Model for Understanding, Preventing, and Resolving Project Disputes

Based on the comparative analysis of 24 construction disputes, this paper presents a process model that explains the development of disputes. The model examines the combined effect of project uncertainty, contract, working relations, and problem solving effectiveness on the development of disputes. The model develops a classification of problem situations, and identifies the problem-solving requirements and the potential for dispute in each situation. The model indicates that the prevention of complex, high cost disputes depends more on the planning and problem solving ability of the project organization, and less on the contractual terms. The paper identifies the following actions that can reduce the number and severity of claims: reduction of project uncertainty, reduction of contractual problems, reduction of opportunistic behavior, increased the project organization's problem-solving ability, and use of alternative dispute resolution methods to reduce resolution costs.