Mediation – Resolving Construction Disputes

by Timothy W. Triplett

Disputes in the construction industry are almost an accepted part of the construction process. As the size, complexity and cost of construction projects rise, so do the possibilities of contractual disputes that simply cannot be resolved through normal negotiation channels.

If disputes cannot be resolved, the parties can turn to the most traditional form of dispute resolution, namely litigation.

However, in the context of the construction industry, it has become more and more common for parties to use so-called “alternative dispute resolution” procedures such as arbitration or mediation. In fact, many construction contracts between owners, contractors and design professionals require the exclusive use of these alternative forms of dispute resolution and specifically exclude the right to litigate disputes in court.

 

Mediation: The Dispute Mechanism for the Construction Industry?

The use of alternative dispute resolution for disputes involving construction projects is certainly not news. However, what is news is the continually increasing popularity of mediation as the chosen form of dispute resolution.

The procedures governing mediation are inherently flexible. Because of that flexibility, parties have several decisions which must be made prior to initiating mediation. Those decisions include the type of mediator to be chosen to assist the parties with the resolution of their dispute.

Types of Mediations 

Generally speaking, there are two types of mediation: facilitative and evaluative. In facilitative mediations, the mediator serves the role of assisting the parties with good communication, an understanding of both positions and attempts to generally facilitate a compromise resolution. The process continues until the parties either reach an agreement, or the mediator declares an impasse. With this form of mediation, the mediator will often inform the parties of his or her opinion regarding valuation of the claims.

Evaluative mediations follow generally the same format. However, if the parties cannot reach a settlement, the parties often empower the mediator to render his or her own judgment or evaluation of the disputed claims. As a result, an evaluative mediator acts not only as a facilitator, but also serves a role similar to that of a judge or arbitrator—depending on the rules established by the parties in advance of the mediation.

 

The Timing of Mediation – A Word of Caution

Parties must not only determine what type of mediation is to be used, but also when in the course of the dispute the mediation should be held. The timing of the mediation can be quite important. The use of mediation too early in the resolution process can be particularly harmful in large and complex construction disputes, for example. Early mediation can result in frustration and confusion because determinative facts may be unknown at the time of mediation.

Success in early mediations is often predicated on a full and good faith disclosure of the facts by all parties prior to attempts to mediate. A strong and talented mediator can also help with this pre-mediation process, including “deciding” disputes among the parties regarding the exchange of information and documents.

 

Final Considerations

Mediation continues to increase in popularity as a method to resolve disputes in the construction industry not only locally but on a national and international scale.

At the end of the day, I believe that the successful use of mediation as an alternative dispute resolution process in the construction industry requires: (1) a full and open dialogue with the other parties and the mediator, (2) disclosure of each party’s strengths and weaknesses through a well-managed mediation process and (3) a realistic view of the outcome of the dispute. If these requirements are met, construction disputes can often be quickly and inexpensively resolved. The alternative (sometimes unavoidable) is months, if not years, of costly litigation and/or arbitration.

 

Timothy Triplett is Partner, Warden Triplett Grier PA.
P | 913.345.5106
E | ttriplett@wtglaw.com