Are Contract Disputes Predictable?

TLDR

Construction projects vary in their propensity for contract disputes, and identifying high‑risk projects before construction starts is a key question. The study aims to determine whether construction projects can be pre‑identified as high‑risk for contract disputes by analyzing the impact of various project characteristics. The authors evaluated people, process, and project characteristics using statistical analysis techniques to assess their influence on dispute likelihood. Statistical analysis of 159 projects led to a Disputes Potential Index that predicts high‑risk projects, showing that people, process, and project factors all contribute, but people factors are the most critical for dispute avoidance.

Abstract

Are some construction projects more prone to contract disputes than others? If so, can these projects be identified before construction begins? This paper describes research conducted with the CII Dispute Prevention and Resolution Task Force to answer these questions. This research analyzed the effect of different project characteristics on the occurrence of contract disputes. This paper explains the project characteristics that were evaluated, our data analysis techniques, and the conclusions that we made from this analysis. Three categories of project characteristics were considered: people aspects, process aspects and project aspects. The findings of this work are based on statistical analysis of data on the frequency and severity of disputes on 159 construction projects. A logistic regression model named Disputes Potential Index was created from this data set that predicts those projects that have a high likelihood of experiencing contract disputes. People, process, and project issues all play a role in predicting the likelihood of contract disputes. However, the fundamental conclusion from this research is that “people” hold the key to avoiding contract disputes.