Framework for improved alternatives dispute resolution practice in the Sri Lankan constructions industry

Alternative Dispute Resolution (ADR) methods are essential for resolving of the disputes in the construction industry. Currently ADR practices in the Sri Lankan construction industry have become unpopular among the construction practitioners mainly due to the cost and time spent on resolving disputes. Accordingly, this study addresses this unfortunate issue by identifying disputes, types of ADR, ADR attributes, theoretical procedures and current ADR practices related to the Sri Lankan construction industry, and by developing a framework for improved ADR practice. In developing the framework, this research was conducted adopting pragmatism as the paradigm. A literature review, semi-structured interviews with adjudicators/arbitrators and construction industry professionals, case studies of completed public sector construction projects and a questionnaire survey were the research methods employed. Finally, the developed framework was validated through focus group discussions. Eight categories of disputes and related causes of disputes were identified. Out of those eight causes of disputes: Lack of team spirit and lack of document communication, which were categorized under ‘Human behavioural related disputes’ are the most commonly occurring disputes in the Sri Lankan construction industry. Also identified was that there are five commonly used ADR methods in the Sri Lankan construction industry. Negotiation, mediation, and conciliation are voluntary methods and, according to the Standard Bidding Document (SBD) from the Construction Industry Development Authority (CIDA), adjudication and arbitration are contractual obligations. This study demonstrates that even though the three voluntary methods feature many positives in comparison to adjudication and arbitration, lack of enforceability of the decisions and parties’ attitudes do not encourage their use in dispute resolution in Sri Lanka. On the other hand, adjudication and arbitration appear to be more costly, time consuming and do not encourage continuing the business relationship among the parties. Additionally, the neutrality of the third party in adjudication and arbitration was raised as a concern by some contracting parties. Since the adjudication is practised according to the SBD, and arbitration is based on the Arbitration Act 11 of 1995 Sri Lanka, several theoretical ADR attributes are not applicable. The framework developed contains two components namely, “process” and “criteria”. Process includes the procedure adopted in ADR, and criteria include the decisions needed during the process. The developed framework is applicable for two ADR methods namely adjudication and arbitration which are contractual obligations for the contracting parties. The framework was validated through a focus group. The study highlights the importance of minimizing disputes, improving ADR, training construction professionals on teamwork, document communication, attitude improvement and ADR training. The results demonstate the need to improve the role played by CIDA by reviewing in detail the nature of disputes and current ADR practices in Sri Lanka, and the need to develop new guidance and training for industry professionals to improve ADR practice. The developed framework makes a significant contribution to improve adjudication and arbitration practice in Sri Lankan construction industry. This research has also opened several further research opprotunties in relation capacity building for ADR practice in the same context.