How does alternative dispute resolution apply to working smarter and improving performance and profitability? ADR methods give project parties more control over process and outcome than does litigation. The high cost of disagreements is reduced when disputes are resolved early; damage to relationships is lessened, and the shorter length of time to resolution allows parties to put disputes behind them and get back to work.

Some of the myriad methods of ADR are described below. Again, choice of the most appropriate method for resolution of disputes is dependent on your specific set of circumstances.

Parties wishing to preserve the relationship tend to have more successful mediations. Establishing a preferred dispute resolution process before a dispute arises eliminates the tactical positioning of the parties after a dispute arises. For example, a payment dispute where there is no ongoing or future work, may have a contractor very eager to settle and an owner who will be in no hurry to write a check. The owner’s strategy may be to delay resolution, in order to force the contractor will settle for less money than owed. These differences often cause a simple dispute to grow in size, expense and intensity. Consult with your advisors for the best dispute resolution philosophy for your needs.

Selection of the most appropriate method and style of ADR for your type of project is key. Evaluate your project and your project participants for weaknesses, strengths and specific needs. Select a mediator, arbitrator, standing neutral or dispute review board with those needs in mind. Your particular project may require an arbitrator or mediator with a specific background, such as facilitation for management of a difficult party or a specific technical expertise. Responsive, experienced ADR personnel is of extreme importance on large or time sensitive projects. Some neutrals are too busy or unable to be available within short notice, which is more frequently required in expedited dispute resolution processes.

Arbitration is the most popular of the ADR methods. Arbitration is a formal dispute resolution technique in which disputing parties present their cases before one or three neutral individuals who will render a final, court-enforceable decision. Arbitration offers resolution generally faster and less expensive than litigation, if properly managed by the Arbitrator. Arbitration is the preferred method of choice in many standard contract documents published by AIA, EJCDC, AGC, CMAA and FIDIC. Arbitration does not need to be a pre-selected dispute resolution method, but, if not pre-stipulated, must be agreed to by all parties after a dispute has arisen. If arbitration is your preference for dispute resolution, be sure to include arbitration as your method of choice in your contract documents. Mediation is frequently used as an intermediate step prior to arbitration.

While arbitration is most often final with very limited appeal rights, some arbitration organizations or court-mandated arbitration programs may be subject to appeal or trial de novo (new trial) and may also feature non-binding processes.

Mediation is a voluntary, non-binding method that utilizes a facilitator to assist disputing parties toward resolution. Mediation is most effective when there is an ongoing relationship that both parties wish to preserve.

The mediator will re-establish lines of communication that may have broken down during the project, guiding the parties toward a mutually negotiated resolution. Successful mediators assist the parties to explore and identify creative options and approaches to resolution.

A mediator may have experience in the technical issues of the dispute, in the processes of negotiation and facilitated dispute resolution, or other area of specialty. Selection of a mediator for style, experience and process to be used are important considerations for successful dispute resolution. Mediation is often used in conjunction with litigation, arbitration or other ADR method.

Dispute Avoidance emphasizes the use of creative and innovative approaches at the earliest stages of project planning and implementation in conjunction with project managers and designers. Selection of appropriate project delivery systems, use of appropriate risk allocation and implementation of a project specific dispute resolution procedures are important techniques. Dispute avoidance planning is frequently overlooked in project planning and implementation. Construction industry research demonstrates significant cost savings can be achieved through effective dispute avoidance and early dispute resolution.

Early Dispute Resolution combines dispute avoidance planning with practical, business-oriented processes that avoid escalation of disputes. Interest-based negotiations are often used to expedite dispute resolution, minimizing the delays and costs of positional bargaining traditionally used by many owners, contractors and attorneys. Separate ADR project counsel, Dispute Review Boards or a Standing Project Neutral are often key factors in achieving early dispute resolution, while maintaining important project relationships.

Facilitated Negotiation utilizes a neutral facilitator to assist negotiating parties to reduce tensions, assist in efficient gathering and flow of information and manage the negotiation process. The Neutral will assist the parties to define and identify all participants and stakeholders, interests and goals of and expand creative options for a successful outcome of the facilitated process. These techniques are similar to, but less structured than, mediation.

Dispute Review Board utilizes a pre-selected panel of three experienced individuals, chosen by project members before work begins. The Dispute Review Board (“DRB”) panel may or may not receive regular updates on project progress and stands by throughout the project for immediate advisory opinions on project disputes as they arise.

DRB panels are best suited for large, time sensitive projects. Smaller projects can use a single standing project neutral. Experience has shown predictable advisory opinion often compels project participants to seek a resolution themselves.

The backgrounds of the panel are often balanced to provide a well-rounded advisory opinion to the parties. Although the role of the DRB is usually to interpret and construe contract obligations, the need for a construction lawyer on the DRB panel is hotly debated among DRB practitioners. One view of owners (who generally have selected the contract terms) is that an attorney on the panel will help maintain consistency and predictability of the legal effect of the contract.

Neutral Fact-Finding is used when a negotiation process is stalemated because of differing views of relevant facts. A neutral evaluates the project record and summarizes relevant facts that the parties can use to re-start negotiations. Neutral evaluation combines fact-finding with an advisory opinion to the parties on the relative merits of each position.

Contract Solutions Group offers a full range of dispute resolution services, including workshops, development and implementation of internal dispute avoidance programs, negotiations and dispute resolution services. Ronald R. Leaders is trained as an arbitrator and mediator by the American Arbitration Association, a DRB member and Chair by the Dispute Review Board Foundation and a certified corporate trainer of negotiations by The Harvard Project on Negotiations.