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DISPUTE AVOIDANCE FROM THE PERSPECTIVE OF PROCUREMENT

METHODS: A CONCEPTUAL FOCUS

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Senarath, P.A.N.B. and Francis, M., 2021. Dispute avoidance from the perspective of procurement
methods: A conceptual focus. In: Sandanayake, Y.G., Gunatilake, S. and Waidyasekara, K.G.A.S. (eds).
Proceedings of the 9th World Construction Symposium, 9-10 July 2021, Sri Lanka. [Online]. pp. 256-267.
DOI: https://doi.org/10.31705/WCS.2021.22. Available from: https://ciobwcs.com/papers/

DISPUTE AVOIDANCE FROM THE

PERSPECTIVE OF PROCUREMENT
METHODS: A CONCEPTUAL FOCUS
P.A.N.B. Senarath1 and Mathusha Francis2

ABSTRACT

Disputes are unavoidable in construction projects due to their complex characteristics

and involvement of different parties, which can interrupt the smooth construction
process. Hence, proper dispute avoidance strategies need to be implemented to avoid
disputes beforehand. On the other hand, the previous researchers suggested that there
is a link between disputes and procurement methods. Therefore, the current research
investigates the disputes in the construction industry from the perspective of different
procurement methods. A systematic literature review was carried out to identify the
available procurement methods in the construction industry, disputes and dispute
avoidance strategies and the features of the procurement methods from the perspective
of disputes. Firstly, a total of fifty-two key research papers on the research area were
employed to review. The literature findings revealed that the industry has moved towards
collaborative approaches from the traditional procurement method with higher dispute
frequency because as per the findings the likelihood of disputes seems less in the
projects procured under collaboration. It further revealed that the inherent features of
collaborative approach such as teamwork, relationships and mutual understanding give
less prosper towards disputes. Therefore, the findings of the review conclude that the
selection of collaborative procurement method at the early stages of a project can reduce
the possibilities of disputes from the perspective of procurement methods.

Keywords: Construction industry; Disputes; Procurement methods.

1. INTRODUCTION
The construction industry is one of the major industries, which plays a vital role in the
economy of any country (Illankoon et al., 2019). It has become more competitive and
complex due to the increasing demands of the employers and the global economic
downturn (Farooqui et al., 2012). A procurement method can be considered as a key stage
that ensures the successful delivery of a construction project despite the challenges (Wang
et al., 2018) and the selection of procurement methods depends on the goals and
objectives set forth, cost, time and quality (Lædre et al., 2006). Further, the author pointed
out that the methods used for the selection of procurement routes should be improved or
otherwise it will overrun on cost, time and quality. Different types of procurement
arrangements are available and each procurement method is consisted of advantages and
disadvantages concerning the delivery of the project, dispute occurrence and selection of
Dispute Resolution Mechanisms (DRM) (Mante et al., 2012).

1
Department of Building Economics, University of Moratuwa, Sri Lanka, [email protected]
2
Department of Building Economics, University of Moratuwa, Sri Lanka, [email protected]

256
 Dispute avoidance from the perspective of procurement methods: A conceptual focus

The disagreements between the parties in a project may later turn into disputes (Illankoon
et al., 2019). Construction disputes have become a major impediment that affect the
performance of a construction project, causing the contribution of various practices to
avoid disputes (De Alwis et al., 2016). The actions, or inactions of the employer,
contractor or other consultants are the main reasons for disputes (Farooqui et al., 2012).
Disputes become expensive in terms of finances, personnel, time and opportunity costs,
if they are not managed and resolved promptly (Farooqui et al., 2012) while damaging
the contractual relationships between the parties (Illankoon et al., 2019). Hence,
adherence to DRM is essential because the study by Li and Cheung (2019), indicated that
a cleaner output of construction works could be obtained through efficient dispute
management. Dispute management can be implemented at the early stage of a project to
avoid and resolve the disputes effectively beforehand (Francis et al., 2017).
The practice utilised in the industry when a dispute occurs is either Alternative Dispute
Resolution (ADR) or litigation process (De Alwis et al., 2016). However, according to
the authors, the drawbacks of DRM in the practical application have paved the path to the
dispute avoidance concept. Moreover, Mante et al. (2012) stated that the disputes in a
project depend on how it is procured and also procurement method is a crucial factor
considered in dispute avoidance (De Alwis et al., 2016). Yusof et al. (2011) indicated
that the traditional procurement method has the highest rate for disputes due to its key
features and the other innovative methods like design and build, management and
partnering methods have the capability of reducing the disputes. On the other hand, the
working atmosphere of collaborative approach can be useful to avoid disputes (Elhag et
al., 2020). Therefore, a link of the relationship between the procurement methods and the
occurrence of the disputes can be identified especially in terms of dispute avoidance.
Nevertheless, available literature on construction disputes tends to give more attention to
dispute resolution than dispute avoidance (Naji et al., 2020). Furthermore, the growth of
complexity and competitiveness in the construction industry has gained a reputation for
disputes in the last few years (Elhag et al., 2020) and different types of procurement
methods have also developed with the evolvement of construction procurement (Oyegoke
et al., 2009). Thus, with the time elapsed, the key features of each method may have
varied as well as along with the occurrence of disputes and dispute avoidance strategies.
Therefore, this research aims to identify the procurement methods used in the
construction industry, dispute avoidance strategies to be implemented through the stages
of a project and the features of the procurement methods from the perspective of disputes
in order to avoid the possible disputes considering the procurement methods.

2. RESEARCH METHODOLOGY
Literature reviews in research are conducted for numerous purposes (Okoli and
Schabram, 2010). Systematic literature review facilitates to conduct a study in a
methodical manner minimising researchers’ bias (Khallaf et al., 2018). Further, the
authors stated that it provides higher reliability in establishing frameworks and
consistency in data collection comparatively to other literature review methods.
Moreover, a systematic literature review enables the researchers for an explicit and
reproducible to collect and combine the existing knowledge and to develop a research
gap and provides suggestions for further research (Ahmed et al., 2017). Therefore,
adhering to this method, the current research reviews the procurement methods in the

Proceedings The 9th World Construction Symposium | July 2021 257

P.A.N.B. Senarath and Mathusha Francis

construction industry, disputes, dispute avoidance strategies and dispute avoidance from
the perspective of procurement methods considering the features of each method.
A comprehensive literature review was carried out based on systematic literature review
by referring reliable sources. The research mainly focuses on relevant sources published
within the study area related to procurement methods, disputes and dispute avoidance and
the findings are aligned accordingly in the sections. A total of fifty-two (52) articles were
employed for the study. Sections 3 and 4 provides brief introductions about procurement
and disputes respectively. Thereafter, dispute avoidance strategies are identified through
the stages of a construction project as in section 5. Subsequently the features of
procurement methods, especially in terms of causes of disputes, frequency of disputes
and dispute avoidance strategies in each are presented in section 6.

3. PROCUREMENT METHODS IN THE

CONSTRUCTION INDUSTRY
The procurement method is a key method which creates the client’s pre-conditions to
ascertain the objectives of a project successfully, preventing project failure and
dissatisfaction of the client (Ratnasabapathy and Rameezdeen, 2010). Various
procurement methods have advanced along with the development of new concepts and
technologies Chanudha et al. (2017) and Mante et al. (2012) recognised them as
traditional, integrated approaches, management-oriented and collaborative/relationship-
based methods. Ratnasabapathy et al. (2005) identified lump sum, measure and pay, and
prime cost as the common variants of traditional method; design and build, package deal,
turnkey, develop and construct, novated design and, build and concession contracts as in
the integrated method. According to Rahmani et al. (2017), management-oriented method
is mainly divided as management contracting and construction management while
partnering, joint ventures, alliancing and voluntary agreements can be identified as
arrangements of collaborative method (Ratnasabapathy et al., 2005).
Earlier, traditional method was the only available option where the architect designs the
building and the contractor bids for the project referring the drawings (Joseph and
Jayasena, 2008). The report by the Charted Institute of Building (CIOB, 2010) stated that
the traditional method is the most understood process in the construction industry with its
utilization over a long time period. Nevertheless, a high number of disputes can occur in
this method due to its key features (Mante et al., 2012). McDermotti and Khalfan (2012),
stated that recently, novel procurement methods are implemented to achieve more
integrated and organised processes. Moreover, Naoum and Egbu (2016), stated that
alternative procurement methods like design and build, management contracting and
construction project management are introduced to overcome the problems from lack of
integration, separation of design from construction, improper communication,
uncertainty, changes in environment and client’s expectations. Furthermore, Elhag et al.
(2020) emphasised the use of collaborative approach due to its benefits as improved
relationships and communication, better productivity and decrease of disputes and
litigation. Moreover, change in attitudes and emphasis on trust are the guiding factors of
dispute prevention scheme in collaborative method (Mante et al., 2012).

Proceedings The 9th World Construction Symposium | July 2021 258

 Dispute avoidance from the perspective of procurement methods: A conceptual focus

4. DISPUTES IN THE CONSTRUCTION INDUSTRY

Disputes can be considered as a major factor obstructing the successful completion of a
construction project due to its high cost and time consumption (Naji et al., 2020).
Moreover, disputes are unavoidable because of the complexity, involvement of multi-
parties in a project (Abeynayake and Weddikkara, 2013), poor preparation of contract
documents, inadequate planning, financial issues and communication issues (Farooqui et
al., 2012). Disputes may arise from the commencement to the execution of works because
both the parties constantly have to satisfy shared obligations on both sides and a single
default case is sufficient to interrupt the balancing pendulum and the entire development
(Pawar and Patil, 2014). Therefore, the findings by Farooqui et al. (2012), concluded that
construction disputes shall be avoided and cautiously managed to obtain a smooth
construction process as prevention of disputes is better than cure.

5. DISPUTE AVOIDANCE STRATEGIES

The disputes must be investigated thoroughly and as soon as possible to determine the
causes of disputes and relate them to the pre-construction phase to reduce or eliminate
them before the commencement of the construction (Naji et al., 2020). De Alwis et al.
(2016) identified briefing stage, pre contract stage and post contract stage as the major
stages in a construction project in preparation of a dispute avoidance model for the Sri
Lankan construction industry. Hence, here the dispute avoidance strategies from 21
studies are categorized according to the above mentioned phases in Table 1.
Table 1: Dispute avoidance strategies

Dispute Avoidance Strategies Sources

Briefing stage
Selection of most appropriate procurement method [4], [19], [20]
Selection of collaborative approach/partnering as [6], [7], [13], [16]
procurement method
Specify the quality standards to follow [4]
Assess the financial risks due to government policy [4]
changes
Pre-contract stage
Proper preparation of contract documents [2], [4], [19]
Intervention of an independent third party at the start of [1], [7], [8], [9], [10], [11], [12],
the contract [E.g.: Dispute Board (DB)/Dispute [14], [15], [18]
Resolution Board (DRB)/Dispute Adjudication Board
(DAB)/Dispute Resolution Adviser (DRA)]
Implementation of proper dispute clauses in the contract [11]
Proper allocation of risks [2], [3], [4], [7], [11], [21], [19]
Identify the link between the dispute’s occurrence and [17]
pre-construction phase
Selection of contractors [4]
Early contractor involvement [13], [15]
Time management by the contractors [4]

Proceedings The 9th World Construction Symposium | July 2021 259

P.A.N.B. Senarath and Mathusha Francis

Dispute Avoidance Strategies Sources

Post contract stage
Proper administration of contract documents [19]
Negotiating in an event of differentiating in matter [3], [19]
Early notification and resolution of the dispute [19]
Constructability [13]
Lean construction/Supply chain integration [13]
Stakeholder management alignment [13]
Use ADR filter mechanisms [3], [11]
Team building [4], [6], [11], [15], [21]
Role of the parties [4]
Study about occurrence and causes for disputes [6], [15], [17]
Quality assurance [4]
Improved relationships [5], [6], [21]
Patch perceptions of fairness [6], [11], [21]
[1] Abeynayake and Weddikkara (2013); [2] Cheung (2014); [3] Connerty (2006); [4] De
Alwis et al. (2016); [5] Chan and Suen (2005); [6] Elhag et al. (2020); [7] Gebken and Gibson
(2006); [8] Gerber (2001); [9] Hardjomuljadi (2020); [10] He (2010); [11] Jannadia et al.
(2000); [12] Jones (2006); [13] McGeorge et al. (2007); [14] MohdDanuri et al. (2016); [15]
Mosey (2019); [16] Mustaffa and Bowles (2004); [17] Naji et al. (2020); [18] Ong and Gerber
(2010); [19] Thusharika and Abeynayake (2016); [20] Yusof et al. (2011); [21] Zhu and
Cheung (2020)
The findings imply that dispute avoidance may commence from the preparation of
contracts and selection of procurement methods as well. Appointment of a third party like
a DB, DRB, DAB or DRA at the start of the contract is the most significant dispute
avoidance method identified by most of the authors. Other than that, a balanced allocation
of risks is also given priority by the researchers as a dispute avoidance strategy and it is
important because according to De Alwis et al. (2016), construction related risks are one
of the main causes of disputes. Furthermore, the selection of suitable procurement
method, taking actions to improve the performance as a team and examining the dispute
causes and clauses in the contract have a considerable effect on dispute avoidance.
Mante (2015) also identified several sets of dispute avoidance strategies which utilise
procurement and management of relationships and, management related processes of
construction projects. The findings of Table 1 have highlighted the selection of the most
suitable procurement method and on the other hand, several authors recognised the
collaborative/partnering approach itself as a method of dispute avoidance. The strategies
such as team building, improved relationships and communication are also identified as
dispute avoidance strategies by the authors which are the special characteristics of the
collaborative approach as identified by Elhag et al. (2020). Moreover, the early
involvement of the contractor is also identified as a dispute avoidance strategy where the
focus again moves towards procurement methods because in management oriented,
design and build, and collaborative methods early contractor involvement is clearly
visible as per Table 2. Therefore, it can be identified that the selection of the proper
procurement method has a huge impact on dispute avoidance as per the findings.
Moreover, the collaborative approach has a significant impact on dispute avoidance in

Proceedings The 9th World Construction Symposium | July 2021 260

 Dispute avoidance from the perspective of procurement methods: A conceptual focus

projects because most of the identified dispute avoidance strategies are recognisable as
key features of the collaborative approach and several researchers recognised the method
itself as a dispute avoidance strategy.
6. FEATURES OF THE PROCUREMENT METHODS
FROM THE PERSPECTIVE OF DISPUTES
According to Rameezdeen and De Silva (2002), the construction procurement
arrangements in the Sri Lankan context can be categorised as; separated systems
(traditional method), integrated systems (design and build method), management-
oriented systems and collaborative systems. Moreover, the features of the procurement
systems may have different impacts on disputes and dispute avoidance. Therefore, the
features of the procurement methods which are applicable in the Sri Lankan context, are
illustrated in Table 2, elaborating the involvement of the parties, suitability of the method,
early contractor involvement, causes of disputes, frequency of disputes and dispute
avoidance strategies based on the literature findings.
Table 2: Features of procurement methods from the perspective of disputes

Traditional Design and Management Collaborative/

method build oriented Partnering
method method
Involvement Contractor is Contractor is Entire process Collaboration
of parties selected after responsible for is managed by between the client
the design is both design the contracted and the project
completed and consultant team (Mante et al.,
(Rahmani et al., construction (Rashid et al., 2012).
2017). (Teon, 2014). 2006).
Suitability Projects with Clients with Fast track High risk and high
separate less experience projects value projects
responsibilities in design (Sivkumaran (Rameezdeen and
for design and (Lesniak et al., and Perera, De Silva, 2002).
construction 2012). 2015) and Any kind of
(Rashid et al., Projects with projects with construction
2006). high priority in more project (CIOB,
buildability commercial 2010).
(Naoum and risk (Rahmani
Egbu, 2015). et al., 2017)
Early
contractor  ✓ ✓ ✓
involvement
Causes of 1.The 1.Dissatisfacti 1.The absence 1.Unforeseen
disputes contractors tend on of the client of single point circumstances and
to reduce quality with the responsibility drawbacks (Sinha
by providing quality and for design and and Jha, 2020).
lack of design of the construction
buildability, final outcome. (CIOB, 2010).
forcing design 2.Abortive
alternations. work.

Proceedings The 9th World Construction Symposium | July 2021 261

P.A.N.B. Senarath and Mathusha Francis

Traditional Design and Management Collaborative/

method build oriented Partnering
method method
2.Contract 3.Imprecisions
variations in the client’s
(Elhag et al., brief.
2020). 4.Conflicts
3.Lack of between the
communication. brief and
4.Price contractor’s
competition. proposal.
5.Fragmentation 5.Valuation of
(Mante et al., variations.
2012). (Mante et al.,
6. Separation of 2012).
design and
construction
(CIOB, 2010)
Frequency of Higher Less. Less Less.
disputes (Yusof et al., (Mante et al., (Yusof et al., (Mante et al.,
2011). 2012). 2011). 2012).
Dispute Implement Early Implement The characteristics
avoidance alternative involvement of collaborative of collaborative
strategies procurement the contractor (partnering method like social
methods as (Elhag et al., and trust) relationships, non–
design and build 2020). method opportunistic
and Implement (Mehany et behaviour, trust,
collaboration collaborative al., 2018). faith, changing
(Mante et al., method attitudes and
2012). (Mante et al., respect among the
2012). participants (Elhag
et al., 2020; Mante
et al., 2012).
The tabulated data of numerous studies indicate that the features of procurement methods
vary with the type of the procurement method. The involvement of the contractor in
traditional method occurs only after the design is completed, but the design and build
contractor contributes from the early stages in both design and construction, improving
the buildability. The appointed contractor in management-oriented method manages the
total process while increasing the opportunity for more fast track and high risk projects.
Collaborative arrangement is especially suitable for projects with high value and risks.
However, the findings imply that irrespective of the implemented procurement method,
disputes may arise due to various reasons. The traditional method is recognised as the
method with the highest frequency for disputes while other methods have comparatively
a less frequency. The reason for an increased number of disputes in traditionally procured
projects is due to the main features of the procurement process (Mante et al., 2012) and
as it is extensively subjected to variations, leading to an increase in cost and time
extensions (Yusof et al., 2011). As per Table 2, several causes of disputes are identifiable
in the traditional method due to issues like less quality, variations, lack of communication,

Proceedings The 9th World Construction Symposium | July 2021 262

 Dispute avoidance from the perspective of procurement methods: A conceptual focus

separation of design and construction etc. In the design and build method as well disputes
may arise with client’s dissatisfaction with quality, ambiguities in the client’s brief and
the contractor’s proposal, variation issues and abortive work. The main reason for
disputes in management-oriented method is the lack of single point responsibility and
unforeseen circumstances in collaborative approach. However, most of the researchers
identified collaboration as a procurement method to avoid disputes successfully
considering its key features and as collaboration between the project participants is
claimed to lead for fewer disputes (Osipova and Eriksson, 2011). According to Table 2,
the implementation of collaborative approach was significantly highlighted as a dispute
avoidance strategy to be adopted under each procurement type.
However, the selection of the most suitable procurement method that is the most
satisfactory to execute the works can avoid disputes (Thusharika and Abeynayake, 2016).
As the costs related to adversarial relationships in the construction industry have become
more obvious, collaborative practices began to emerge and interest in informal and less
adversarial dispute resolution procedures have developed (Musonda and Muya, 2011).
As per the findings, considerable attention towards the selection of collaborative
approach is given to avoid disputes beforehand because its characteristics like social
relationships, non-opportunistic behaviour, mutual trust, faith, changing attitudes and
respect among the project participants have increased the consideration towards it.
Figure 1 presents the conceptual framework derived through the findings of the study.
Construction Industry

Disputes Construction Project Dispute Avoidance

Causes for disputes

●Variations Traditional Method

High
●Lack of buildability ●Lump sum 01. Briefing Stage
●Separation of design ●Measure and pay
and construction ●Prime cost
●Communication
issues • Select the most
●Fragmentation suitable
procurement
●Issues with final Design and Build Method method
Low
design and quality ●Design and Build
●Abortive work ●Package deal
●Variation issues
Dispute Frequency

●Turnkey
●Issues in client’s ●Develop and construct • Select
brief ●Novated design collaborative
●Conflicts between ●Build and concession approach
brief and contractor’s
proposal

Low ●Absence of single Management Oriented

point responsibility in Method 02. Pre Contract Stage
design and ●Management contracting
construction ●Construction management

Low ●Unforeseen Collaborative Method 03. Post Contract Stage

circumstances and ●Partnering
drawbacks ●Joint venture
●Alliancing
●Voluntary agreements

Obtain project objectives in terms of; TIME, COST, QUALITY

Figure 1: Conceptual framework for disputes from the perspective of procurement methods

Proceedings The 9th World Construction Symposium | July 2021 263

P.A.N.B. Senarath and Mathusha Francis

As per the developed framework, dispute avoidance can be initiated irrespective of the
adopted procurement method in order to ensure the successful completion of a project
while obtaining the objectives in terms of time, cost and quality. The procurement method
with the highest rate for disputes is traditional method and the lowest is the collaborative
method. Each method has various kinds of dispute causes which vary with the
procurement type mainly because of the features of them. The causes of disputes
respectively to each method is presented in the framework. On the other hand, dispute
avoidance may take place at three major stages of a construction project: namely; briefing,
pre contract and post contract stages. However, this research aims to elaborate the concept
of dispute avoidance from the perspective of the procurement methods. According to the
findings, selecting the most suitable procurement approach at the briefing stage acts as a
dispute avoidance strategy and collaborative approach was mainly highlighted as a
significant method with the capability of avoiding disputes. Disputes are inevitable
irrespective of the used procurement type. Therefore, the industry practitioners must
rethink of adopting dispute avoidance strategies from the commencement of the project,
especially in terms of selecting a procurement method. Figure 1 clearly illustrates the key
causes of disputes in each procurement method and the importance of selecting
collaborative approach at the briefing stage. However, the developed model only
identified the contextual aspects of dispute avoidance from the perspective of
procurement methods and further investigations are required to ascertain the connection.

7. CONCLUSIONS
Disputes are common in construction projects because of the complex and competitive
characteristics and involvement of different parties. If the disputes are not avoided or
managed properly, it may affect the performance and the final outcome of a project.
Hence, in the present competitive environment in the construction industry, the
possibilities for disputes should be reduced and proper mechanisms should be
implemented to reduce them. However, attention towards dispute avoidance should be
high due to the disadvantages of DRM. Procurement method is a key factor which
contributes to the successful completion of a project. Previous research pointed out that
the method of how a project is procured contributes to the disputes that arise. Therefore,
this study was conducted to further study the disputes in the construction industry from
the perspective of procurement methods. A systematic literature survey was carried out
by referring to reliable resources in the area of the research. The research identified the
relationship between disputes and procurement methods in terms of the frequency of
occurrence of disputes in each procurement method, causes for disputes and suitable
dispute avoidance strategies for each method. The findings implied that in the traditional
procurement method, dispute frequency is high compared to the other alternative methods
mainly because the design and construction are separated. However, the research findings
depict that disputes can be avoided by adopting the most suitable procurement method.
Implementation of collaborative approach was highlighted to avoid the disputes
beforehand and the discovered dispute avoidance strategies as well were included with
the special characteristics of this method. The key features of it like improved
relationships and communication, early contractor involvement, trust and understanding
have the capability of dispute avoidance. The ability of collaborative approaches to avoid
disputes from occurring is identified and proved in this research through the findings of
previous research. Therefore, this research suggests that effective ways of dispute
avoidance should be considered beforehand in every construction project, mainly by

Proceedings The 9th World Construction Symposium | July 2021 264

 Dispute avoidance from the perspective of procurement methods: A conceptual focus

selecting a more collaborative procurement approach based on the findings. The findings
of the study enable the industry practitioners to identify the features of the procurement
methods which may cause and avoid the disputes and to recognise the dispute avoidance
strategies which can be implemented throughout a construction project. The study can be
further continued to develop a strategic framework to avoid disputes by investigating the
causes of disputes and dispute avoidance strategies adopted in the projects procured under
each procurement method, and the effects of disputes in each procurement method.
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