Why mediation is the best way to resolve construction claims
Talk about construction claims and most people are immediately filled with the images and anxieties that go with lengthy, expensive court proceedings. However, it doesn’t have to be that way. Here, Dr. Apirath Prateapusanond, Regional Director of Tungsten Capital in Thailand, forensic delay analyst and construction claims consultant explains…
While there are some cases that do inevitably end up in court, it is a last resort. It isn’t really in the interests of any of the participating parties.
In the past we have discussed the merits of preparing for a claims notice before one even arises. That is to use efficient project management tools such as our cloud based system ConZol, to manage construction projects in such a way as to anticipate any issues. The result is that you can deal with them quickly and efficiently, rather than letting them escalate.
Inevitably however, claims do occur. So by far the next golden moment of opportunity to resolve the issues is mediation. That’s because this widely used arena for resolving construction claims has a number of merits:
- Mediation is confidential. Any discussions would not be disclosed or used in further dispute resolution processes such as arbitration and litigation, should mediation fail to find a resolution.
- During mediation parties still have the power to make the decisions. For example, they can choose mediators with a construction background. Then the two parties can and decide on an acceptable settlement. Once things escalate to arbitration much of the control is taken out of the client’s hands.
- Mediation is relatively informal. It can be conducted anywhere, such as at a hotel meeting room with, or without, lawyers involved. This makes for a more relaxed environment, and keeps costs lower.
- Mediation is much less expensive than arbitration and litigation.
- Mediation allows for the possibility to retain a good business relationship between the parties.
Arbitration and litigation leads to bitterness, anger and mistrust.
THE KEY TO SUCCESSFUL MEDIATION
So if mediation is usually preferable to litigation and arbitration then why doesn’t everyone do it? The answer is that it isn’t an easy resolution to achieve. It requires careful and well considered planning and presentation as well as a keen understanding of both construction, claims and the litigation processes.
- Decision makers for the two parties must present clearly and thoroughly during the mediation process.
- Both must be willing to listen and compromise.
- Both parties must present the problems with supporting documents and exhibits to agree the root cause of the dispute. Well informed, well presented material should not be held back in case of a trial. It’s important that both parties recognise this is the chance for decision makers and senior management to show real understanding of the root causes of the problems with a sense of compassion. Only then can an acceptable settlement can be made.
While much of this may seem logical, it is surprising how often these fundamentals are overlooked in favour of holding onto anger and mistrust. For these elements to be achieved it is necessary to have three key ingredients in place:
- Good document management processes from the start of a project.
- A team who really understand the construction claims processes.
- The capacity for exceptionally clear and effective communications.
These are the three pillars that reside at the core of the Tungsten Capital organisation.