Multistep Dispute Resolution in Design and Construction Industry

The construction industry has a propensity to disputes dating back thousands of years, at least to the time of the Hammurabi Code. As a result, the industry devised alternative methods for dispute resolution to avoid the civil litigation. Since the late nineteenth century, the traditional two-step process has been included in standard construction contracts. The engineer first renders a determination, followed by binding arbitration if either the owner or contractor disagreed with the engineer’s decision. In the last half of the twentieth century, the industry has reexamined this traditional two-step method. This examination has produced a multistep dispute resolution process consisting of (1) loss prevention and dispute avoidance, (2) direct negotiations, (3) facilitated direct negotiations with preselected standing neutrals, (4) issue specific outside neutral facilitated negotiations, and (5) binding adjudication. This paper examines the evolution of this multistep dispute resolution process within the construction industry.