Construction projects are inherently complex, often fraught with variables that can lead to disagreements, claims, and disputes. When a conflict arises, it can be costly in terms of time, money, and professional relationships. While a traditional approach might be to head straight to litigation, it is often more effective to leverage alternative dispute resolution (ADR) methods like negotiation and mediation. The key to success lies in understanding and managing three core tensions that exist in every dispute.
1. The Tension Between Creating Value and Distributing Value
In any dispute, there are two primary objectives: to create a larger “pie” of value that all parties can share, and to claim the largest possible slice of the existing pie for yourself.
• In a construction dispute, “creating value” means looking for a solution that benefits all parties beyond a simple financial settlement. This could involve agreeing to future collaboration, sharing a technical solution, or adjusting a project schedule to mitigate further costs for everyone.
• “Distributing value” is the more traditional, combative approach—arguing over who is owed what, based on the contract terms and legal positions. A successful negotiation or mediation requires parties to move beyond a purely distributive mindset. By focusing on creating value, such as a solution that keeps the project on track or preserves a long-term business relationship, parties can often achieve a better outcome than they would through a legal battle.
2. The Tension Between Empathy and Assertiveness
Effective dispute resolution requires a delicate balance between understanding the other side’s perspective and confidently advocating for your own.
• Empathy is about stepping into the other party’s shoes to understand their motivations, constraints, and fears. For a contractor, this might mean understanding the client’s financial pressures or the project manager’s need to meet a strict deadline.
• Assertiveness is about clearly and firmly articulating your position, rights, and interests. In construction, this involves knowing the contract language inside and out and being prepared to present a strong case for your claims.
Failing to manage this tension can derail a resolution. Too much assertiveness without empathy can lead to a stalemate, while too much empathy can result in a disadvantageous settlement. The best approach is to be strong on your interests, but soft on the people.
3. The Tension Between Principals and Agents
This tension highlights the conflict between the direct stakeholders (the principals—e.g., the company owner or client) and their representatives (the agents—e.g., project managers, superintendent, legal counsel).
• In a construction dispute, the agents are often the ones in the negotiation room, but they are not the ones who will ultimately live with the consequences of the resolution. Their incentives might be different from the principals’. A lawyer might be incentivized to pursue a case to trial, while a company owner might simply want the dispute to go away.
• Disputes often become more difficult to solve when the principals are not present or involved in the process. It is crucial for agents to have a clear understanding of their principals’ true interests and to ensure that a resolution aligns with those goals. The most successful mediations often include direct involvement from the decision-makers on both sides.
By keeping these three tensions in mind, parties involved in construction disputes can move beyond positional bargaining and work toward a collaborative solution that saves time, money, and most importantly, preserves critical business relationships.
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