Journal of Legal Affairs and Dispute Resolution in Engineering and Construction

Unbalanced pricing in construction projects involves shifting the markup and sometimes a portion of the costs of certain items to other items in order to attain additional profit for the bidder if he wins the contract and/or increase his chance of being the lowest bidder. Unbalanced pricing is a common practice associated with competitive bidding for public construction projects. Despite the spread of the practice, project owners oppose unbalanced bidding and may reject a submitted bid if they identify an obvious imbalance in the submitted item rates. This paper presents a review of research presented to help owners deal with this practice and control its negative impact on the owner and the entire process of competitive bidding. The reviewed studies include the outcomes of around 20 years of research on unbalanced pricing from the owners’ perspective and include: papers that presented models to reduce the negative impacts of unbalanced pricing on the owner; and papers that presented detection models or procedures to help owners identify imbalances in submitted bids. This should contribute to a better awareness of public procurement entities of the research work that represented the owners’ interests in handling unbalanced pricing and can establish the basis for further research to develop improved models for handling imbalances in prices.

Arbitration has a long history of resolving disputes, particularly in the construction industry. The benefits of arbitration performance and effectiveness were well promoted, along with its adverse issues. This article aims to examine the evolution trends of arbitration over the last decade based on published articles in the Web of Science and Scopus database library using bibliometric and content analysis. To the best awareness, this investigation was instigated by the lack of a comprehensive literature analysis of the published articles. From the 89 shortlisted articles finalized following the PRISMA 2020 protocol, the findings through Biblioshiny and VOSviewer helped answer the article’s objectives on the investigation after harmonizing it with the OpenRefine software. Findings indicated the need for an effective framework to address all the issues of past concern within a single body of knowledge to enhance the performance of arbitration. The findings of this article aim to inform stakeholders in the construction industry about the progression of arbitration performance. Meanwhile, construction industry stakeholders and scholars can investigate ways to enhance arbitration methods with the results to delve into the emphasized themes and at the same time, this analysis method may encourage other researchers to pursue their areas of interest similarly.

Abstract

The success or failure of dispute resolution depends largely on implementing a proper mechanism to resolve the particular dispute while having a sound understanding of the ideologies and features of each dispute resolution method. Even though the issues of alternative dispute resolution (ADR) in the construction industry have been addressed adequately in length, the actual scenario of ADR’s success with respect to achieving its desired outcomes is less researched. This research aimed to fill this knowledge gap by enhancing the success level of using ADR in building projects in Sri Lanka with respect to the level of achieving the desired outcomes of using ADR. The research employed predominantly a qualitative research design, entailing both survey and case study strategies followed by semi-structured interviews and document reviews as the main data collection techniques. Manual content analysis and cognitive mapping were used to capture primary data findings. Parties’ ability to control over proceeding is identified as the most successfully achieved desired outcome. Faster resolution, least transaction cost, preservation of relationship between the parties and the inability to ignore the decision after a time bar, are found to be the next in order. However, it was elicited that the parties rarely achieve the desired outcomes as expected, on five key reasons, namely being restricted to following the standard bidding documents, unawareness of the initial stages of ADR practices, attitudes of the parties, malpractices in the industry, and incapacity and inadequacy of professionals. Recommendations were made to enhance the level of achieving desired outcomes of using ADR while minimizing the loopholes identified in the case study findings.

Practical Applications

The framework developed in the current study outlines the reasons for the low level of achievement of desired outcomes when using ADR and provides recommendations to improve the level of achievement of desired outcomes and thereby make the ADR process successful. This framework will assist construction industry stakeholders to utilize ADR for a particular dispute effectively and achieve the desired outcomes of using ADR rather than making it more complex like in litigation. The framework specifically outlines the causes of the low achievement of each desired outcome of ADR. For instance, during an ongoing dispute, if the parties to the dispute want a faster resolution, they can get to know the possible causes that slow down the process and engage with recommendations given in the framework to achieve their desires. Moreover, the practitioners who are involved in resolving disputes (mediators, adjudicators, arbitrators) can use this framework to deliver the best outcomes to their clients. In addition, governments and respective organizations can refer to this framework to introduce necessary changes to the conditions of contracts and relevant legislation to scrutinize the construction dispute resolution procedures. Ultimately, the findings of this study will indirectly aid in enhancing the overall impact that the construction industry would make on the economy since unsuccessful ADR processes have hindered the success of many construction projects and ended up with massive losses.

Abstract

The effectiveness of delay analysis techniques in giving accurate and timely analysis results is determined by scheduling practice performance and the availability of as-built records. To enhance the effectiveness of delay claim analysis, it is imperative to delve into these dimensions. With this perspective, in this study we evaluated the impact of construction scheduling practice and as-built records on delay claim analysis and developed an improvement framework in the context of the Ethiopian construction industry. A questionnaire survey was developed and distributed to construction professionals working in the industry. A factor analysis was performed to identify relevant components of scheduling practice, and multiple regression analysis was conducted to assess the impact of these components and documentation of as-built records on delay claim analysis performance. The findings indicated that the scheduling practice components that impact delay claim analysis are schedule reliability, accuracy in updating schedules, timely communication, documentation of previous schedules and schedule basis, and schedule conciseness. The results of the multiple regression analysis indicated that documentation of as-built records had a greater impact on delay claim analysis performance than the other components of scheduling practice. Considering these findings, we proposed a framework to improve delay claim analysis by improving scheduling practice and the documentation of as-built records.

Practical Applications

Delay claim analysis is one of the major activities of contract administration practice. Failing to resolve delay claims appropriately results in expensive disputes with a lengthy claims process that may include litigation. It may affect the relationships among the parties involved and may harm their reputations in the process. The effectiveness of delay analysis techniques in giving accurate and timely analysis results is determined by scheduling practice performance and the availability of as-built records. Although scheduling is a major responsibility of the contractor, engagement of other contracting parties is important in enhancing scheduling and as-built recordkeeping practices. The involvement of stakeholders during the development and updating of the schedule helps promote a mutual understanding of schedule data and the construction methodology; hence, delay claim analysts can quickly understand and review claims. The findings show the expected role of stakeholders in improving practice and the effects of scheduling practices and as-built records on delay claim analysis.

Public-private partnership (PPP) projects would result in disagreements due to their intricate nature, extended duration, and the involvement of various parties. There is a gap in the literature on quantitively evaluating the most important indicators that contribute to a dispute in PPP projects. To comprehend the causes of disputes in PPP projects, a thorough review of the literature was carried out, leading to the classification of 41 factors leading to disputes into six categories. A survey was then conducted to gather data on how these factors are perceived as risks in PPP projects. This data was analyzed using two statistical methods, frequently adjusted importance index (FAII) and structural equation modeling (SEM), via confirmatory factor analysis (CFA) and exploratory structural equation modeling (ESEM). The results indicated that CFA is more reliable and valid than ESEM; consequently, only the CFA and FAII findings are considered. The study found that the most significant contributors to PPP project disputes are the construction-related factors group, followed closely by the design-related factors group. These findings can make critical contributions to avoiding time and cost overruns on PPP contracts, subsequently leading to better performance and higher efficiency. Furthermore, the models developed in this study may be useful in future research with similar objectives as they meet the criteria for goodness-of-fit.

One of the inevitable challenges that face the construction industry is the delay of project completion. The current state of the industry makes the need for delay analysis apparent, however the process of choosing the most reliable delay analysis technique can get very complex in some situations. This research aims to develop a framework to identify and analyze the most important factors to consider when choosing a delay analysis technique. The most reliable technique is decided based on a weighted multicriteria decision matrix. The proposed numerical weight for each factor and the pointing system it is derived from are supported by a conducted survey, previous research, and recommended practices. Different scenarios of each factor are listed, each scenario recommends the use of a certain delay analysis technique if it occurs in the project. To present the framework, a user-interface is developed that takes every factor’s scenario as an input to yield the most recommended delay analysis technique. It is concluded that the most important factor to consider is the presence of reliable contemporaneous records. Furthermore, the technique that is most recommended in many cases is time impact analysis while collapsed as-built is recommended in very specific situations. The developed framework serves as a tool for professionals in the construction management industry to facilitate the choice of the delay analysis technique.

Contractors bidding on public construction projects must observe applicable rules and regulations and comply with their terms and conditions. Failure to do so exposes the bidding contractor to the risk that its bid will be rejected as nonresponsive or irresponsible. This paper investigates the grounds for rejecting individual bids in the bidding regulations of state departments of transportation (DOTs). Each DOT adopts its own criteria for determining whether bids are responsive and bidders are responsible and, if not, the grounds for rejection. This paper evaluates sixteen factors that awarding authorities may consider in evaluating bid submissions, their responsiveness, and the reasons nonresponsive bids may be rejected. Our evaluation of an awarding authority’s grounds for rejecting unresponsive bids is followed by a discussion of several factors that may warrant reconsideration by public awarding authorities. Our analysis will provide valuable information to state DOTs and other awarding authorities of public construction projects worldwide, given the volume of projects awarded by state DOTs and their accumulated experience in managing competitive bidding for public projects. Both contractors and officials involved in public bidding should find this paper helpful. Contractors will have a better understanding of the potential grounds for bid rejection so they may stay clear of them when preparing proposals in response to future solicitations by public awarding authorities. Officials in charge of public bidding will be able to better assess issues and modify their procedures in light of those implemented by other public awarding authorities.

The construction of transportation projects in the United States has been increasing over the last few decades; more mega projects are expected to be procured in the next few years due to the new bipartisan infrastructure bill, for example, the federal government has allocated USD 110 billion in additional funds for transportation repairs over the next five years. It thus becomes crucial to develop and adapt innovative and effective risk management strategies to minimize the potential impact of claims or disputes on these mega projects, which could include the use of innovative project delivery methods. Construction risks can materialize at any of the project phases: planning, pre-award, and postaward stage. However, the planning stage is considered the most critical stage of any construction project’s life cycle as it sets the stage for projects’ expectations and risk management strategies. Parties in this project phase need to make risk allocation decisions such as those for land acquisition, utility relocation, and third-party agreements risks, while allocating these risks to the parties best able to manage them. This paper aims to conduct an analysis of risk allocation strategies that could be employed in the planning phase of mega transportation projects in the United States, considering different project delivery methods. The aim is to provide a comprehensive understanding of the risk allocation strategies employed by owners in drafting their contracts, including factors they need to consider at that stage. Results showed that the most critical risks to be taken into consideration during the planning phase are governmental approvals, third-party approvals, environmental approvals, right of way, and utilities. The contribution of this paper is that it addresses contract risk allocation in various project delivery methods while considering the increased size and risk of transportation projects, with a focus on preplanning stage. It also provides owners and stakeholders with risk allocation strategies they can employ on their projects.

In recent decades, state transportation authorities (STAs) have increasingly relied upon alternative contracting methods (ACMs) to deliver large surface transportation infrastructure projects. ACM delivery allocates higher levels of responsibility—and associated risks—to the private sector for the completion of engineering design and other elements. To this end, this study highlights attitudes and strategies related to utilities risks, a topic agreed by public and private industry to be highly material to ACM project success. The study utilizes a mixed-methods approach featuring (1) content analysis of contractual and programmatic STA documentation and (2) semistructured interviews with subject matter experts across a broad cross section of the national project delivery network. Synthesizing these results, the study presents commonly identified challenges related to the identification, allocation, mitigation and management of utilities risks in ACM contexts. It furthermore identifies the best practices and strategies utilized across STAs and ACM project networks to address those challenges. The study thereby contributes a highly contextualized integration of contractual analysis supplemented with practitioner perspective. The results offer guidance to STAs seeking to effectively manage utilities and geotechnical risks while fostering a competitive procurement environment.

The construction industry is one of the main economic sectors in Iran, significantly impacting the country’s growth and prosperity. The dynamism, complexity, and conflict of interest in the construction industry lead to increasing conflicts and disputes in construction projects. Disputes usually arise due to ambiguity in contract documents, changes in quantities and specifications, contradictions in contract documents, and delays in fulfilling financial and contractual obligations. These disputes must be resolved promptly to avoid any negative impact on the project’s time and cost and the viability of its economic relationships in the future. Arbitration has been used as a dispute resolution method as it is a faster and more cost-effective method of dispute resolution than litigation. Furthermore, contractors prefer arbitration for dispute resolution in international construction contracts because it saves time and money and avoids litigation in local courts. The article examines the concept of arbitration as an alternative dispute resolution method and its application in the construction industry of Iran, with a specific focus on the country’s arbitration law. In this research, in addition to examining the structure, rules, and regulations governing dispute arbitration in Iran, 12 semistructured interviews were used to review and criticize dispute resolution by arbitration method in Iran’s construction industry. Surveys indicate that Iran’s domestic and international arbitration laws are harmonized with international laws partly. The legislator in Iran has considered appropriate powers for the arbitrator, and according to the existing laws, arbitration awards are recognized and implemented in domestic courts. The current procedures under the arbitration law and the reasons for the minimal use of arbitration compared to the number of lawsuits filed in Iran’s judicial courts have been examined, and the effective factors in this matter have been identified. Finally, some recommendations have been provided for the development and progress of arbitration in Iran.

Methods for establishing and practicing safety culture across the multiple organizations that collaborate on today’s complex and dynamic construction projects are intended to prevent accidents and lawsuits. These methods have been described extensively in the literature; however, despite the large availability of research-proven best-compliance methods to achieve substantial improvement, safety records have only marginally improved. In addition, despite the emergence of digitalization even in construction, practitioners lack proper guidance for finding transformative tools that suit the detection and proactive mitigation of known risks naturally embedded in construction work environments and schedules. This article is part of a broader study to analyze pathways to innovation in construction safety and how some contractual and legal aspects, such as subcontracting, can either facilitate or hinder such innovation. After presenting our research objectives and methodology, we review prevalent and emergent subcontracting models. Then, we synthesize research-proven innovations in construction safety that rely on digitalization. We focus on a project’s legal framework and particularly on how subcontracting approaches and innovative safety methods may interact. There is no substantial evidence of studies in the literature that specifically address the intersection of these two areas.

Artificial intelligence (AI) application has been recently utilized in various commercial trades. In the past 20 years, researchers made various attempts in applying AI as a supporting tool in construction management, unfortunately, most of these attempts are neither mature enough nor well developed, due to the sophisticated nature of the construction industry considering its diversified fields. Overviewing construction projects and shedding light on the construction management stages, it can be clear, identification, categorization, and impact assessment of contractual risks consumes extensive amounts of effort and time during the estimation process in the tendering stage. This process has proven to be very challenging and risky due to the tight duration usually allocated for such crucial activities. Consequently, hurrying the aforesaid bidders most likely leads to inaccurate pricing leading to unavoidable legal disputes threatening construction projects’ success. Therefore, developing an AI model for bidders to support them in proper and accurate pricing, and the early stage enhancement of the risk management, in addition to a potential reduction in the possible disputes that might arise between contracting parties at a later stage. This research presents a supervised machine learning model programmed using Python language, adopting artificial neural networks (ANN), established, and trained to identify the risky clauses, their level of severity, and their expected impact (time, cost, or both). The collected data set extracted from real five construction contracts generating 486 clauses; these clauses were analyzed by eight domain experts (through two-stage interviews) to provide risk ranking and its probable impact through a predetermined question. A preprocessing stage is conducted for utilizing the collected interview replies in a suitable format for the ANN model. The python-based model uses transformers to predict clauses’ risk rank and their probable impact. The data set is split into 80% training and 20% validation, results show high validation percentages for risk impact and risk ranking.

Anti-price-gouging laws are enforced by a disaster declaration to control reconstruction labor and material costs in the wake of disasters. Reconstruction costs provide an important signal in the postdisaster reconstruction resource market, enabling consumers, suppliers, and policymakers to understand the postdisaster situations and prepare reconstruction strategies. However, the impact of anti-price-gouging law on postdisaster reconstruction costs has not been examined in the literature. The objective of this study is to investigate the effect of the anti-price-gouging law on postdisaster reconstruction wages at the US. County level following major disasters declared by the Federal Emergency Management Agency (FEMA). Panel data models with a difference-in-differences (DID) specification were implemented to quantify the effect of the anti-price-gouging law on postdisaster reconstruction wages. The DID specification was used to compare the pre and postchanges in reconstruction wages in the US counties subject to the state-level anti-price-gouging law relative to the wages in the US counties not subject to the law, controlling for endogenous county-specific heterogeneities. It is found that the anti-price-gouging laws reduced quarterly reconstruction wages by 2.5 percent in disaster-stricken counties. This finding indicates the effectiveness of anti-price-gouging laws as a price control to mitigate postdisaster reconstruction cost inflation. The US counties subject to the anti-price-gouging law enforcement have experienced less expensive reconstruction labor costs compared to the US counties not subject to the anti-price-gouging law enforcement. The findings of this research provide empirical evidence about the function of anti-price-gouging laws as a reconstruction cost control and present policy implications about the wage effect of anti-price-gouging laws in the postdisaster reconstruction market.

Abstract

The involvement of foreign contractors (FC) in developing countries is a growing trend, but it often leads to disputes and collaboration problems that hinder the intended benefits for the host country. This study focuses on solutions from the perspective of local contractors working with FC. Using a quantitative approach with three Delphi rounds, the study identified thirteen significant issues local contractors face in such collaborations and ranked them based on their significance. Notably, communication problems and difficulties in maintaining quality were key challenges. The study also pinpointed root causes, like the delayed involvement of professionals and language barriers, directly contributed to these problems. Moreover, the study highlighted solutions, emphasizing the importance of proper contract documentation and fostering a collaborative attitude. This research fills a gap in the literature by shedding light on managing FCs’ involvement from the viewpoint of local contractors, ultimately aiming to improve collaboration and enhance the capabilities of local contractors in the Sri Lankan context.

Practical Applications

This study focusing on the challenges encountered by local contractors when collaborating with foreign contractors in Sri Lanka serves as an essential resource for gaining a comprehensive understanding of the critical issues faced by Sri Lankan contractors. The insights given from this research, in turn, empower industry stakeholders, policymakers, and project managers to optimize the efficiency and effectiveness of construction projects in the context of developing countries. Furthermore, given Sri Lanka’s status as a developing nation that relies on foreign support, it is imperative for the nation to navigate these challenges effectively while simultaneously maximizing the benefits derived from foreign aid. By implementing the appropriate strategies recommended in this study, developing countries can take proactive measures to enhance collaboration between local and foreign stakeholders. This not only fosters capacity building among local entities but also expands their opportunities for growth and development.

Abstract

Construction disputes appear ubiquitous in megaprojects, but, they are undesirable due to their negative consequences which include project cost escalation and project delays. Reducing, or better still eliminating, disputes in projects is a desirable indicator of project performance. Much of the previous research on construction disputes has focused on identifying general sources of construction disputes and has tended to deal with immediate causes and ignored root causes of construction disputes. Better understanding of construction disputes can be achieved by understanding the entire causation mechanism of construction disputes right from the root cause through to the immediate cause. Such an understanding will facilitate efficient approaches to managing disputes. In this paper we present research undertaken to elucidate root causes of important disputes in one case study of a megaproject in a developing country. Secondary data including project reports, contract documents, minutes of meetings, and project communications were collected and analyzed using inductive thematic analysis. Using the concept of a mechanism, we reveal a root cause of construction disputes, namely, limited competence of internal project stakeholders. Hence, we put a spotlight on the need to improve competence of construction professionals in the areas of construction contracts, procurement management, contract administration, and project governance. We argue that focus on the preceding areas of competence and deployment of these competences throughout the lifecycle of megaprojects will reduce disputes and improve project performance.

Practical Applications

This paper highlights the mechanism through which significant disputes arose in an infrastructure megaproject. It promotes the idea that avoidance/elimination of the root cause of the dispute can mitigate dispute occurrence and improve overall project performance. The study reveals lack of competence among project delivery stakeholders especially the client, consultant, and contractor as a root cause of construction disputes. The paper demonstrates that improved project performance can be achieved with increased competence of internal project stakeholders not only in the early stages of the project but throughout the project lifecycle.

In the challenging landscape of real estate, project delays due to conflicts were a persistent issue until the Indian government introduced the Real Estate (Regulation and Development) Act (RERA) in 2016. This transformative legislation aimed to bring transparency and accountability to the sector. Through a systematic approach involving a literature review, case studies, and tailored surveys, this study explores RERA’s effectiveness from the perspectives of developers and customers. Despite awareness of real estate policies, certain elements like the appellate tribunal are often overlooked by stakeholders. Developers highlight positive impacts and financial prudence catalyzed by RERA, while customers stress the need for stringent regulations, emphasizing timeliness and transparency. Survey-derived recommendations include a Pan-India registration system and an efficiency rating for developers. Although focusing on NCR Delhi initially, the study emphasizes the importance of broader research for comprehensive policy recommendations, ultimately aiming to reduce delays and ensure timely project delivery.

Abstract

The design-build (DB) procurement method, commonly used in construction, often faces disputes over claims related to differing site conditions (DSC), which are unforeseen and unpredictable risks encountered during the construction process. Thus, this research aims to manage the contractual disputes related to the contractor’s liability under DSC in DB projects. An extensive literature survey, followed by three case studies, a document review, and expert interviews, helped gather information. DB contractors’ nonperformance of DSC precautions, such as verifying employer-provided data and conducting thorough site investigations before bidding, can primarily be attributed to negligence, unawareness, and constraints in terms of cost and time for conducting comprehensive site investigations. Effective DSC dispute management involves contractual parameters like evaluation techniques and risk responsibilities and technical aspects such as detailed site investigations and expert analysis of potential risks. Win-win DSC dispute management benefits employer and contractor.

Practical Applications

This research is based on managing disputes related to DSC, focusing on the contractor’s liability and its impact on design-build projects. The finding reveals the contractor’s liability and the level of fulfilment of the contractor’s liability for DSC, common disputes under the contractor’s liability for DSC and suitable contractual and technical parameters to manage the disputes, underscoring the importance of managing DSC disputes in practical scenarios. This study is beneficial to industry professionals to systematically handle the disputes related to DSC in DB contracts, offering a new perspective on dispute management. Construction industry practitioners can leverage these findings to dispute management, enhancing sustainability in their works. The study provides actionable recommendations for construction industry practitioners. By integrating these research outcomes, stakeholders can overcome challenges in DSCs, contributing to more informed and effective practices in dispute management. This study advances our understanding of managing disputes related to the contractor’s liability in differing site conditions in design-build projects. It highlights its practical relevance, offering a foundation for further innovation and application in real-world contexts.

Solar power is sustainable and one of the mainstream resources for meeting power demands. It has emerged as the most adaptable solution to energy access and security concerns. Despite offering modularity and low cost of generation advantages, the projects suffer overruns and often fail to deliver the desired performances. However, limited studies are available on investigating solar power project risks and their impact on project performances, primarily based on empirical evidence. Moreover, such studies rarely analyze the underlying contractor’s approach in addressing them. Therefore, through case studies in India, this study empirically attempts to identify the potential risk issues and associated impacts responsible for impaired solar project performance. The study also explores the contractors’ approach toward their management concerning their enterprise listing, i.e., private and public. The study outlines the 16 key risk factors, including error in project estimations, incorrect site assessment, delays in statutory and regulatory compliances, change in management, ineffective communication and control, improper distribution of works, insufficient workforce, and lack of quality control mechanism. Also, the study evaluates their impact on project performance, such as reworks, cost and time variance, imposition of liquidated damages, loss of revenue, and disputes and claims. Moreover, the study suggests mitigation measures, i.e., proactive and inclusive planning, a thorough study of project parameters and conditions, utilizing IT for reducing response time, training and development, and continuous monitoring and control, that could have minimized the impact of risk in the cases. Further, the study reveals that irrespective of the contractors’ listing type, the approach toward risk management remains casual, leading to derailed project outcomes. Overall, this study fills a critical gap in the body of knowledge on solar power project development by identifying risk factors that cause impaired performances and the contractors’ perspectives based on empirical evidence from India.