5 5 5 5 4 4 5 5

26 5 4 4 5 5 3 4 3 5 4 4 4 4 3 3 4 4

27 4 5 4 5 4 3 4 3 5 3 5 5 5 3 3 5 4

Table-43: List of Collected Data About CCD

APPENDIX - B


28 5 5 5 4 5 4 5 3 5 3 5 5 5 3 3 4 4

29 4 4 4 3 5 4 5 3 4 4 5 4 4 3 3 4 5

30 5 5 5 3 5 3 4 2 5 4 5 4 4 3 3 4 5

31 5 5 5 3 5 4 5 3 5 4 4 5 5 3 3 5 5

32 5 4 4 3 4 3 5 4 5 3 4 4 4 3 3 4 4

33 4 5 5 4 5 3 5 3 4 5 4 4 4 3 3 4 5

34 5 4 4 5 4 3 4 3 5 3 4 4 4 3 3 4 5

35 5 5 5 3 5 4 5 3 5 4 5 5 5 3 3 5 4

36 5 4 4 5 5 4 5 3 5 4 5 4 4 3 3 4 4

37 5 5 5 3 5 3 5 3 5 3 5 4 4 3 3 4 5

38 5 5 5 4 5 4 5 3 5 4 5 4 4 3 3 4 4

39 5 5 5 3 4 5 5 3 5 3 5 5 5 3 3 4 5

40 5 5 5 3 5 5 5 3 5 3 4 5 4 2 4 3 4

41 5 5 5 5 5 5 5 4 5 3 5 5 5 4 3 5 4

42 5 4 4 3 4 3 5 3 4 4 5 4 4 3 3 4 4

43 5 5 5 4 5 5 5 4 5 3 5 4 4 5 4 5 5

44 5 4 5 5 4 4 5 4 3 5 5 4 5 3 5 4 5

45 3 4 5 4 5 3 4 3 5 4 5 4 4 3 2 4 5

46 5 4 4 3 5 4 5 3 5 4 5 4 4 3 2 5 5

47 5 5 5 4 5 5 5 3 5 4 5 5 5 3 5 5 5

48 5 4 4 3 4 3 5 3 4 3 5 4 4 3 3 5 3

49 5 4 4 3 4 4 5 4 5 4 5 5 5 3 4 5 5

50 5 4 4 3 4 4 5 3 5 4 5 4 4 3 4 5 4

51 5 5 5 4 5 5 5 4 5 5 5 5 5 3 3 5 5

52 5 4 4 3 4 3 4 2 5 3 5 4 4 3 3 5 4

53 5 5 5 3 5 4 5 3 5 3 5 5 5 2 4 5 5

54 5 4 5 3 5 4 5 3 5 4 5 4 3 2 3 5 4

55 4 5 5 4 5 5 4 3 5 3 5 4 4 2 2 5 5

56 3 3 3 2 4 3 5 3 5 3 4 4 4 2 2 4 3

57 5 5 5 4 5 5 5 4 5 3 5 5 5 3 5 5 5

58 5 4 5 4 4 4 5 3 5 4 5 3 3 4 5 5 5

59 5 5 5 5 4 3 4 3 5 4 5 5 5 3 2 4 5

APPENDIX - B


60 5 4 4 4 5 3 5 4 5 3 4 3 3 2 2 4 4

61 4 4 4 2 4 3 5 3 5 3 4 4 4 3 2 4 4

62 5 4 5 4 5 3 4 3 5 4 5 5 5 3 4 5 5

63 4 4 4 3 5 4 3 2 4 5 5 4 4 3 2 4 4

64 5 4 4 3 4 3 4 2 4 3 5 4 4 3 2 3 4

65 3 4 4 3 5 4 4 3 5 4 5 4 4 5 3 4 4

66 5 4 4 3 4 3 4 3 5 4 4 4 5 3 3 4 4

67 5 5 5 3 3 4 5 3 5 4 4 5 5 4 3 4 4

68 5 4 4 3 4 2 4 3 5 4 5 5 5 3 3 4 4

69 4 5 5 4 5 5 5 3 4 5 4 5 5 4 5 4 4

70 5 5 5 4 5 4 5 3 5 5 5 5 4 3 3 4 5

TOTAL

3

2

7

3

0

8

3

1

2

2

5

3

3

1

3

2

7

5

3

1

9

2

1

8

3

2

2

2

6

0

3

2

4

3

0

0

3

0

6

2

2

4

2

2

8

2

9

2

2

9

6

Wei.

Avg

Index

4

.

6

7

4

.

4

0

4

.

4

6

3

.

6

1

4

.

4

7

3

.

9

3

4

.

5

6

3

.

1

1

4

.

6

0

3

.

7

1

4

.

6

3

4

.

2

9

4

.

3

7

3

.

2

0

3

.

2

6

4

.

1

7

4

.

2

3

APPENDIX C

DATA COLLECTION

ABOUT IMPACT OF

CONSTRUCTION

DISPUTE

PAGE NO. C1 – C3

APPENDIX - C

M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page C1

TABLE–44: LIST OF COLLECTED DATA OF ICD

Impact of Construction Disputes

Respondent Q-1 Q-2 Q-3 Q-4 Q-5 Q-6 Q-7 Q-8

1 4 5 5 4 4 5 4 4

2 5 5 5 5 5 5 5 5

3 5 4 5 5 5 4 5 5

4 5 4 3 3 4 2 3 4

5 5 5 5 4 5 4 4 5

6 4 3 3 1 5 2 4 3

7 5 4 4 2 5 3 4 4

8 5 4 4 4 5 4 5 4

9 5 4 4 3 5 3 4 4

10 5 4 3 3 4 3 4 3

11 5 4 3 4 5 3 4 4

12 5 5 5 4 5 4 5 5

13 5 4 4 4 4 3 4 4

14 4 5 5 4 5 4 5 5

15 4 3 4 2 4 1 3 4

16 5 5 4 5 4 4 3 4

17 5 5 5 3 5 4 4 5

18 4 4 4 5 4 5 4 5

19 5 4 4 4 5 4 4 4

20 5 4 4 4 4 5 4 4

21 5 4 4 4 4 4 5 4

22 4 5 5 2 4 2 4 5

23 5 5 5 3 5 3 5 5

24 5 5 5 4 5 3 4 5

25 5 5 5 4 5 3 4 5

26 5 5 4 3 5 4 4 5

27 5 4 4 5 5 4 5 5

28 5 5 5 4 5 4 4 4

29 5 5 4 3 5 3 5 4

APPENDIX - C


30 5 5 5 3 5 3 4 5

31 5 5 5 3 4 3 5 5

32 5 4 4 3 5 3 4 4

33 4 5 5 4 5 3 5 5

34 4 4 4 3 4 3 5 4

35 5 5 5 3 4 3 5 5

36 5 5 5 3 4 3 5 5

37 5 5 5 3 5 3 4 5

38 5 4 4 3 4 3 5 4

39 4 5 5 3 5 3 4 5

40 4 4 4 3 5 3 5 5

41 5 5 5 3 5 3 5 5

42 5 4 4 3 5 3 4 4

43 5 4 4 5 4 3 4 4

44 5 4 4 3 4 3 4 4

45 5 5 4 3 5 3 4 5

46 5 4 5 4 5 4 5 4

47 4 5 5 4 5 3 4 5

48 5 4 4 3 5 3 5 4

49 5 5 5 4 5 3 4 5

50 5 4 4 5 5 4 5 4

51 5 5 5 4 5 4 5 5

52 4 4 4 3 4 3 5 4

53 4 5 4 5 5 4 5 5

54 5 5 5 4 5 4 5 5

55 4 4 4 3 4 4 4 4

56 3 5 4 3 5 3 4 4

57 5 5 5 4 5 3 5 5

58 4 4 4 3 5 3 4 4

59 5 5 5 3 5 3 5 5

60 4 5 5 3 5 3 5 5

61 4 5 4 5 4 3 4 5

APPENDIX - C


62 4 4 4 3 4 3 5 4

63 5 5 5 4 5 5 5 5

64 4 5 5 3 5 3 4 5

65 5 4 4 4 5 3 4 4

66 4 4 4 5 4 4 3 4

67 4 4 4 3 5 4 5 5

68 5 4 5 4 5 3 5 4

69 4 4 4 3 4 4 5 4

70 4 5 4 3 5 3 5 5

Total 325 314 307 248 327 236 309 314

W.A.Index 4.64 4.49 4.39 3.54 4.67 3.37 4.41 4.49

RII Index 0.929 0.897 0.877 0.709 0.934 0.674 0.883 0.897

APPENDIX D

DATA COLLECTION

ABOUT DISPUTE

RESOLUTION METHOD

USED

PAGE NO. D1 – D3

APPENDIX - D

M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page D1

TABLE – 45: LIST OF COLLECTED DATA ABOUT DRM

Dispute Resolution Method Used

Respondent A B C D E F G H

1 4 3 2 5 2 3 5 5

2 3 3 1 4 1 3 4 5

3 3 3 3 4 3 3 4 5

4 3 1 2 4 1 3 3 5

5 4 3 3 4 2 3 5 5

6 3 2 1 3 1 2 4 5

7 4 3 2 4 1 3 4 5

8 3 2 1 4 2 2 3 5

9 4 3 2 4 3 3 4 5

10 3 2 1 4 2 3 4 5

11 3 2 1 4 1 3 4 5

12 4 3 2 5 2 3 4 5

13 3 1 1 4 1 1 1 5

14 4 3 2 5 2 4 4 5

15 4 3 1 3 1 3 4 5

16 4 3 1 4 2 4 4 5

17 3 3 2 5 2 4 5 5

18 4 3 1 5 1 2 4 5

19 4 4 3 5 2 3 4 5

20 2 2 1 5 1 3 4 5

21 3 2 1 5 1 4 4 5

22 3 3 2 4 1 2 4 5

23 3 1 1 4 1 3 4 5

24 3 2 1 5 1 3 4 5

25 2 2 2 3 1 4 5 5

26 2 1 1 5 1 2 5 5

27 3 2 1 4 1 4 5 5

28 1 1 1 5 1 1 4 5

29 2 1 1 5 1 3 4 5

APPENDIX - D


30 3 1 1 1 1 3 5 5

31 2 2 2 4 1 3 4 5

32 3 1 1 4 1 4 5 5

33 3 2 1 4 1 4 5 5

34 4 3 2 5 2 4 5 5

35 3 2 2 5 2 4 4 5

36 2 2 1 5 1 3 5 5

37 2 2 1 4 1 3 4 5

38 3 2 1 4 1 3 5 5

39 2 1 1 4 1 4 5 5

40 2 2 1 4 1 3 4 5

41 2 1 1 5 1 4 5 5

42 2 1 1 4 1 4 5 5

43 3 2 2 4 2 4 5 5

44 3 2 1 4 1 5 5 5

45 2 1 1 5 1 4 5 5

46 4 2 2 5 1 4 5 5

47 1 1 1 5 1 4 5 5

48 3 1 1 5 1 5 5 5

49 3 2 1 4 1 4 5 5

50 2 3 2 5 1 3 5 5

51 3 4 2 5 2 4 5 5

52 3 2 1 5 1 3 5 5

53 4 3 2 5 1 4 5 5

54 4 3 3 5 2 4 5 5

55 2 1 1 5 1 4 5 5

56 2 1 1 5 1 4 5 5

57 2 1 1 4 1 5 5 5

58 3 1 1 5 1 3 5 5

59 2 1 1 4 1 3 5 5

60 1 1 1 4 1 3 5 5

61 2 1 1 4 1 4 5 5

APPENDIX - D


62 1 1 1 5 1 3 5 5

63 2 1 1 4 1 3 4 5

64 3 2 2 4 1 3 5 5

65 4 3 1 5 1 3 5 5

66 3 3 2 5 2 4 5 5

67 4 3 2 4 1 5 5 5

68 2 2 1 4 1 3 5 5

69 2 1 1 4 1 3 5 5

70 2 1 1 5 1 4 5 5

Total 196 139 98 306 89 235 317 350

Weighted

.Average Index 2.80 1.99 1.40 4.37 1.27 3.36 4.53 5.00

Relative

Importance Index 0.56 0.40 0.28 0.87 0.25 0.67 0.91 1.00

APPENDIX E

RESEARCH PAPER 1

PAGE NO. E1 – E13

APPENDIX - E

M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page E1

TYPES AND CAUSES OF CONSTRUCTION CLAIMS

Abhishek Shah1, Dr. Rajiv Bhatt2, Prof. J. J. Bhavsar3

1Student of first year M.E (C.E & M), B.V.M Engineering College, Vallabh Vidyanagar

2Head of the department, Civil Engineering Department, A.D.I.T Engineering College, Vallabh Vidyanagar-

Gujarat-India

3Associate Professor and PG Coordinator (M.E C E & M), Civil Engineering Department, B.V.M. Engineering

College, Vallabh Vidyanagar-Gujarat-India

[email protected]

[email protected]

[email protected]

ABSTRACT:

The Indian government is investing millions of dollars every year in new facilities to

improve the infrastructure of the country. Construction projects are complex, uncertain,

have long construction periods, involve many parties, and require the integration of

different work components (Civil, Mechanical and Electrical) to work together as a

single unit. The projects require highly specialized designs, detailed plans and

specifications, high-risk constriction methods, effective management, skill full

supervision, and close coordination. Thus, claims are common in such projects. Today,

construction projects are the subject of more claims than in any other industry. Claims

appear to hinder the completion of construction and cause delays in delivering projects.

These claims are undesirable because they require significant time and resources to

resolve, and because they cause adversarial relationships among the parties involved. It

is therefore in the common interest of all involved parties to prevent them, minimize

them, or resolve them as amicably as possible. Identifying common claim types and

their causes is essential in devising ways and means to minimize and hopefully avoid

them in future projects. This research presents the results of a pilot study of the types,

and causes of construction claims in the Construction industry. The recommendations

to prevent/reduce claims in construction projects are then presented. It is expected that

the findings of this research will help construction firms avoid the main causes of claims

and, accordingly, minimize delays and cost overruns in construction projects.

KEYWORDS: Claims, Disputes, Causes, Types, Construction

mailto:[email protected]



APPENDIX - E


INTRODUCTION:



fulfil his part of obligations as specified in the contract. The compensation is usually in

the form of the additional payment or an extension of time (EOT).


worrying and unpleasant events of a project. The high competition has forced

contractors to submit projects with minimum profits in order to stay in business. In

addition to their multiparty nature, projects are becoming more complex and risky. This

has placed an added burden on contractors to construct increasingly sophisticated and

risky projects with less resources and profits. Under these circumstances, it is not

shocking that the number of claims within the construction industry continues to

increase.

Knowledge of the different construction claim types allows owners to recognize

potential claims situations. This recognition can protect the owners from incurring

losses and assist in recovering compensation. In this research paper the Construction

claims types are divided into mainly eight different types, most of the claim types

discussed are interrelated, frequently occurring and most of them may pertain to a

particular situation.

RESEARCH OBJECTIVES:

The main purpose of this research is to find which causes of claims are important and

which types of claims are more common in different construction projects. A study of

all types of construction claims is done to identify the main types and causes of

construction claims in construction projects. These objectives include:

1. Undertake a comprehensive analysis of construction claims in construction

projects.

2. Identify and analyze the types of claims and their causes in construction

projects.

APPENDIX - E


3. To give conclusions and recommendations for future researches based on the

analysis and severity of claims in construction projects.

TYPES OF CONTRACTUAL CLAIMS:

There are several types of construction claims out of which some of the listed down

below after studying the research papers, journals, books etc

Figure-1 Types of Contractual Claims

APPENDIX - E


CAUSES OF CLAIMS:

There are many kind of conflicts occur in construction industry between the parties

which mostly converts into the claims. After taking the opinion of experts like

experienced contractor, client, Designers, Arbitrator, Professors of the construction

sector as well as after reviewing the research papers related to construction claims I

have listed down the following causes of claims.

Delay in Supply of Drawings,

Delay in Handing over the Site,

Delay in Supply of materials,

Delay in Payments,

Delay in Starting work,

Delay in Completing the work,

Work actually done but not measured and paid,

Refund of maintenance deposit,

Loss due to extra overheads on account of extension of time limit,

Loss due to idle machinery and idle labour,

Due to Design errors,

Due to inadequate or incomplete specifications,

Due to inadequate information related to design.

Due to Inadequate bid information,

Due to Inadequate time for bid preparation,

Due to Change in work scope,

Due to Changes in plans and specifications during construction,

Due to Insufficient plans and specifications,

Due to Extra items and Variations,

Due to Non granting of Completion by Engineer in charge.

Due to Partiality by the Engineer,

Due to Unrealistic expectations,

Due to Poor management and administration of the construction site.

Due to Ambiguities in contract documents,

Due to Different interpretations of the contract provisions,

APPENDIX - E


Due to Inadequate investigation of site,

Due to Unbalanced bidding,

Due to coating very low rates in the Tender,

Due to Changes made or changes which occur not at the request of the owner,

Due to Extension of time (EOT),

Due to financial failure of the contractor,

Due to technical inadequacy of the contractor,

Due to Poor quality of construction work and use of wrong equipment,

Due to Failure to follow authorized procedures,

Due to Employers’ Lack of Construction Knowledge,

Due to damages occur to adjacent buildings during the work,

Due to Strikes by Workers,

Due to Stoppage of Work by workers,

Due to Failure of parties to cooperate with each other in the performance of

the work.

Due to Accidents,

Due to Natural Calamity,

Due to Increase in Material / Fuel Cost,

Due to Court intervention,

Due to Weather conditions,

Due to Unforeseen ground conditions,

MOST FREQUENT CAUSES:

From the list of above claims most of the claims mostly settled down between the

parties by their mutual understanding as well as by Negotiation but some of the claims

which are frequently occurs and which may not settle create the disputes between the

parties are listed and explained below. These type of claims which do not settle and

converts into the dispute can be solved by the Advanced Dispute Resolution Methods.

APPENDIX - E


Figure-2 Most Frequent causes of Claims

PAYMENT RELATED CLAIMS:

In the construction industry most of claims arise for the not payment or delayed

payment of Running bills, Final bills, unreasonably deduction of money from bills

without any strong reason, delay in payment of security deposit, maintenance deposit

etc.

CHANGE CLAIMS:

Almost every construction project encounters change. Whether it’s a change to the

scope of work, a revision to the specifications, or an impact to the means and methods

of performing the work, changes can significantly impact a project’s cost and

schedule. Due to change in work scope the claim may take place between the

contractor and client. Due to change in work scope or change in design the quantity

of work may increase or decrease and if it is the work from which contractor is going

to get the maximum profit then he can claim for increased rates for performing the

work or extra money for completing the work.

APPENDIX - E


DELAY CLAIMS:

Construction delay claims, or disputes related to schedule impacts, are one of the most

common types of disputes in the construction industry. Delay claims typically relate

to unanticipated project events and/or circumstances which extend the project and/or

prevent work from being performed as originally planned. There are many common

causes for schedule delays on a construction project. Any project faces delays and

disruptions especially the mega/complex projects of today, with many interfaces.

Proving delay and/or disruption is not an easy task and it is a time consuming process

especially in the mega/complex projects with thousands of activities, lots of details

and interfaces with the involvement of many stakeholders.

EXTRA WORK CLAIMS:

Extra work is any work that is ordered by the owner after construction has started that

was not included in the original contract. The extra work being performed by the

contractor is a result of a clarification of the contract documents. However, the

contractor believes that he is performing extra work, while the owner believes the

work was part of original contract.

CONTRACTUAL CLAIMS:

Contractual claims concern matters with consideration to the contract itself. This

includes any disagreement on the responsibility or liability of some parts that are not

included in the documents. The main reason of these types of claims is poorly written

contracts

DIFFERENCE IN PRICING AND MEASURING CLAIMS:

These types of claims deal with the disagreement regarding measurements at the final

stage in the construction. Also, these claims include the differences in pricing by the

contractor and the owner of some of the materials. Also, the change and the extra

work usually create some differences in pricing.

APPENDIX - E


DIFFERENT SITE CONDITIONS CLAIMS:

A changed condition refers to some physical aspect of the project or its site that differs

materially from the indicated by the contract documents or that is of an unusual and

differs materially from the conditions ordinarily encountered.

ACCELERATION CLAIMS:

Acceleration refers to the owners directing the contractor to accelerate his

performance so as complete the project at an earlier date the current date of work

advancement will permit. It occurs when the contractor is ordered, either directly or

constructively, to speed up performance in some way. These types of claims may

occur in big projects but for residential houses, these are rare especially nowadays

where the rate of houses rental is smaller.

DAMAGE CLAIMS:

Property damages may occur due to the act of the owner or due to safety related

problems. This type of claims is very rare because usually contractors have the total

responsibility for the site.

CONTRACT TERMINATION:

When contract termination has occurred before the contractor has begun the work,

the contractor may be entitled to recover the loss of the expected profit, or the

difference between the contract price and the anticipated cost of the work. If the owner

has terminated the contract after the contractor has begun the work, the contractor

may be entitled to recover the loss in various ways. If the contractor has completed

the work in full compliance with the contract prior to termination, she should expect

to recover the full contract price. Recovery and liability under terminated contracts

varies widely.

http://www.disputesinconstruction.com/construction-expert-terminated-fixed-price-contracts/

APPENDIX - E


CLAIMS SETTLEMENT METHODS:

When the contractor discovers the problem, he should try to eliminate or avoid it. If he

cannot do so, then he should write to a letter to the owner to make a formal claim. This

is the first step in claim procedure. The problem is approached during regular meeting

s, or a special meeting may be arranged to settle or discuss this dispute. If all that did

not succeed, then mediation could be friendly way for settling the claim. Otherwise,

arbitration or litigation could be other ways to solve the claims. These methods could

be as under:

Figure-3 Claim Settlement Methods

APPENDIX - E


CONCLUSION:

Based on the results of this research, the following conclusions can be drawn:

1. Delays in payment are the main important cause of claims because they result

in a financial problem and disputes between the owner and the contractor.

2. Documents are a very important part in the contract. At the time of writing the

agreement, everything is usually acceptable for all parties, but the problem

come during the last part of the project, when they con not make any changes

to the contract.

3. Owners usually try to deduct from the last payment and the reason they give is

that the quality of work is not good or there are some errors in execution. Such

execution errors or quality depend on how skilled the labors and the

management are.

4. One of the major claim factors is that both owners and contractors do not put a

good plan before starting a project. The owner usually does not know what he

needs exactly. Also, contractors usually do not use any type of scheduling which

may result in delay.

5. Another factor is that there is no control of the construction market, anyone

could become a contractor. As a result, prices of contracts decrease, and

therefore, the quality of work decreases.

6. Sub-surfacing problem and accidents happen during the project but are not

important causes of delays. This is because the residential houses do not need

a lot of excavation.

7. The economic impact and shortage of money in recent years has resulted in

an increased number of claims. Profit margins have decreased and may

become harder to maintain.

RECOMMENDATION:

1. In the contract the rights and responsibilities of the contractors as well the rights

and responsibilities of the owners and engineer should clearly defined.

APPENDIX - E


2. Give reasonable time to the design team to produce clear and complete

drawings, bills of quantities, and specifications with no or minimum error and

discrepancies.

3. Careful preparation of the contract documents helps to avoid disputes.

4. Therefore, the documents will help to avoid disputes. Therefore the contractor

should ask the owner to write the change orders instead of giving oral change

orders.

5. Contractor should have signed change (variation) orders before starting doing

any change in work on site.

6. Provide a proper mechanism for processing and evaluating change (variation)

orders that pay for direct costs, indirect costs, and loss of productivity associated

with any changes.

7. Bringing together the design documents is extremely important. Written

specifications should be reviewed to stay away from ambiguities and conflicts

between architectural and engineering drawings.

8. The contractor should take care of his work superiority by getting skilled

labour and using good management techniques.

9. The government should create a set of procedures to control the quality of the

construction work. Also, it should develop licensing contractors to make it

more difficult to get certified.

10. The most excellent solution to claim lies in establishment of partnership

between the owner and the contractor. Each party should try to solve the

problems from the first moment they arise.

11. Use software like MSP, Primavera etc. to make bar charts, critical paths,

planning, scheduling, cost control, productivity analysis and most

importantly the project progress report to control the delay of the project.

12. Develop co-operative problem solving attitudes on project between

contractor and client.

13. Maintain proper job records on a timely manner including:

Time sheets

Diary records

Reports

Photographs

Records of labor

APPENDIX - E


Records of plant on site, and its utilization

Weather, and its effect on progress

Progress of the construction

Instructions

ACKNOWLEDGMENT:

The Authors thankfully acknowledge Prof. Akalkotkar sir CEPT University, Arbitrator

D.V.Pael sir, Arbitrator A.P.Doshi sir, Mr. Amrutbhai Patel government contractor, Mr.

Virambhai gamara developer for giving their valuable time for listing out the causes of

all possible causes of claims.

REFERENCES:

[1] ASCE Technical Committee on Contracting Practices of the Underground

Technology Research Council (1991) Avoiding and resolving disputes during

construction: successful practices and guidelines. ASCE, New York.

[2] Building Contract Claims, second edition by Author Dr Vincent Powell-Smith and

John Sims Publisher: BSP Professional. 1988

[3] Construction Delay Claims, Authors: Bany B. Bramble and Michael T. Callahan

Publisher: John Wiley & Sons, 1987

[4] Chester, M and Hendrickson, C (2005) Cost impacts, scheduling impacts, and the

claims process during construction. Journal of Construction Engineering and

Management, 131(1), 102-107.

[5] Gulezian, R and Samelian, F (2003) Baseline determination in construction labor

productivity-loss claims. Journal of Management in Engineering, 19(4), 160-165.

[6] Hartman, F and Snelgrove, P (1996) Risk allocation in lump-sum contracts –

concept of latent dispute. Journal of Construction Engineering and Management,

122(3), 291-296.

[7] Ho, S P and Liu, L Y (2004) Analytical model for analyzing construction claims

and opportunistic bidding. Journal of Construction Engineering and Management,

130 (1), 94-104.

APPENDIX - E


[8] Janney, J R, Vince, C R and Madsen, J D (1996) Claims analysis from risk-retention

professional liability group. Journal of Performance of Constructed Facilities,

10(3), 115-122.

[9] Kartam, S (1999) Generic methodology for analyzing delay claims. Journal of

Construction Engineering and Management, 125 (6), 409-419.

[10] Ren, Z, Anumba, C J and Ugwu, O O (2003) Multiagent system for construction

claims negotiation. Journal of Computing in Civil Engineering, 17(3), 180-188.

APPENDIX F

RESEARCH PAPER 2

PAGE NO. F1 – F9

APPENDIX - F

M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page F1

Ranking of “Causes of Disputes” and “Use of

Dispute Resolution Methods” for Construction

Industry in Gujarat

Dr Rajiv Bhatt1, Abhishek Shah2, Prof J J Bhavsar3

1 Associate Professor, Civil Engineering Department, A.D.Patel Institute of Technology, Karamsad,

Gujarat, India


2 P.G. Scholar, Construction Engineering and Management section, Civil Engineering Department,

Birla Vishvakarma Mahavidyalaya, V.V.Nagar, Gujarat, India


3 Associate Professor, Civil Engineering Department, Birla Vishvakarma Mahavidyalaya, V.V.Nagar,

Gujarat, India


Abstract:

Presently India is in the developing phase which brings tremendous growth of

construction industry. Construction industry is witnessing all kinds of projects across

the country. Many projects are suffering from major issues like conflict between parties,

claim generations and dispute occurrence. This study focuses on ranking of factors

which contributes as “Causes of Disputes”, “Impact on project scenario” and “Use of

Dispute resolution methods”. During this study, 70 feedbacks were collected from

Architects, Contractors and Developers from Ahmedabad city of Gujarat state of India.

Responses were analyzed by Weighted Average Method and Relative Importance Index

method. It was found that “Finance and payment issues”, “Poor work quality” and

“Extra items” are the three major causes which contribute for occurrence of disputes.

This study found that due to arising of dispute reputation of both the parties gets

disturbed.

Keywords: Disputes, Construction Industry, Weighted Average Index, Relative

Importance Index



APPENDIX - F


Introduction

India is a developing country. The construction sector of India is growing rapidly. There

are many ongoing Infrastructure projects in India of Billions of Dollars where the delay

or stoppage of work due to any reason cannot be acceptable. In this rapidly growing

construction industry many times claims arise between client and contractors.



fulfill his part of obligations as specified in the contract. The compensation is usually

in the form of the additional payment or an extension of time (EOT).


disturbing and unpleasant events of a project. Today, construction projects are the

subject matter of more claims than in any other industry. The high competition has

forced contractors to submit projects with minimum profits in order to stay in business.

In addition to their multiparty nature, projects are becoming more complex and risky.

This has placed an added burden on contractors to construct increasingly sophisticated

and risky projects with less resources and profits. Under these circumstances, it is not

surprising that the number of claims within the construction industry continues to

increase.

During the execution of a project, several issues arise that cannot be resolver among

project participants. Such issues typically involve contractor requesting for either time

extension or for additional cost, or sometimes both. Such requests by the contractor are

referred as Claims. However if the owner does not agree to the claims put out by the

contractor and there are differences in the interpretations, the issue takes the form of

dispute. Claims are becoming an inevitable and unavoidable stress in modern projects

involving new technology, specifications and high expectations from the owner.

Construction claims are defined as “a request for compensation for damages incurred

by any party to a contract” (Semple et al, 1994). Construction dispute are defined as

“any contract question or controversy that must be settled beyond the jobsite

management” (Diekmann and Girard, 1995).

There are many reasons for claims time, machinery, material, manpower, money, price

escalation, accident on site, change in design and many other are major reasons for

APPENDIX - F


dispute between two parties which results into disputes, if the disputes are Claims and

Counterclaims.

To solve this Claims there are certain dispute resolution techniques are available like

arbitration, conciliation, mediation dispute resolution board. In this paper authors have

listed 17 different causes for occurrence of disputes in construction industry. Further 8

different issue matters are listed which are created in project scenario as an impact of

dispute occurrence. Total 8 different methods are found which are prevailing as on

today among construction stakeholders for dispute resolution. Objective of this paper

is to develop ranking of causes, impact on issues and use of DRM’s through statistical

techniques.

Literature Review

As per study carried out by Zaneldin.E.K (2006), “Changes” and “Extra work” are the

two major causes for dispute generation in UAE. They concluded that ‘‘change orders’’

are the most frequent cause of claims while ‘‘delay caused by owner’’ was ranked

second. ‘‘Planning errors’’ were ranked last, indicating that it is the least frequent cause

of claims. Cakmak.E and Cakmak.P.I (2014) carried out the study of causes of disputes

in construction industry of Turkey by Analytic Network technique. They have classified

the causes under seven different categories as: Owner related, Contractor related,

Design related, Contract related, Human behavior related, Project related and External

factors. Edwin H.W. Chan and Henry C.H. Suen (2004) found that arbitration is the

most popular dispute resolution mechanism, after negotiation, for resolving disputes in

international construction disputes in China.

Research Methodology

In this paper authors have tried to work out ranking of causes of disputes in construction

industry along with ranking of impacts of these disputes. Further this work includes the

ranking of various methods used by construction industry for dispute resolution. The

survey questionnaire was designed to get the ranking of above three issues by suitable

technique. The Survey questionnaire is given in appendix 1. The survey questionnaire

is made of four sections. Section A includes demographic information of respondents.

Section B includes questions about causes of construction disputes. Section C includes

APPENDIX - F


Impacts of disputes and Section D includes ranking for dispute resolution methods.

Respondents has to tick mark any one option for each raw under the category of

Strongly disagree(1), Disagree(2), Neutral(3), Agree(4) and Strongly Agree(5).

It was planned to collect the feedbacks from various stakeholders of construction

industry from Ahmedabad city of Gujarat state of India. The survey has included

Architects, Contractors and Developers. This research work includes use of Weighted

Average Method (W.I) and Relative Importance Index method (R.I.I).

Data Collection

The total population data was collected from different sources of the city which is as

given below:

Number of Builder / Developers, Contractors / Engineers and Architects in Ahmedabad

according to Ahmedabad Urban Development Authority (AUDA) = 1714

Sample size required for the present study was calculated as given below. The formula

below was used to determine the sample size of unlimited population (Creative

Research Systems, 2001):

SS = [Z2 × P × (1-P)] / C2

Where,

SS = Sample Size.

Z = Z Value (e.g. 1.96 for 95% confidence interval).

P = Percentage picking a choice, expressed as decimal, (0.50 used for sample size

needed).

C = Confidence interval (0.1)

POP = Population

SS = [1.962 × 0.5 × (1- 0.5)] / .12 = 96.04

Correction for finite population:

POP

SS

SSSSnew 1

1

99.90

1714

104.961

04.96

newSS

APPENDIX - F


So, total responses required are 91. During the data collection stage, total 105

questionnaire were distributed out of which 70 feedbacks were recived back. Out of the

total responses, 36 were from Contractors, 23 from Developers, and 11 were from

Architects.

Data Analysis

This research work has used following two methods for carrying out ranking work.

1. WEIGHTED AVERAGE METHOD: Data of all these table were analyzed by a

weighted average was calculated for each type of claims as follows:

Weighted Average Index = (Wi* Xi) / N;

where Wi is the weight assigned to the ith option; Xi is the number of respondents

who selected the ith option; and N is the total number of respondents (70 in this study).

2. RII INDEX METHOD: Data of all these table were analyzed by a RII Index was

calculated for each type of claims as follows:

RII Index = Σ W/ (A*N)

Where, W = weighting given to each factor by the respondents which ranges from 1 to

5,

A = highest weight (i.e. 5 in this case) and

N = total number of respondents.

APPENDIX - F


According to above two methods ranking of causes of construction disputes are found

as per table 1 given below.

Table 1: Rank of causes of disputes by different methods

Sr. No. Cause

Rank as per

W.I Method

Rank as

per R.I.I

method

1 Finance and Payment Issue 1 1

2 Time Overrun 7 7

3 Cost Overrun 6 6

4 Price Escalation 14 14

5 Work Change Orders 5 5

6 Poor Communication 12 12

7 Design Errors 4 4

8 Inclement Weather 17 17

9 Extra Items 3 3

10 Unforeseen Site Condition 13 13

11 Poor Work Quality 2 2

12 Incomplete information in Tender 9 9

13 Delay in issuing Site, Drawings,

Materials 8 8

14 Return of Security Deposit 16 16

15 Unfair allocation of Risk 15 15

16 Delay in Clients Response 11 11

17 Mistakes in Contract Document 10 10

APPENDIX - F


Regarding Impact of causes of disputes on various situations of construction project,

ranking by respondents is given in table 2.

Table 2: Ranking for Impact on various issues by WI and RII

methods

Sr.

No. Impact matter

Rank as

per W.I

Method

Rank as

per R.I.I

method

1 Damaged business relationship 2 2

2 Increased project costs 3 3

3 Project Delays 6 6

4 Undermine team spirit 7 7

5 Damaging company reputation 1 1

6 Dispute escalation 8 8

7 Poor client satisfaction 5 5

8 Delay in project completion 4 4

Regarding ranking of dispute resolution techniques, findings are given below in table

3.

Table 3: Ranking to use of DRM by WI and RII method

Sr.

No. Dispute Resolution Methods

Rank as

per W.I

Method

Rank as

per R.I.I

method

A Adjuducation 5 5

B Arbitration 6 6

C Dispute Review Board 7 7

D Expert Determination 3 3

E Litigation 8 8

F Mini-trial 4 4

G Mediation 2 2

H Negotiation 1 1

APPENDIX - F


Results and Discussion:







Impact matters. Further, respondents have given lowest rank to “Dispute Escalation”

matter. Respondents have given first rank to “Negotiation” method for dispute

resolution and last rank is given to “Litigation” method.

Conclusion:

Present study focuses on study of causes of construction disputes, it’s impact on various

aspects and different methods used for dispute resolution. Weighted average method

[W.I], and Relative importance index methods [RII] were used to work out ranking of

various factors. Total 70 feedbacks were analyzed through above two techniques. It is

found that “Finance and payment issues”, “Poor work quality” and “Extra items” are

the three major causes which leads towards occurrence of disputes. So, contractors and

clients must try to create an environment during project executions such that above

causes are avoided. As far as use of a various DRM’s, it was found that Arbitration is

not much popular in Ahmedabad region among construction industry. Looking to the

benefits and legal backing available with Arbitration, construction industry should go

for arbitration rather than mini-trials.

Acknowledgement:

Authors are highly grateful to all participating construction professionals for spending

their valuable time and giving their feedbacks on survey questionnaire.

APPENDIX - F


References:

1. Zaneldin.E.K. (2006), “Construction claims in United Arab Emirates: Types,

causes, and frequency”, International Journal of Project Management , 24,

453–459.

2. Cakmak.E and Cakmak.P.I (2014), “An analysis of causes of disputes in the

construction industry using analytical network process”, Procedia - Social and

Behavioural Sciences 109, 183 – 187

3. Edwin H.W. Chan and Henry C.H. Suen (2004), “Dispute resolution

management for international construction projects in China”, Emerald

Management Decision Vol. 43 No. 4, pp. 589-602 4. Zaneldin.E.K. (2006),“Construction claims in the united arab emirates: types,

causes, and frequency” 21st Annual ARCOM Conference, 7-9 September 2005,

SOAS, University of London. Association of Researchers in Construction

Management, Vol. 2, 813-22.

5. Semple, C., Hartman, F., and Jergeas, G. (1994). Construction claims and

disputes: causes and cost/time overruns. ASCE Journal of Construction,

Engineering and Management, 120(4), pp.785-795 6. Diekmann, J.E., Girard, M.J. (1995). “Are contract disputes predictable?”

ASCE Journal of Construction Engineering and Management, 121(4), pp.355-

363

7. http://www.surveysystem.com/sample-size-formula.htm, accessed on 21st

November 2014.

http://www.surveysystem.com/sample-size-formula.htm

APPENDIX G

RESEARCH PAPER

CERTIFICATES

PAGE NO. G1 - G2

APPENDIX - G

M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page G1

APPENDIX - G

M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page G2

APPENDIX H

PLAGIARISM REPORT

PAGE NO. H1 – H2

APPENDIX - H

M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page H1

APPENDIX - H

M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page H2

APPENDIX I

REVIEW CARD

& ACTION TAKEN

PAGE NO. I1 – I7

APPENDIX - I

M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page I1

APPENDIX - I


APPENDIX - I


APPENDIX - I


APPENDIX - I


APPENDIX - I


APPENDIX - I


The Author has taken following steps from the comment of External Guide’s in

review card of Dissertation Phase – 1 and from Mid semester review card.

Table – 46: Action taken on Comments from External Guide

Sr No. External Guide’s Comment Remedial Action Taken

1 Literature Review needs to be

improved subject to Indian

region

Indian Research Paper has been added in

Literature Review Chapter

2 Should study Tender

Documents, terms and

conditions in tender,

Escalation clauses and the

main clauses responsible for

major disputes.

Tender Clauses related to Construction

Claims has been added in Literature

Review Chapter

3 Change the title and related to

scope of work

“STUDY OF CONSTRUCTION

DISPUTES & IT’s RESOLUTION

THROUGH ARBITRATION FOR

AHMEDABAD CITY OF GUJARAT

STATE OF INDIA”

Education

STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA