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STUDY OF CONSTRUCTION DISPUTES & IT’s
RESOLUTION THROUGH ARBITRATION FOR
AHMEDABAD CITY OF GUJARAT STATE OF INDIA
By
SHAH ...
i
CERTIFICATE
This is to certify that research work embodied in this thesis entitled “STUDY OF
CONSTRUCTION DISPUTES & IT’...
ii
COMPLIANCE CERTIFICATE
This is to certify that research work embodied in this thesis entitled “STUDY OF
CONSTRUCTION DI...
iii
PAPER PUBLICATION CERTIFICATE
This is to certify that research work embodied in this thesis entitled “STUDY OF
CONSTRU...
iv
THESIS APPROVAL CERTIFICATE
This is to certify that research work embodied in this thesis entitled “STUDY OF
CONSTRUCTI...
v
DECLERATION OF ORIGINALITY
I hereby certify that I am the sole author of this thesis and that neither any part of this
t...
vi
ACKNOWLEDGEMENT
I am very much thankful to Mr. F.S.Umrigar Principal, BVM Engineering College
& Mr. L.B.Zala Head of th...
vii
TABLE OF CONTENTS
Sr. No. Table of Content Page
No.
Certificate i
Compliance Certificate ii
Paper Publication Certific...
viii
2.1.1 Conflict 5
2.1.2 Claims 5
2.1.3 Dispute 5
2.1.4 Change 6
2.1.5 Constructive change 6
2.1.6 Change order 6
2.1.7...
ix
2.7.1 Negotiation 29
2.7.2 Mediation 29
2.7.3 Conciliation 29
2.7.4 Mini trial 30
2.7.5 Adjudication 30
2.7.6 Arbitrati...
x
4.5.3 To Dispute Resolution Method Used 49
4.6 Spearman’s Rank Correlation Method 50
4.6.1 Spearman’s Rank Correlation f...
xi
5.3.2 Percentage and Rank to Impact of Construction Dispute by
Architect
65
5.3.3 Percentage and Rank to Impact of Cons...
xii
REFERENCES 79 - 82
APPENDIX
Appendix - A : Questioner Form A1 – A4
Appendix - B : Data Collected about Causes of Const...
xiii
List of Figure
Sr. No. Figure Page No.
Figure-1 Claims Settlement Methods 27
Figure-2 Claims Settlements Methods 27
F...
xiv
List of Table
Sr. No. Table Page
No.
Table – 1 Factors affecting Dispute by different Authors 16
Table – 2 Overall fin...
xv
Table – 23 ICD – Spearman’s Rank Correlation Between Developer &
Contractor
54
Table – 24 DRM – Spearman’s Rank Correla...
xvi
List of Abbreviations
CCD Causes of Construction Dispute
ICD Impact of Construction Dispute
DRM Dispute Resolution Met...
xvii
“STUDY OF CONSTRUCTION DISPUTES & IT’s
RESOLUTION THROUGH ARBITRATION FOR
AHMEDABAD CITY OF GUJARAT STATE OF INDIA”
B...
xviii
From present study it is found that “Finance and payment issues” is having first rank
among all causes for generatio...
CHAPTER 1
INTRODUCTION
PAGE NO. 01 - 03
CHAPTER – 1: INTRODUCTION
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 1
1.0 Background:
India is a developing country...
CHAPTER – 1: INTRODUCTION
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 2
for dispute between two parties which results...
CHAPTER – 1: INTRODUCTION
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 3
1.3 Need for study:
Claim is essentially an o...
CHAPTER 2
LITERATURE
REVIEW
PAGE NO. 04 - 35
CHAPTER – 2: LITERATURE REVIEW
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 4
2.0 Introduction:
Since 1990’s, the conc...
CHAPTER – 2: LITERATURE REVIEW
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 5
2.1 Background:
2.1.1 Conflict:
“It is S...
CHAPTER – 2: LITERATURE REVIEW
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 6
(Source: Sigitas Mitkus and Tomas Mitkus...
CHAPTER – 2: LITERATURE REVIEW
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 7
2.1.7 Dispute-Conflict Concept
Survey of...
CHAPTER – 2: LITERATURE REVIEW
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 8
Loosemore and Djebarni (1994) has commen...
CHAPTER – 2: LITERATURE REVIEW
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 9
Love et al. has analyzed the reasons for...
CHAPTER – 2: LITERATURE REVIEW
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 10
Conclusions and findings on the suitabi...
CHAPTER – 2: LITERATURE REVIEW
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 11
this study collected the data regarding...
CHAPTER – 2: LITERATURE REVIEW
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 12
Mitropoulos and Howell (2001) suggest t...
CHAPTER – 2: LITERATURE REVIEW
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 13
more claims than in any other time in h...
CHAPTER – 2: LITERATURE REVIEW
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 14
Ashwini Arun Salunkhe et al. has highli...
CHAPTER – 2: LITERATURE REVIEW
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 15
Tomas Mitkus et al. has analyzed that t...
CHAPTER – 2: LITERATURE REVIEW
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 16
2.2.1 Factors affecting disputes given ...
CHAPTER – 2: LITERATURE REVIEW
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 17
Variations due to client changes
Kumara...
CHAPTER – 2: LITERATURE REVIEW
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 18
2.2.2 Overall findings of Global Constr...
CHAPTER – 2: LITERATURE REVIEW
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 19
2.2.5 Rank to the Dispute causes in Asi...
CHAPTER – 2: LITERATURE REVIEW
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 20
2.2.7 Rank to the Dispute causes in UK
...
CHAPTER – 2: LITERATURE REVIEW
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 21
for it to be a riskallocated to the pri...
CHAPTER – 2: LITERATURE REVIEW
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 22
 Delay in Payments,
 Delay in Startin...
CHAPTER – 2: LITERATURE REVIEW
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 23
 Due to Failure of parties to cooperat...
CHAPTER – 2: LITERATURE REVIEW
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 24
2.6.1 Payment related Claims:
In the co...
CHAPTER – 2: LITERATURE REVIEW
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 25
performed as originally planned. There ...
CHAPTER – 2: LITERATURE REVIEW
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 26
adjusted schedule. Acceleration refers ...
CHAPTER – 2: LITERATURE REVIEW
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 27
FIGURE-1: CLAIMS SETTLEMENTS METHODS
Th...
CHAPTER – 2: LITERATURE REVIEW
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 28
Arbitrator which is appointed by the co...
CHAPTER – 2: LITERATURE REVIEW
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 29
The above figure shows that in methods ...
CHAPTER – 2: LITERATURE REVIEW
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 30
In conciliation, the process begins wit...
CHAPTER – 2: LITERATURE REVIEW
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 31
Arbitration is a dispute resolution pro...
CHAPTER – 2: LITERATURE REVIEW
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 32
on a daily basis.
 Record all relevant...
CHAPTER – 2: LITERATURE REVIEW
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 33
 Document the additional costs caused ...
CHAPTER – 2: LITERATURE REVIEW
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 34
be considered which will not be more th...
CHAPTER – 2: LITERATURE REVIEW
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 35
Work Completion time Schedule.
Work Com...
CHAPTER 3
RESEARCH
METHODOLOGY
PAGE NO. 36 - 40
CHAPTER – 3: RESEARCH METHODOLOGY
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 36
3.1 Introduction
In this chapter the...
CHAPTER – 3: RESEARCH METHODOLOGY
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 37
organization, their profession in co...
CHAPTER – 3: RESEARCH METHODOLOGY
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 38
3.4.2 RII INDEX METHOD
Data of all t...
CHAPTER – 3: RESEARCH METHODOLOGY
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 39
Source: http://geographyfieldwork.co...
CHAPTER – 3: RESEARCH METHODOLOGY
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 40
Correction for finite population:
PO...
CHAPTER 4
DATA COLLECTION
AND ANALYSIS
PAGE NO. 41 - 55
CHAPTER – 4: DATA COLLECTION AND ANALYSIS
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 41
4.0 INTRODUCTION:
In this ch...
CHAPTER – 4: DATA COLLECTION AND ANALYSIS
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 42
4.2 LIST OF RESPONDENTS:
Tab...
CHAPTER – 4: DATA COLLECTION AND ANALYSIS
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 43
27 Nishit Parmar Contractor ...
CHAPTER – 4: DATA COLLECTION AND ANALYSIS
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 44
56 Jignesh Pawar Contractor ...
CHAPTER – 4: DATA COLLECTION AND ANALYSIS
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 45
4.4OVERALL RANKING BY ALL IN...
CHAPTER – 4: DATA COLLECTION AND ANALYSIS
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 46
4.4.2 RANK TO IMPACT OF CONS...
CHAPTER – 4: DATA COLLECTION AND ANALYSIS
M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 47
E Litigation 1.27 8 0.25 8
F...
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA
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This is my Thesis work which I have done in my last year of Masters of Engineering in Construction Engineering and Management.

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STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA

  1. 1. STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA By SHAH ABHISHEK SHAILESH (130080714018) Guided by: Dr. RAJIV BHATT Associate Professor, Civil Engineering Department A.D.Patel Institute of Technology New VallabhVidyanagar, Gujarat Co Guided by: Prof. J.J.BHAVSAR Associate Professor and PG Coordinator (M.E - C.E.M), B.V.M. Engineering College, VallabhVidyanagar, Gujarat A Thesis Submitted to Gujarat Technological University in Partial Fulfillment of the Requirements for The Degree of Master of Engineering in Construction Engineering & Management MAY - 2015 BIRLA VISHVAKARMA MAHAVIDYALAYA ENGINEERING COLLEGE VALLABH VIDYANAGAR
  2. 2. i CERTIFICATE This is to certify that research work embodied in this thesis entitled “STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA” was carried out by SHAH ABHISHEK SHAILESH (130080714018) studying at Birla Vishvakarma Mahavidyalaya (BVM) Engineering College (008) for partial fulfillment of Master of Engineering degree Construction Engineering and Management to be awardedby Gujarat Technological University. This researchwork has beencarriedout under our guidance and supervision and it is up to my satisfaction. Date: / / 2015 Place: Dr. RAJIV BHATT Associate Professor Civil Engineering Department A.D.Patel Institute of Technology New VallabhVidyanagar, Gujarat Prof. J.J.BHAVSAR Associate Professor and PG Coordinator (M.E C.E.M), B.V.M. Engineering College, VallabhVidyanagar, Gujarat Prof. (Dr) L. B. ZALA Professor and Head Civil Engineering Department B.V.M. Engineering College VallabhVidyanagar Dr. F. S. UMRIGAR Principal B.V.M. Engineering College VallabhVidyanagar Seal of Institute
  3. 3. ii COMPLIANCE CERTIFICATE This is to certify that research work embodied in this thesis entitled “STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA” was carried out by Mr. Abhishek. S. Shah (Enrollment No. 13008071418) studying at BIRLA VISHVAKARMA MAHAVIDYALAYA – 008 for partial fulfillment of Master of Technology degree to be awarded by Gujarat Technological University. He has compiled to the comments given by Dissertation phase – I as well as mid semester Thesis Reviewer to my satisfaction. Date: / /2015 Place: ABHISHEK S SHAH PG Scholar ME (CEM), Civil Engineering Department BVM Engineering College Vallabh Vidhyanagar, Gujarat Dr. RAJIV BHATT Associate Professor Civil Engineering Department A.D.Patel Institute of Technology New VallabhVidyanagar, Gujarat PROF. (Dr) L. B. ZALA Professor and Head Civil Engineering Department B.V.M. Engineering College VallabhVidyanagar, Gujarat DR. F. S. UMRIGAR Principal B.V.M. Engineering College Vallabh Vidhyanagar, Gujarat
  4. 4. iii PAPER PUBLICATION CERTIFICATE This is to certify that research work embodied in this thesis entitled “STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA” carried out by SHAH ABHISHEK SHAILESH (Enrollment No. 130080714018) studying at Birla Vishvakarma Mahavidyalaya (BVM) Engineering College (008) for partial fulfillment of Master of Engineering degree to be awarded by Gujarat Technological University, has published article entitled “RANKING OF “CAUSES OF DISPUTES” AND “USE OF DISPUTE RESOLUTION METHODS” FOR CONSTRUCTION INDUSTRY IN GUJARAT” for publication by the National Conference “Recent Research & Development In Core Discipline Of Engineering” at Vadodara Institute of Engineering during 25th and 26th April 2015. Date: / /2015 Place: ABHISHEK S SHAH PG Scholar ME (CEM), Civil Engineering Department BVM Engineering College Vallabh Vidhyanagar, Gujarat Dr. RAJIV BHATT Associate Professor Civil Engineering Department A.D.Patel Institute of Technology New VallabhVidyanagar, Gujarat PROF. (Dr) L. B. ZALA Professor and Head Civil Engineering Department B.V.M. Engineering College VallabhVidyanagar, Gujarat DR. F. S. UMRIGAR Principal B.V.M. Engineering College Vallabh Vidhyanagar, Gujarat (Seal of the Institute)
  5. 5. iv THESIS APPROVAL CERTIFICATE This is to certify that research work embodied in this thesis entitled “STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA” carried out by SHAH ABHISHEK SHAILESH Enrollment No.130080714018 studying at Birla Vishvakarma Mahavidyalaya (BVM) Engineering College (008) is approved for the degree of Master of Engineering with specialization of Construction Engineering and Management by Gujarat Technological University. Date: / /2015 Place: Name: Name:
  6. 6. v DECLERATION OF ORIGINALITY I hereby certify that I am the sole author of this thesis and that neither any part of this thesis nor the whole of the thesis has been submitted for a degree to any other University or Institution. I certify that, to the best of my knowledge, my thesis does not infringe upon anyone’s copyright nor violate any proprietaryrights and that any ideas,techniques, quotations, or any other material from the work of other people included in my thesis, published or otherwise, are fully acknowledged in accordance with the standard referencing practices. Furthermore, to the extent that I have included copyrighted material that surpasses the bounds of fair dealing within the meaning of the Indian Copyright Act, I certify that I have obtained a written permission from the copyright owner(s) to include such material(s) in my thesis and have included copies of such copyright clearances to my appendix. I declare that this is a true copyof my thesis, including any final revisions,as approved by my thesis review committee. Date: / / 2015 Place: SHAH ABHISHEK SHAILESH 130080714018 Dr. RAJIV B BHATT COLLEGE CODE: 001
  7. 7. vi ACKNOWLEDGEMENT I am very much thankful to Mr. F.S.Umrigar Principal, BVM Engineering College & Mr. L.B.Zala Head of the Civil Engineering Department, for having permitted me to carry out this Dissertation work in my area of interest. I wish to express my deep sense of gratitude to my Guide, Dr. Rajiv. B. Bhatt (Associate Professor, Civil Engineering Department, A.D.Patel Institute of Technology) and Co-guide Mr. J.J.Bhavsar (PG co- ordinator, BVM Engineering College) for his able guidance and useful suggestions, which helped me a lot in completing the Dissertation work, in time. A great many thanks to all other respected faculty members and the whole Institution of BVM Engineering College. I would also thank Mr. Akalkotkar Sir (H.O.D of Construction Project Management branch of PG course at GANPAT University, Kherva) for their very helpful guidance throughout my thesis work. I would also like to thank Arbitrators Mr. D.V.Patel and Mr. A.T.Doshi for their great support and help during the thesis work. I would alsolike to thanks all the respondents of the survey workwho has contributed their time and effort and gave their valuable responses. ABHISHEK.S.SHAH 130080714018 M.E. – CONSTRUCTION ENGINEERING AND MANAGEMENT, BVM ENGINEERING COLLEGE, V.V.NAGAR, GUJARAT
  8. 8. vii TABLE OF CONTENTS Sr. No. Table of Content Page No. Certificate i Compliance Certificate ii Paper Publication Certificate iii Thesis Approval Certificate iv Declaration of Originality v Acknowledgement vi Table of Content vii List of Figure x List of Table xii List of Abbreviations xvi Abstract xvii CHAPTER – 1 ( INTRODUCTION ) 1 - 3 1.0 Background 1 1.1 Problem statement 2 1.2 Objectives 2 1.3 Need for the study 3 1.4 Scope of the work 3 CHAPTER - 2 ( LITERATURE REVIEW ) 5 - 35 2.0 Introduction 4 2.1 Background 5
  9. 9. viii 2.1.1 Conflict 5 2.1.2 Claims 5 2.1.3 Dispute 5 2.1.4 Change 6 2.1.5 Constructive change 6 2.1.6 Change order 6 2.1.7 Dispute conflict concept 7 2.1.8 Conflict management 7 2.2 Literature review of researchpaper and its summary 8 2.2.1 Factors affecting disputes given by different authors in previous studies 16 2.2.2 Overall findings of Global Construction Dispute 2014 18 2.2.3 Rank to the Dispute causes in Global 18 2.2.4 Rank to Alternative Dispute Resolution Method 18 2.2.5 Rank to the Dispute causes in ASIA 19 2.2.6 Rank to the Dispute causes in US 19 2.2.7 Rank to the Dispute causes in UK 20 2.2.8 Rank to the Dispute causes in Middle East 20 2.3 Data required for making claims 20 2.4 Types of construction disputes 21 2.5 List of Causes of claims 21 2.6 Most frequent causes of claims 23 2.6.1 Payment related claims 24 2.6.2 Change claims 24 2.6.3 Delay claims, 24 2.6.4 Extra work claims 25 2.6.5 Contact claims 25 2.6.6 Different pricing and measuring claims 25 2.6.7 Different site condition Claims 25 2.6.8 Acceleration claims 25 2.6.9 Damage claims 26 2.6.10 Contract termination claims 26 2.7 Claim settlement methods 26
  10. 10. ix 2.7.1 Negotiation 29 2.7.2 Mediation 29 2.7.3 Conciliation 29 2.7.4 Mini trial 30 2.7.5 Adjudication 30 2.7.6 Arbitration 30 2.7.7 Litigation 31 2.8 Supporting documents for the claims 31 2.9 Clauses in Tender to Avoid or Settle Claims 33 CHAPTER-3 ( RESEARCH METHODOLOGY ) 36 - 40 3.1 Introduction 36 3.2 Data Collection Method 36 3.2.1 Desk Study 36 3.3 Questionnaire Design 36 3.4 Data Analysis Method 37 3.4.1 Weighted Average Method 37 3.4.2 Relative Importance Index Method 38 3.4.3 Spearman Rank Correlation Coefficient 38 3.5 Sample Size 39 CHAPTER – 4 ( DATA COLLECTION & ANALYSIS) 41 - 55 4.0 Introduction 41 4.1 Data Collection 41 4.2 List of Respondents 42 4.3 Data Analysis 44 4.4 Overall ranking by all in General 45 4.4.1 Rank to Causes of Construction Dispute 45 4.4.2 Rank to Impact of Construction Dispute 46 4.4.3 Rank to Dispute Resolution Method 46 4.5 Rank by Individual 47 4.5.1 To causes of Construction Dispute 47 4.5.2 To Impact of Construction Dispute 48
  11. 11. x 4.5.3 To Dispute Resolution Method Used 49 4.6 Spearman’s Rank Correlation Method 50 4.6.1 Spearman’s Rank Correlation for Causes of Construction Dispute 50 4.6.1.1 Between Architect and Contractor 50 4.6.1.2 Between Architect and Developer 51 4.6.1.3 Between Contractor and Developer 52 4.6.2 Spearman’s Rank Correlation for Impact of Construction Dispute 53 4.6.2.1 Between Architect and Contractor 53 4.6.2.2 Between Architect and Developer 53 4.6.2.3 Between Contractor and Developer 54 4.6.3 Spearman’s Rank Correlation for Dispute Resolution Method Used 54 4.6.3.1 Between Architect and Contractor 54 4.6.3.2 Between Architect and Developer 55 4.6.3.3 Between Contractor and Developer 55 CHAPTER – 5 ( RESULTS AND DISCUSIONS ) 56 – 71 5.0 Introduction 56 5.1 Comparison of Rank of Each Category by All Individual 56 5.1.1 Rank to Causes of Construction Dispute by All Individual 56 5.1.2 Rank to Impact of Construction Dispute by All Individual 58 5.1.3 Rank to Dispute Resolution Method by All Individual 59 5.2 Percentage and Rank to Major Causes of Dispute 60 5.2.1 Percentage and Rank to Major Causes of Dispute in General 60 5.2.2 Percentage and Rank to Major Causes of Dispute by Architect 61 5.2.3 Percentage and Rank to Major Causes of Dispute by Contractor 62 5.2.4 Percentage and Rank to Major Causes of Dispute by Developer 63 5.3 Percentage and Rank to Impact of Construction Dispute 64 5.3.1 Percentage and Rank to Impact of Construction Dispute in General 64
  12. 12. xi 5.3.2 Percentage and Rank to Impact of Construction Dispute by Architect 65 5.3.3 Percentage and Rank to Impact of Construction Dispute by Contractor 66 5.3.4 Percentage and Rank to Impact of Construction Dispute by Developer 67 5.4 Percentage and Rank to Dispute Resolution Method Used 68 5.4.1 Percentage and Rank to Dispute Resolution Method Used in General 68 5.4.2 Percentage and Rank to Dispute Resolution Method Used by Architect 69 5.4.3 Percentage and Rank to Dispute Resolution Method Used by Contractor 70 5.4.4 Percentage and Rank to Dispute Resolution Method Used by Developer 71 CHAPTER – 6 ( CASE STUDY ) 72 - 75 6.0 Introduction 72 6.1 General Details 72 6.2 Facts Agreed by both the parties 72 6.3 Reasons for Disputes 73 6.4 Claims by Claimant on Respondent 73 6.5 Issues of the Case 73 6.6 List of Supporting Documents along with Claim Submission 74 6.7 Arbitrator’s Finding and Decisions on the issues 74 6.8 Statement of Award amount 75 CHAPTER – 7 ( CONCLUSION ) 76 - 78 7.1 Conclusion 76 7.2 Recommendation 76 7.3 Future Study Scope 78 7.4 Limitations of the study 78
  13. 13. xii REFERENCES 79 - 82 APPENDIX Appendix - A : Questioner Form A1 – A4 Appendix - B : Data Collected about Causes of Construction Dispute B1 – B3 Appendix – C : Data Collected about Impact of Construction Dispute C1 – C3 Appendix - D : Data Collected about Dispute Resolution Method Used D1 – D3 Appendix – E : Research Paper - 1 E1 – E13 Appendix – F : Research Paper - 2 F1 – F9 Appendix – G : Research Paper Certificates G1 – G2 Appendix – H : Plagiarism Report H1 – H2 Appendix – I : Review Card and Action Taken I1 – I7
  14. 14. xiii List of Figure Sr. No. Figure Page No. Figure-1 Claims Settlement Methods 27 Figure-2 Claims Settlements Methods 27 Figure-3 Alternative Dispute Resolution Methods 28 Figure-4 Rank by All Individual to Causes of Construction Dispute 57 Figure-5 Rank by All Individual to Impact of Construction Dispute 58 Figure-6 Rank by All Individual to Dispute Resolution Method 59 Figure-7 CCD Vs Its Percentage by All 60 Figure-8 CCD Vs Its Percentage by Architect 61 Figure-9 CCD Vs Its Percentage by Contractor 62 Figure-10 CCD Vs Its Percentage by Developer 63 Figure-11 ICD Vs Its Percentage by All 64 Figure-12 ICD Vs Its Percentage by Architect 65 Figure-13 ICD Vs Its Percentage by Contractor 66 Figure-14 ICD Vs Its Percentage by Developer 67 Figure-15 DRM Vs Its Percentage by All 68 Figure-16 DRM Vs Its Percentage by Architect 69 Figure-17 DRM Vs Its Percentage by Contractor 70 Figure-18 DRM Vs Its Percentage by Developer 71
  15. 15. xiv List of Table Sr. No. Table Page No. Table – 1 Factors affecting Dispute by different Authors 16 Table – 2 Overall findings of Global Construction Dispute 2014 18 Table – 3 Rank to the Dispute causes in Global 18 Table – 4 Rank to Alternative Dispute Resolution Method 18 Table – 5 Rank to the Dispute causes in Asia 19 Table – 6 Rank to the Dispute causes in US 19 Table – 7 Rank to the Dispute causes in UK 20 Table – 8 Rank to the Dispute causes in Middle East 20 Table – 9 Population for Survey Work 39 Table – 10 Rate of Responses 41 Table – 11 List of Respondents 42 Table – 12 Overall Rank to Causes of Construction Dispute 45 Table – 13 Overall Rank to Impact of Construction Dispute 46 Table – 14 Overall Rank to Dispute Resolution Method Used 46 Table – 15 Individual Rank to Causes of Construction Dispute 47 Table – 16 Individual Rank to Causes of Construction Dispute 48 Table – 17 Individual Rank to Causes of Construction Dispute 49 Table – 18 CCD – Spearman’s Rank Correlation Between Architect & Contractor 50 Table – 19 CCD – Spearman’s Rank Correlation Between Architect & Developer 51 Table – 20 CCD – Spearman’s Rank Correlation Between Contractor & Developer 52 Table – 21 ICD – Spearman’s Rank Correlation Between Architect & Contractor 53 Table – 22 ICD – Spearman’s Rank Correlation Between Architect & Developer 53
  16. 16. xv Table – 23 ICD – Spearman’s Rank Correlation Between Developer & Contractor 54 Table – 24 DRM – Spearman’s Rank Correlation Between Architect & Contractor 54 Table – 25 DRM – Spearman’s Rank Correlation Between Architect & Developer 55 Table – 26 DRM – Spearman’s Rank Correlation Between Contractor & Developer 55 Table – 27 Rank to CCD by All Individual 56 Table – 28 Rank to ICD by All Individual 58 Table – 29 Rank to DRM by All Individual 59 Table – 30 Percentage and Rank to CCD in General 60 Table – 31 Percentage and Rank to CCD by Architect 61 Table – 32 Percentage and Rank to CCD by Contractor 62 Table – 33 Percentage and Rank to CCD by Developer 63 Table – 34 Percentage and Rank to ICD in General 64 Table – 35 Percentage and Rank to ICD by Architect 65 Table – 36 Percentage and Rank to ICD by Contractor 66 Table – 37 Percentage and Rank to ICD by Developer 67 Table – 38 Percentage and Rank to DRM in General 68 Table – 39 Percentage and Rank to DRM by Architect 69 Table – 40 Percentage and Rank to DRM by Contractor 70 Table – 41 Percentage and Rank to DRM by Developer 71 Table – 42 Statement of Awarded Amount 75
  17. 17. xvi List of Abbreviations CCD Causes of Construction Dispute ICD Impact of Construction Dispute DRM Dispute Resolution Method
  18. 18. xvii “STUDY OF CONSTRUCTION DISPUTES & IT’s RESOLUTION THROUGH ARBITRATION FOR AHMEDABAD CITY OF GUJARAT STATE OF INDIA” By SHAH ABHISHEK SHAILESH (130080714018) Guided by: DR. RAJIV BHATT H.O.D (Civil Department) A.D.Patel Institute of Technology New VallabhVidyanagar, Gujarat ABSTRACT The Indian government is investing millions of dollars every year in new facilities to improve the infrastructure of the country. Construction projects are complex, uncertain, have long construction periods, involve many parties, and require the integration of different work components (Civil, Mechanical and Electrical) to work together as a single unit. The projects require highly specializeddesigns, detailedplans and specifications, high-risk constriction methods, effective management, skill full supervision, and close coordination. Thus, claims are common in such projects. Today, construction projects are the subject of more claims than in any other industry. Claims appear to hinder the completion of construction and cause delays in delivering projects. These claims are undesirable because they require significant time and resources to resolve, and because they cause adversarial relationships among the parties involved. It is therefore in the common interest of all involved parties to prevent them, minimize them, or resolve them as amicably as possible. Identifying common claim types and their causes is essential in devising ways and means to minimize and hopefully avoid them in future projects. This thesis presents the results of a pilot study of the types, and causes of construction claims in the Construction industry.
  19. 19. xviii From present study it is found that “Finance and payment issues” is having first rank among all causes for generation of dispute. Second rank was given to “Poor work quality” by the respondents. “Extra items” is having third rank and “Design errors” is having fourth rank in causes of disputes. “Inclement weather” is having lowest rank. Respondents felt that disputes in construction industry damages the reputation of both the parties. This is found by getting first rank for “Damaging company reputation” in Impact matters. Further, respondents have given lowest rank to “Dispute Escalation” matter. Respondents have given first rank to “Negotiation” method for dispute resolution and last rank is given to “Litigation” method. The recommendations to prevent/reduce claims in construction projects are then presented. It is expected that the study of this thesis will help construction firms to avoid the main causes of claims and, accordingly, minimize delays and cost overruns in construction projects.
  20. 20. CHAPTER 1 INTRODUCTION PAGE NO. 01 - 03
  21. 21. CHAPTER – 1: INTRODUCTION M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 1 1.0 Background: India is a developing country. The construction sector of India is growing rapidly. There are many ongoing Infrastructure projects in India of Billions of Dollars where the delay or stoppage of work due to any reason cannot be acceptable. In this rapidly growing construction industry many times claims arise between client and contractors. Construction Claim can be defined as a request by either party to the contract, usually the Contractor, for compensation for damages caused by failure of the other party to fulfill his part of obligations as specified in the contract. The compensation is usually in the form of the additional payment or an extension of time (EOT). Construction claims are measured by many project participants to be one of the most disturbing and unpleasant events of a project. Today, construction projects are the subject matter of more claims than in any other industry. The high competition has forced contractors to submit projects with minimum profits in order to stay in business. In addition to their multiparty nature, projects are becoming more complex and risky. This has placed an added burden on contractors to construct increasingly sophisticated and risky projects with less resources and profits. Under these circumstances, it is not surprising that the number of claims within the construction industry continues to increase. During the execution of a project, several issues arise that cannot be resolved among projectparticipants. Such issues typically involve contractor requesting for either time extension or for additional cost, or sometimes both. Such requests by the contractor are referred as Claims. However if the owner does not agree to the claims put out by the contractor and there are differences in the interpretations, the issue takes the form of dispute. Claims are becoming an inevitable and unavoidable stress in modern projects involving new technology, specifications and high expectations from the owner. There are many reasons for claims time, machinery, material, manpower, money, price escalation, accident on site, change in design and many other are major reasons
  22. 22. CHAPTER – 1: INTRODUCTION M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 2 for dispute between two parties which results into disputes, if the disputes are Claims and Counterclaims. To solve these Claims, certain dispute resolution techniques are available like arbitration, conciliation, mediation and dispute resolution board. 1.1 Problem Statement In any construction work there are mainly Client or Developer, Contractor, Sub- contractors, Architects, Structure Designer, Project management consultancy (PMC) etc. working together on the project. Many times due to delay of work, delay in clearance of running bill, cost over-run, design errors etc can create conflict between either two parties mentioned above, which may convert into the claims. However,  What are the main causes that lead them into a construction dispute?  What are the impacts of construction disputes?  Which are the disputes resolution techniques available in construction industry? Above important issues needs to be studied. 1.2 Objective: The main objective of study is...  To find out various aspect of claims management and suggest various measures for avoidance of claims.  To identify and analyze the types of claims and their causes in construction projects.  To study Causes of Construction Dispute, their Impact and Dispute Resolution Method Used to resolve these disputes.  Study of the Dispute Resolution case study of any real cases.
  23. 23. CHAPTER – 1: INTRODUCTION M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 3 1.3 Need for study: Claim is essentially an outcome of loss or damage occurred. In most cases for claim, both the engineer and contractor really start thinking about the matter after the claim arises. They are seldom prepared in advance. It is essential for the contractor / client to estimate the exact value of loss or damage incurred due to the increased cost and extension of time. Moreover it is necessary to view the current scenario in the construction industry for the level of practice used in the claim process of the clients consultants and the contractor and what should be done to manage claims if they arise. In addition it is essential to study the various ways in which the claims could be avoided and how this can be resolved even if they occur for an amicable working in a project. 1.4 Scope of work: It is necessary to study the various aspects of Claims Management by the Contractor, Developer, Architect and Consultant. It is necessary to correlate the ability of Contractor, Client and Consultant to deal with claim process with organizational parameters like financial growth, size of the company, financial turnover, management system and their attitude towards claims.
  24. 24. CHAPTER 2 LITERATURE REVIEW PAGE NO. 04 - 35
  25. 25. CHAPTER – 2: LITERATURE REVIEW M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 4 2.0 Introduction: Since 1990’s, the concept of claim management has spread broadly among many companies in construction sector as it works well against the clients by providing supplementary profits to contractors. On the other hand, client’s understandable disappointment at being enforced to release large additional payments beyond the sums initially budgeted and assumed to be sufficient, damages the relation with the contractor. A survey study by Semple at al. (1994) concludes that the most common causes are increases in scopes,weather conditions, restricted access, and acceleration, in addition to the above causes Adrian (1993) indicated relativelylow profitability of the construction industry, changing of product delivery, and other factors like; inadequate bid information, faulty or late owner-supplied equipment or material, inferior quality of drawings or specifications, and stop-and-go operations. Based on 91 projects, concluded that the most crucial sources of claims are unclear or inadequate documentation, late instructions, variations initiated by the employer/engineer, measurement related issues, inclement weather, and time extension assessment. The difference between how firms manage these claims, however, can impact their profitability both in the short term and the long term. Consequently, a good background with efficient knowledge is essential during both interpretation and application of Claim methodology in order to reach satisfying results, that is, knowledge is defined as one of the key elements through which an organization can reach to success. As indicated increased globalization, changing workforce patterns and technology has led the transition to the knowledge era in which knowledge, not physical labour, remittances and assets, has become the most critical resource of an organization and the fountain of organizational and personal power. In addition to above statement, it is also crucial to be able to utilize the gathered information and knowledge in an efficient way so that an effective claim management strategy is determined and the claimant can take advantage of it.
  26. 26. CHAPTER – 2: LITERATURE REVIEW M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 5 2.1 Background: 2.1.1 Conflict: “It is Serious disagreement and agreement about something important” (Collins, 1995) [4] While Willmot and Hocker (1998) [5], provide a detailed definition of conflict as “An expressed struggle between at least two independent parties who perceive incompatible goals, scare resources, and interference from other achieving those goals”. 2.1.2 Claims: Claim is basically, a contract adjustment due to changes or additions to the original contract. Considering various definitions, a construction claim can be defined as ‘a request by either party to the contract for compensation for damages caused by failure of the other party to fulfil his part of obligations or expectations as specified in the contract. “For the assertion of a right to money, property or remedy”(Powell- Smith and Stephenson, 1993) [6]. While Likewise, Semple et al. (1994) [7] define a claim as “A request for compensation for damages incurred by any party to a contract” 2.1.3 Dispute: “Any contract question or controversy that must be settled beyond the jobsite management” (Diekmann and Girard, 1995) [8] Claims that remain protested after completing the claims procedure become disputes between the contracting l parties. The dispute resolution process to be followed is often times identified in the contract documents. Disputes may be addressed through arbitration, alternate dispute resolution techniques or litigation.
  27. 27. CHAPTER – 2: LITERATURE REVIEW M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 6 (Source: Sigitas Mitkus and Tomas Mitkus / Procedia - Social and Behavioral Sciences 110 ( 2014 ) 777 – 786) Sigitas Mitkus has explained that Conflicts occur if Risks are not clearly assigned, Claims occur if Conflicts are not clearly managed and Disputes occur if Claims are not clearly resolved. 2.1.4 Change: A change occurs when the scope of the contract work is modified or is impacted not due to the fault or negligence of the contractor. Changes are compensable in money or time or both. 2.1.5 Constructive Change: A constructive change occurs when the owner or designer 3 fails to recognize a contractor's entitlement to a changed condition in a timely manner. 2.1.6 Change Order: The formal contract document that modifies the original contract is known as Change order. A Change Order is a written instruction prepared by the Architect and signed by the Owner, Contractor and Architect, stating their agreement upon all of the following: 1. A change in the work; 2. The amount of the adjustment in Contract Sum, if any; and 3. The extent of the adjustment in the Contract Time, if any
  28. 28. CHAPTER – 2: LITERATURE REVIEW M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 7 2.1.7 Dispute-Conflict Concept Survey of the literature on conflicts and disputes in construction reveals confused usage of the terms. The terms “conflict”, “dispute”, and “claim” are used separately or in pairs and frequently without clear indication of the precise meaning of each use. There is often lack of clarity as to whether the researcher is referring to “claims” per se (that is claims which are resolved between the parties and do not therefore become dispute), or to “disputes” (that is those claims which are not resolved and escalates to disputes), or conflict that is not either appeared as claim or dispute. Is there a difference between conflict and dispute? Some authors interchange the two terms, others point to conceptual differences, even if they are blurred. However, 'Conflict' and 'dispute' are two distinct notions. Conflict, it is proposed, exists wherever there is incompatibility of interest, and therefore is pandemic. Conflict can be managed, possiblyto the extent of preventing a dispute resulting from the conflict. Dispute is associated with distinct justifiable issues. Generally the process of dispute resolution lends itself to third party intervention. It is concluded that effective management of conflicts and disputes would be furthered by separating the two fields, and particularly by applying a more stringent structuring (Peter, Michael and Edward, 1998). John Burton (1990) has suggested that Disputes are short-term disagreements that are relativelyeasy to resolve. Burton has referred the conflicts as Long-term, deep-rooted problems that involve seemingly non-negotiable issues and are resistant to resolution of the problem. Douglas Yarn (1999) has observed that conflict is a state rather than a process. People who have opposing interests, values, or needs are in the state of conflict, which may be manifest, in which case it is brought forward in the form of a dispute which cannot exist without a conflict. As per Costantino and Merchant (1996), Conflict is the process of expressing dissatisfaction, disagreement, or unmet expressions. Conflict is ongoing, intangible and amorphous.
  29. 29. CHAPTER – 2: LITERATURE REVIEW M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 8 Loosemore and Djebarni (1994) has commented that whilst there is little consensus among sociological scholars on a specific definition of conflict as a common denominator is that for conflict to occur there must be an incompatibility of needs and a perception by one party that this incompatibility interferes with the attainment of that person’s needs. In 1993 Brown and Marroit has subscribed a similar definition. “A conflict exists, in the mind of an individual, when he/she perceives a situation of incompatibility among objectives, whereas a dispute is a conflict of which both parties are conscious and which is the subject toalteration between them. Further Brown and Marriot (1993) has defined the dispute as a class or kind of conflict, which manifest itself in distinct, justifiable issues which involves disagreement over issues which are capable of resolution by negotiations, meditation, or third party adjudication. As per Brown and Marriot (1993), “An actual ‘dispute’ will not exist until a claim is asserted by one party which is ‘disputed’ by the other” In similar vein Fenn et al (1997) suggested that, “The Conflict exists when there is an incompatibility of interest. When a conflict becomes irreconcilable and the mechanisms for avoiding it are exhausted, or inadequate, techniques for resolving the dispute are required.” 2.2 Literature review of Research Papers and its Summary: Cakmak et al. has aimed to analyze the main causes of disputes which occur in the construction industry. In order to reach this aim, a literature review was undertaken by him to identify the common causes of construction disputes. In this paper there are mainly 7 categories of construction disputes are listed down they are mainly Owner related, Contractor related,Design related, Contract related, Human Behavior related, Project related and lastly External factors. In each of these categories of construction disputes there are several causes of claims are also listed down by the owner.
  30. 30. CHAPTER – 2: LITERATURE REVIEW M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 9 Love et al. has analyzed the reasons for disputes in Australian construction industry and says that Disputes are become an endemic element of the Australian construction industry. If they are not resolved quickly then they can escalate causing schedule delays, lead to claims that require litigation proceedings for resolution and destroy business relationships. Author has said that research over the last two decades has revealedthat factors such as scope of workchanges, poor contractual documentation, unforeseen ground conditions, and contractual ambiguities are contributors of disputes. While this is widely known, disputes still exist over such issues. Before disputes can be avoided an understanding of what the underlying conditions that contributes to their occurrence needs to be determined so that mechanisms can be put in place to prevent them from arising. In this paper the literature is examined and a series of causal models are developed by the author to demonstrate the interdependency between key variables that contribute to disputes. The developed models are used to identify a number of strategies that can be adopted to reduce the urgent occurrence of disputes in construction. Lian et al. has said that Extension of time (EOT) has become a common construction action in many construction projects, particularly when ordinary forms of contract is applied; and it has been treated as an allowable delay in ordinary construction contract. Contractor and supervising engineer often spend considerable time to verify and evaluate the delays. A variety of techniques have been employed for such assessments. However, the effectiveness of techniques adopted has been a critical factor in attracting multinational organization for their participations in construction industry inMalaysia. The purpose of the study was therefore to analyze different EOT evaluation techniques used in Malaysia, and to probe reasons for delays in the submission and assessment of EOT. Issues such as treatment of float time and concurrent delay, agreed programmes, scheduling software and late payment had also been pointed out. During these research workauthor has sent overall 70 sets of questionnaires to several companies includes architecture firms, consultant firms, developer, contractors and also some government bodies.These 70 respondents were carefully chosen. Out of 70 respondents, 36 of them responded, which report for 51.4% response rate.
  31. 31. CHAPTER – 2: LITERATURE REVIEW M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 10 Conclusions and findings on the suitability of different techniques used were obtained from the analysis of literature review and questionnaire survey from a consolidation of practitioners. The outcome of the study provides recommendations for solution for EOT related issues as well as improving the contractual procedures. Edwi et al. has said that Purpose of this researchpaper is encounter differences with the local Chinese parties with Architect/ Contractor and Developer because of the Unfamiliar with the Chinese culture and ways of doing business, foreign. With reference to the characteristics of Chinese culture on disputes, this paper studies the problem areas of dispute and of resolving disputes in international construction projects in China. The objectives are to: examine the fundamentals of Chinese culture and ways of doing business; examine the characteristics of international projects and investigate any differences in the dispute problems arising from China International Projects; identify the most popular dispute resolution mechanism(s) for international projects in China; and recommend possible ways to reduce and resolve disputes of these projects. After literature review,author prepared a questionnaire which was designed for face- to-face interviews with 40 practitioners to collect their opinions. And the results show that the problem areas giving rise to disputes are mainly related to contractual matters. To reflect the characteristics of international projects in China, cultural and legal matters are also found to be the sources of problem. Arbitration is the most popular method, after negotiation, for resolving disputes in international construction projects in China. The limitation of the researchwas that the number of interviewees in this study could be improved and further study could include experts in Mainland China. Shreastha et al. has said that the Delay claims are the common occurrence in construction projects, which are result from many issues, including differing site conditions, access restrictions, and disputes of the contract documents. Different analysis methods of a delayclaimcan range from scheduling to cost analysis. Methods in use today can incur exponential costs, and can last for years on end. Using a survey,
  32. 32. CHAPTER – 2: LITERATURE REVIEW M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 11 this study collected the data regarding practices in delay claim analysis from professionals within the construction industry. The survey emphasized the defining qualities of a delay claim, the processes, and the requirements for resolving a claim. The results showed that the analysis of schedules and other contract documents were major resources when analyzing and resolving a delay claim. The top three subcontractors who submitted the most delay claims are concrete, earthwork, and steel. This study determined the crucial qualities of a delay claim, their processes, and the requirements for resolving a claim. When analyzing and resolving a delay claim, the results showed that analysis of schedules and contract documents was a major resource. The owners generally acknowledged the delay claim after it is submitted, inquired about the validity, and cost of the claim. Cheung et al. has described the Construction dispute resolution as a topical research area. These studies typically start from dispute identification and subject matter is the most commonly used approach. However, this approach does not take account of the contextual factors that may in fact the true causes. This prompts the diagnostic approach. This chapter gives an overview of these two approaches to identify construction disputes. In addition, a third approach that draws on the concepts of bounded rationality and opportunism is proposed. Minefields and manifestations of opportunism in construction contracting in relation to occurrence of construction disputes are also discussed. Accordingly, an anatomy of construction disputes is provided.It is suggested that construction disputes are mostly contractual but can also be speculative where people factor is a major trigger. Sinha et al. has suggested that following are the root causes of disputes identified by Kumaraswamy (1997) unfair risk allocation, unrealistic time/cost/quality targets by the client, adversarial industry culture, inappropriate contract type, and unrealistic information expectations. Proximate causes identified included: inadequate brief, slow client responses, inaccurate design information, inaccurate design documentation, inappropriate contract form, inadequate contract administration, and inappropriate contractor selection.
  33. 33. CHAPTER – 2: LITERATURE REVIEW M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 12 Mitropoulos and Howell (2001) suggest that a combination of factors of uncertainty, contractual problems and opportunistic behavior can lead to disputes. The author has concluded that client who understands their scope should be able to select a procurement option that best meets their needs. The requirement of contractor involvement during the design process can improve constructability and reduce the probability of design changes. When there is scope uncertainty and no contractor involvement during design then the likelihood of scope changes increases, which may increase project costs and time and lead to claims and disputes. Project scope, contractual conditions, particularly the allocation of risk and responsibility and procurement strategy are key elements to be considered by the organization as this will influence their planning and resourcing and their ability to achieve project outcomes. Ossama et al, has discussed the appropriateness of contractual methods towards dispute avoidance and resolution (DAR) for industrial projects in Saudi Arabia. It focuses on the private industrial sector in the Eastern Province. A survey was conducted using the principles of quota sampling where 93 questionnaires were distributed to 11 owners, 59 contractors and 23 consultants. The survey consisted of 20 statements that measured the parties' attitude and opinion towards contractual methods recommended for dispute avoidance and resolution (DAR) during the construction phase. Respondents indicated their level of agreement on a 5-level scale. The results reflect the appropriateness of these techniques for industrial projects. The five contract administration methods for dispute avoidance and resolution (DAR) covered in this study are: Allocating Fair Contract Risk, Drafting Dispute Clauses, Team Building, Provision of a Neutral Arbitrator, and Binding Arbitration. Zaneldin et al. has said that The United Arab Emirates (UAE) government is investing millions of dollars every year in new facilities to improve the infrastructure of the country. Infrastructure development has been phenomenal in view of the relatively brief period since the country’s establishment. In view of this, the construction industry is considered the largest single industry in UAE. Yet, it is also very complex and the most fragmented industry as it involves multidisciplinary participants and several stake holders. Today, construction projects are the subject of
  34. 34. CHAPTER – 2: LITERATURE REVIEW M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 13 more claims than in any other time in history. Claims appear to hinder the completion of construction and cause delays in delivering projects. This research presents the results of a pilot study of the types, causes, and frequency of construction claims in the emirates of Dubai and Abu Dhabi in UAE using a questionnaire survey that was conducted in the two emirates. The data received from the survey respondents is analyzed and recommendations to prevent/reduce claims in construction projects are then presented. It is expected that the findings of this research will help construction firms avoid the main causes of claims and, accordingly, minimize delays and cost overruns in construction projects. Olive du Preez et al. has identified some skills which is required by professionals to effectively apply conciliation in their daily tasks and to determine whether a basic understanding of conciliation would improve the overall application of claims management. It is concluded in the research paper that placing emphasis on conciliation will add value to claims management relating to procurement and the prevention of differences developing into disputes. The added value will also have a positive effect on time and cost management. Though stakeholders are of the opinion that they can rely on their inherent skills to facilitate conciliation effectively, the data analysis suggests that the skills and attributes are lacking. Conciliation is thus considered as a key and important element in the claims management process. K. C. Iyer et al. has said that contract time and cost overruns are common in any construction project which gives rise to claims and that claims mostly leads to the construction dispute. If these disputes are not handled properly then it can consume time and money of all parties to the contract. In these research paper author has analyzed and study the Arbitration case for delay claims. In this paper author has attempts to identify questions related to disputes for Indian scenario through literature reviews, arbitration awards, court cases and discussions with professionals. In this paper author has tried to list out questions for each reason of delay claim. In this paper author has identifies the various delay factors which are influencing by the decisions of arbitrators. The factors are identified as questions asked by the arbitrators and viewed as per the thought process of arbitrators or judges. Author has told that these questions were extracted through literature, arbitration awards, court cases and discussions with professionals.
  35. 35. CHAPTER – 2: LITERATURE REVIEW M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 14 Ashwini Arun Salunkhe et al. has highlighted the types of construction delays due to which project suffer time and cost overrun. Construction delay is considered to be one of the recurring problems in the construction industry and it has an adverse effect on project success in terms of time, cost and quality. In this paper author has studied the factors that influence the construction process and outlines the effect of delay in large construction projects. In this paper author has studied the performance of year 2012 with respect to ongoing and also completed projects. Author has concluded that time and cost overrun have been a major problem in construction industry. The reasons for time overruns as reported by various project implementing agencies are delay in land acquisition, delay in equipment erection, inadequate mobilization by the contractor, delay in forest clearance, fund constraints, change in scope of work, cancellation of tender, law & order problem, delay in supply of equipment, slow progress of civil work,escalationin cost. Author has alsoidentified the causes of delay by Owner and Contractor. Keval J. Shah et al. has said that it is widely accepted that a project is successful when it is finished on time. But, due to so many reasons, large number of construction projects fails to follow the planned schedule and hence delayed. So, careful study and planning of each and every activity of a construction project becomes very important in order to minimize delays. In this paper author has presented the causes of delay occurring on an ongoing bridge construction project with respect to construction of bridge girders of three spans of a major bridge across the river Sabarmati, Gandhinagar, Gujaratas a case study. This study was aimed to investigate the important causes of delay in construction of bridge girder. Activities on site with respect to construction of girder were thoroughly observed and comparison done between planned and as executed schedule by author. As per the author most of reasons for delays are related with contractor’s performance such as site management, labour productivity, and lack of expert proficiency in supervision etc. Same as delay in drawing and delay in design come under client’s responsibility. It was evident that consultant has a less responsibility. Some of the causes were to be addressed are beyond the control of all the project parties such as differing site conditions, unforeseen weather etc. As per author the overall responsibility of delay, is more responsible to contractor.
  36. 36. CHAPTER – 2: LITERATURE REVIEW M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 15 Tomas Mitkus et al. has analyzed that the causes of conflicts due to which claims are arising between client and contractors in the construction industry. Author has said that analysis of articles on this topic has revealed that most of contemporary authors refer to externally visible signs of conflicts as to the causes thereof. The authors of the present article look at the conflict in construction in a different light – from the aspect of communication. Author has said that construction contract agreement which regulates the relationships between the client and the contractor is also viewed as a product of communication. The author has said that authors hypothesize that the main cause of conflicts in the construction industry is unsuccessful communication between the client and the contractor. The hypothesis has been confirmed by the conducted research studies. In addition, author has found out these two major causes for conflict were unfair behavior of the parties to a construction contract agreement and psychological defense mechanisms. In this paper the author has analyzed, a construction contract agreement as a product of communication between the parties to a construction contract agreement. Which means that the most frequent cause of construction conflicts is unsuccessful communication between the parties to a construction contract agreement. Other causes of conflicts in the construction industry identified in this article include unfair behaviour of construction participants and psychological defence mechanisms.
  37. 37. CHAPTER – 2: LITERATURE REVIEW M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 16 2.2.1 Factors affecting disputes given by different authors in previous studies: TABLE -1 FACTORS AFFECTING DISPUTE BY DIFFERENT AUTHORS [SOURCE: (KUMARA SWAMY, 1997)] No Subject matters of construction disputes References 1 Change of scope Hewit (1991) Change work conditions Delay Disruption Acceleration Termination 2 Ambiguous contract documents Spittler and Jentzen (1992) Competitive/adversarial attitude and Dissimilar perceptions of fairness by the participants 3 Determination of the agreement Watts and Scrivener (1993) Payment related The site and execution of work Time related Final certificate and final payment Tort related 4 Contract terms Heath et al. (1994) Payments Variations Extensions of time Re-nomination and Availability of information 5 Payment Conlin et al(1996a, b) Performance Delay Negligence Quality and administration as headings of construction Disputes 6 Variation due to site conditions
  38. 38. CHAPTER – 2: LITERATURE REVIEW M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 17 Variations due to client changes Kumaraswa my (1997) Variations due to design errors Unforeseen ground conditions Ambiguities in contract documents Interferences with utility lines Variations due to external events Exceptional inclement weather Delayed design information and Delayed site possession 7 Variations Yates (1998) Ambiguities in contract documents Inclement weather Late issue of design information/drawings Delayed possession of site Delay by other contractors employed by the client (e.g. Utility companies) Postponement of part of the project 8 Project uncertainty Mitropoulos and Howell (2001) Contractual problems Opportunistic behaviour, Contractors’ financial position and Cost of conflict and culture 9 Payment, Brooker (2002) Delay Defect/quality and Professional negligence 10 Valuation of variations Sheridan (2003) Valuation of final account and Failure to comply with payment provisions
  39. 39. CHAPTER – 2: LITERATURE REVIEW M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 18 2.2.2 Overall findings of Global Construction Dispute 2014 TABLE-2: OVERALL FINDINGS OF GLOBAL CONSTRUCTION DISPUTE 2014 Region Dispute Values in US $ Length of Disputes in Month 2010 2011 2012 2013 2010 2011 2012 2013 MIDDLE EAST 56.3 112.5 65 40.9 8.3 9 14.6 13.9 ASIA 64.5 53.1 39.7 41.9 11.4 12.4 14.3 14 US 64.5 10.5 9 34.3 11.4 14.4 11.9 13.7 UK 7.5 10.2 27 27.9 6.8 8.7 12.9 7.9 EUROP 33.3 35.1 25 27.5 10 11.7 6 6.5 GLOBALY 35.1 32.2 31.7 32.1 9.1 10.6 12.8 11.8 2.2.3 Rank to the Dispute causes in Global TABLE–3: RANK TO THE DISPUTE CAUSES IN GLOBAL SOURCE: GLOBAL CONSTRUCTION DISPUTES REPORT 2014 2013 Rank Cause 2012 Rank 1 Failure to properly administer the contract 3 2 Failure to understand and/ or comply with its contractual obligations by the Employer/Contractor/ Subcontractor 2 3 Incomplete design information or Employer requirements New 4 Failure to make interim awards on extensions of time and compensation 4 5 Poorlydrafted or incomplete and unsubstantiated claims 1 2.2.4 Rank to Alternative Dispute Resolution Method TABLE–4: RANK TO ALTERNATIVE DISPUTE RESOLUTION METHOD SOURCE: GLOBAL CONSTRUCTION DISPUTES REPORT 2014 2013 Rank Method of Alternative Dispute Resolution 2012 Rank 1 Party to Party Negotiation 3 2 Arbitration 2 3 Adjudication 1
  40. 40. CHAPTER – 2: LITERATURE REVIEW M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 19 2.2.5 Rank to the Dispute causes in Asia TABLE–5: RANK TO THE DISPUTE CAUSES IN ASIA SOURCE: GLOBAL CONSTRUCTION DISPUTES REPORT 2014 2013 Rank Cause 2012 Rank 1 Failure to make interim awards on extensions of time and compensation 2 2 A failure to properly administer the contract 5 3 A biased PM or Engineer - 4 An unrealistic contract completion date being defined at tender stage - 5 Employer imposed change - 2.2.6 Rank to the Dispute causes in US TABLE–6: RANK TO THE DISPUTE CAUSES IN US SOURCE: GLOBAL CONSTRUCTION DISPUTES REPORT 2014 2013 Rank Cause 2012 Rank 1 Errors and/ or omissions in the Contract Document 2 2 Failure to make interim awards on extensions of time and compensation 5 3 Differing site conditions 4 4 Incomplete design information or Employer requirements (for D&B/D&C) - 5 A failure to properly administer the contract -
  41. 41. CHAPTER – 2: LITERATURE REVIEW M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 20 2.2.7 Rank to the Dispute causes in UK TABLE–7: RANK TO THE DISPUTE CAUSES IN UK SOURCE: GLOBAL CONSTRUCTION DISPUTES REPORT 2014 2013 Rank Cause 2012 Rank 1 Employer/ Contractor/ Subcontractor failing to understand and/ or comply with its contractual obligations 1 2 Failure to properly administer the contract 3 3 Incomplete design information or Employer requirements (for D&B/D&C) - 4 Poorly drafted or incomplete and unsubstantiated claims - 5 Employer imposed change - 2.2.8 Rank to the Dispute causes in Middle East TABLE – 8 RANK TO THE DISPUTE CAUSES IN MIDDLE EAST SOURCE: GLOBAL CONSTRUCTION DISPUTES REPORT 2014 2013 Rank Cause 2012 Rank 1 A failure to properly administer the contract 1 2 Employer imposed change 3 3 Employer/ Contractor/ Subcontractor failing to understand and/ or comply with its contractual obligations - 4 Errors and/ or omissions in the Contract Document - 5 An unrealistic contract completion date being defined at tender stage - 2.3 Data required for making Claim It is essential that for every claim, the contractor provide to the engineer appropriately documented claims, which sets out:  The name and brief description of the claim, that is claim identification;  The provisions of the contract on which the claim is based (and which provide
  42. 42. CHAPTER – 2: LITERATURE REVIEW M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 21 for it to be a riskallocated to the principal requiring additional payment and/or extension of time),  Details any additional work undertaken or costs incurred,  Valuation of the claim, supported by sufficient details (and proof if required),  Details of any delay and time extension due, keep contemporary records: to support the claim; and permit the Engineer to examine them (FIDIC Clause) 2.4 Types of construction disputes There are several types of construction claims out of which major ones are listeddown below after studying the research papers, journals, books and other study material 2.5 Causes of Claims: There are many kind of conflicts occur in construction industry between the parties which mostly converts into the claims. After taking the opinion of experts like experienced contractor, client, Designers, Arbitrator, Professors of the construction sector as well as after reviewing the research papers related to construction claims. Following are the main causes of claims:  Delay in Supply of Drawings,  Delay in Handing over the Site,  Delay in Supply of materials, Delay Claims Price Acceleration Claims Change of work order Claims Extra item, and Veriation Claims Diferent Site conditionClaims Damage Claims Loss of profit Claims Wrongful withholding of Deposits Claims
  43. 43. CHAPTER – 2: LITERATURE REVIEW M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 22  Delay in Payments,  Delay in Starting work,  Delay in Completing the work,  Work actually done but not measured and paid,  Refund of maintenance deposit,  Loss due to extra overheads on account of extension of time limit,  Loss due to idle machinery and idle labour,  Due to Design errors,  Due to inadequate or incomplete specifications,  Due to inadequate information related to design.  Due to Inadequate bid information,  Due to Inadequate time for bid preparation,  Due to Change in work scope,  Due to Changes in plans and specifications during construction,  Due to Insufficient plans and specifications,  Due to Extra items and Variations,  Due to Non granting of Completion by Engineer in charge.  Due to Partiality by the Engineer,  Due to Unrealistic expectations,  Due to Poor management and administration of the construction site.  Due to Ambiguities in contract documents,  Due to Different interpretations of the contract provisions,  Due to Inadequate investigation of site,  Due to Unbalanced bidding,  Due to coating very low rates in the Tender,  Due to Changes made or changes which occur not at the request of the owner,  Due to Extension of time (EOT),  Due to financial failure of the contractor,  Due to technical inadequacy of the contractor,  Due to Poor quality of construction work and use of wrong equipment,  Due to Failure to follow authorized procedures,  Due to Employers’ Lack of Construction Knowledge,  Due to damages occur to adjacent buildings during the work,  Due to Strikes by Workers,
  44. 44. CHAPTER – 2: LITERATURE REVIEW M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 23  Due to Failure of parties to cooperate with each other in the performance of the work.  Due to Accidents,  Due to Natural Calamity,  Due to Increase in Material / Fuel Cost,  Due to Court intervention,  Due to Weather conditions,  Due to Unforeseen ground conditions. 2.6 Most frequent causes of Claims From the list of above claims most of the claims mostly settled down between the parties by their mutual understanding as well as by Negotiation but some of the claims which are frequently occurs and which may not settle create the disputes between the parties are listed and explained below. These type of claims which do not settle and converts into the dispute can be solvedby the Advanced Dispute Resolution Methods. Payment Related Claims Change of work order Claims Delay Claims Extra item, and Veriation Claims ContractualClaims Difference in Measuring Claims Diferent Site conditionClaims Price Acceleration Claims Damage Claims Contract termination Claims
  45. 45. CHAPTER – 2: LITERATURE REVIEW M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 24 2.6.1 Payment related Claims: In the construction industry most of claims arise for the not payment or delayed payment of running bills, Final bills, unreasonably deduction of money from bills without any strong reason, delay in payment of security deposit, maintenance deposit etc. as well as construction work which contractor have done, construction material or plant which have provided,consulting services which have been provided,interest on overdue progress payments, Contractor’s losses and additional expenses due to work being deleted from the contract while work suspended under the protection of the Act at the end of the contract, a claim under the Act can be made for the final payment. However,claims under the Act are claims for the interim payments, pending the resolution of your final entitlement under the contract. 2.6.2 Change Claims: Almost every construction project encounters change. Whether it’s a change to the scope of work, a revisionto the specifications, or an impact to the means and methods of performing the work, changes can significantly impact a project’s cost and schedule. Due to change in work scope the claim may take place between the contractor and client. Due to change in work scope or change in design the quantity of work may increase or decrease and if it is the work from which contractor is going to get the maximum profit then he can claim for increased rates for performing the work or extra money for completing the work. 2.6.3 Delay Claims Construction delay claims, or disputes related to schedule impacts, are one of the most common types of disputes in the construction industry. Delays should be investigated thoroughly and carefully as the results may vary widely. Some may not affect the whole project, that is, their impact is solelythe cost of resources working at a reduced efficiency. These activities are considered to have float time within the programme, and their influence on the project is limited. Whereas, some delays do impact the project completion and accordingly their financial implications are much greater. Completion of project within the prescribed time scale, budget and with appropriate technical performance/quality is an important measure of a successful management of construction project. Delay claims typically relate to unanticipated project events and/or circumstances which extend the project and/or prevent work from being
  46. 46. CHAPTER – 2: LITERATURE REVIEW M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 25 performed as originally planned. There are many common causes for schedule delays on a construction project. Any project faces delays and disruptions especially the mega/complex projects of today, with many interfaces. Delay refers to the lack of performance or the extension of time required to complete a project that results from unexpected events. Delay may be caused by the contractor, the owner, third parties, or by unanticipated natural or artificial site conditions. 2.6.4 Extra Work Claims Extra workis any workthat is ordered by the owner after construction has started that was not included in the original contract. The extra work being performed by the contractor is a result of a clarification of the contract documents. However, the contractor believes that he is performing extra work, while the owner believes the work was part of original contract. 2.6.5 Contractual Claims Contractual claims concerns matters with regard to the contract itself. This includes any disagreement on the responsibility or liability of some parts that are not included in the documents. The main reasonof these types of claims is poorlywritten contracts. 2.6.6 Difference in Pricing and Measuring Claims These types of claims deal with the disagreement regarding measurements at the final stage in the construction. Also, these claims include the differences in pricing by the contractor and the owner of some of the materials. Also, the change and the extra work usually create some differences in pricing. 2.6.7 Different Site Conditions Claims A changed condition refers to some physical aspect of the project or its site that differs materially from the indicated by the contract documents or that is of an unusual and differs materially from the conditions ordinarily encountered. 2.6.8 Acceleration claims Acceleration occurs when the owner requires the contractor to complete construction of the project earlier than the time the contractor was entitled to base on a properly
  47. 47. CHAPTER – 2: LITERATURE REVIEW M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 26 adjusted schedule. Acceleration refers to the owners directing the contractor to accelerate his performance so as complete the project at an earlier date the current date of workadvancement will permit. It occurs when the contractor is ordered, either directly or constructively, to speed up performance in some way. These types of claims may occur in big projects but for residential houses, these are rare especially nowadays where the rate of houses rental is smaller. 2.6.9 Damage Claims Property damages may occur due to the act of the owner or due to safety related problems. This type of claims is very rare because usually contractors have the total responsibility for the site. 2.6.10 Contract Termination When contract termination has occurred before the contractor has begun the work, the contractor may be entitled to recover the loss of the expected profit, or the difference between the contract price and the anticipated cost of the work. If the owner has terminated the contract after the contractor has begun the work, the contractor may be entitled to recover the loss in various ways. If the contractor has completed the work in full compliance with the contract prior to termination, he should expect to recover the full contract price. Recovery and liability under terminated contracts varies widely. 2.7 Claims Settlement methods: When the contractor discovers the problem, he should try to eliminate or avoid it. If he cannot do so, then he should write to a letter to the owner to make a formal claim. This is the first step in claim procedure. The problem is approached during regular meeting s, or a special meeting may be arranged to settle or discuss this dispute. If all that did not succeed, then mediation could be friendly way for settling the claim. Otherwise, arbitration or litigation could be other ways to solve the claims. These methods could be as under:
  48. 48. CHAPTER – 2: LITERATURE REVIEW M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 27 FIGURE-1: CLAIMS SETTLEMENTS METHODS The above figure shows that to solve the claims generally Owner and Contractor use the Negotiation method first. If the claim is not settled by Negotiation then Mediation method is use to solve the claims by help of Mediator. If the claim is still not settled by Mediation method then Arbitration method is use to solve the claims by help of FIGURE-2: CLAIMS SETTLEMENTS METHODS (Source: www.justindemerchant.com/adr-in-the-construction-context/)
  49. 49. CHAPTER – 2: LITERATURE REVIEW M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 28 Arbitrator which is appointed by the court and whose decision is enforced by law and it is agree by both the parties. And at the last if the result of Arbitrator is not accepted by either party of claim then the last option to resolve the claim is Litigation by the help of court. The figure shows that as we go from bottom to top the cost incurred in the method is also increasing. It also shows that Mediation, Mini-trial and Adjudication is Non- Binding while Arbitration and Litigation is Binding to both the parties. FIGURE-3: ALTERNATIVE DISPUTE RESOLUTION METHODS (Source:www.publicprocurementguides.treasury.gov.cy/OHS- EN/HTML/index.html)
  50. 50. CHAPTER – 2: LITERATURE REVIEW M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 29 The above figure shows that in methods like Amicable Settlement, Mediation and Conciliation the involvement of the parties in the decisionis higher and these methods are Informal methods. While Arbitration, Adjudication and Litigation is Formal method to settle the disputes and involves low degree of involvement of the different parties in the decision. 2.7.1 Negotiation: Direct negotiation is a common dispute resolution process in which parties themselves, or their representatives, try to resolve the dispute without involving any neutral third party. It is a voluntary and an unstructured process agreed by both parties, privately and confidentially. The features that contribute to the success of direct negotiation include avoiding taking entrenched positions in the dispute, but rather seeking solutions, which meet the needs and interest of both parties. However, the success of negotiation depends on interpersonal communication skills of the parties during the entire process. Negotiation would be the first port of call when a dispute occurs and should resolve a dispute at this stage. 2.7.2 Mediation: Mediation is a private, quick, cheap process (compared to either arbitration or litigation) where a third party makes possible dialogue between the parties in order that the parties can reach their own decision that is initially non-binding. The parties can however, agree to be bound by their final decision. 2.7.3 Conciliation: Conciliation is a process similar to mediation except that the conciliator can express an opinion on the merits of the case and is required to recommend a solution if the parties fail to agree (Dighello 2000, Agarwal 2001). The power of the conciliators is conferred by status. In conciliation however, the third party neutral does not always meet together with the parties. The conciliator’s role is also broader than in the mediation as it includes advising the parties on the possible result of the dispute if it were resolved in either arbitration or litigation.
  51. 51. CHAPTER – 2: LITERATURE REVIEW M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 30 In conciliation, the process begins with identification of the issues, then the options for resolution are explored, the conciliator advises on likely outcome of dispute in other forums and in light of this the options for resolution are considered; and ideally a consensual agreement is then reached. 2.7.4 Mini-trial: Another process involving neutral third party in a dispute is the mini-trial. In mini- trial, the case is heard not by judge, but by the senior professional or other high-level business people from both sides. The representative should have full settlement authority. A third party neutral usually joins the party representative listening to the proofs and argument, and can make any necessary decision to regulate the process. Following the presentations, the parties’ representatives meet, with or without the neutral, to negotiate a settlement. Frequently, the neutral will serve as a mediator during the negotiations or be asked to offer a non-binding opinion on the potential court outcome. 2.7.5 Adjudication: A statutory dispute resolution method. The Construction Act (Part II of the Housing Grants, Construction and Regeneration Act 1996) allows any party to a building contract, subcontract or appointment to refer a dispute to an adjudicator, who must then be appointed within seven days and must reach his decision within a further 28 days. The adjudicator's decisionis binding unless and until the dispute is resolved by a judge or arbitrator. 2.7.6 Arbitration: Arbitration is a process where a third party who is independent of parties, but may be selected by them, makes an awarddetermining the dispute. The Award is binding and can be enforced by courts. Arbitration is the settlement of a dispute by the decisionnot of a regular and ordinary court of law but of one or more persons chosen by parties themselves who are called arbitrators. Thus, arbitration is out-of-court proceeding where the arbitrator acts as a judge.
  52. 52. CHAPTER – 2: LITERATURE REVIEW M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 31 Arbitration is a dispute resolution process in which one or more neutral third parties hear the evidence and arguments of each disputant and make a decisionfor them. The outcome is one of a win/lose situation. The decisionof the arbitrator is legallybinding and, often, there is no provision for appeal to a court of law. There are exceptions, such as misconduct of the arbitrator. Rules of evidence used in arbitration depend on the prior agreement between the parties. It may take a long time, same as for a litigation process, and may even be more costly. 2.7.7 Litigation: Litigation (used when all other venues failed) is a dispute resolution method that is inquisitorial and adversarial, where by the disputant initiates legal action against the other party by going to court (Agarwal 2001). It has a win/lose outcome and rarely satisfies both parties (Fisher et al 1991). It is costly and results into much delay for the disputants and may not do justice to the parties. However, the benefit of litigation is that the court has authority to find out the “truth” from the parties and the enforcement of the order or judgment is supported by other law enforcement agencies. It is also used when parties have low resources and need an umpire or when they cannot agree to other forms of dispute resolution. 2.8 Supporting Documents (Evidence) for the claim:  Keep all bid documentation and record any pre-contractual agreements, representations and understandings in writing and ensure they are in the contract or can be relied upon at a later stage.  Ensure that a fully signed written agreement is in place before commencing work on a project. While oral agreements are generally enforceable, written ones are easier to prove.  Read and be familiar with all contract terms, especially the notice provisions. Failure to provide notification of a potential claim could preclude a party from bringing its claim.  Keep all project correspondence. It is often helpful to organize project correspondence according to each key party and whether the correspondence is incoming or outgoing. For example, it is important to remember that in order to litigate a delay claim, it is generally necessary to reconstruct the project in detail
  53. 53. CHAPTER – 2: LITERATURE REVIEW M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 32 on a daily basis.  Record all relevant conversations and send follow up correspondence. Parties may proceed on a project for months based on a particular representation or understanding, only to find out later during litigation that the other party denies everything. Where there is no response to correspondence, a court may find that a failure to respond affirms what was said in the letter.  Take pictures or videos at all stages of the project. Nothing can help a judge or lawyer more to understand a problem or deficiency on a project than an illustrative picture of it.  Keep all plans and drawings and ensure that you have accurate records of all amendments or addendums.  Make sure a project diary is kept along with diaries for key personnel. Diaries should record: 1) the weather; 2) manpower, visitors and contractors on site; 3) key deliveries; and 4) any notable event such as problematic or hidden site conditions or events that may cause delay or affect productivity. Ensure that entries express facts, rather than opinions.  Maintain an as-planned schedule and regularly update it with an as-built schedule. There are several computer programs available to schedule and track progress. The end product of a proper scheduling exercise is a plan that should tell a contactor or owner what sequence work should be done in, when it should start, what work has to be completed first, when successor activities should start, and when it should finish. Having an accurate schedule for a project and regularly updating it will provide a valuable tool for tracking and recording delay and the impact of that delay.  Record all key events, especially ones that may lead to a claim, and specifically record: 1) when the event occurred; 2) what it was; 3) who noticed it; 4) the projected impact it may have on cost and time; 5) whether notice was given and to whom; and 6) response to notice.  Record all change orders and claims for extras and when they were submitted for approval,and separate those that are approved from those that are not. A contractor who has failed to get approval for a change orders should always diligently express and protest their ongoing concerns in writing. When doing so, the contractor should adhere to the contractual notice requirements. Parties should also be aware of the ability to give notice that they are performing under protest.
  54. 54. CHAPTER – 2: LITERATURE REVIEW M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 33  Document the additional costs caused by an event. It is particularly important to keep proper accounting and employee payroll records pertaining to additional overhead and employee costs.  Finally, contact legal counsel as early as possible. Contractual interpretation and strategic decisions made early can greatly enhance prospects for success in a construction 2.9 Clauses in Tender to Avoid or Settle Claims Payment terms and running bills: Invoice/ Bill should be sent in triplicate. [Please mention our LOI/Work Order no in the invoice without fail]. Original invoice, Measurement Sheet Materials Test Certificates if any should be sent to project with a copy to head office for reference. Mode of payment of running bills: Running Bills become payable at after deduction as per following and after approval from management within 30 working days from the date of receipt of the bill at HO, after deducting there from Payments shall be released for the work executed in all respects as per BOQ, drawings and specifications. Retention money deposit will be deducted from RA bills @ 5 % of the value of the bill amount. Security deposit at 5 % of the contract value exceed than tendered value. RA bill must be submitted along with the names of the laborers employed for the work, salaries/payment made to them, amount of P.F. deducted from the salary made to the labours and employer’s contribution amount deposited in RPFC against each and copy of challans for the amount deposited in RPFC office till the previous month duly certified by project office, failing which no payment will be made for the RA bill submitted by the Contractor. The payment will be made to the Tenderer after completion of the work as full and final settlement in general. However, as a special condition, intermediate payment can
  55. 55. CHAPTER – 2: LITERATURE REVIEW M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 34 be considered which will not be more than 15% of the actual work done. Other deduction either statutory or other work reason, if any. Earnest Money Deposit.(EMD) / Security Deposit (SD) / Retention Money The tender must accompany Earnest money deposit only by demand Draft of Nationalized OR HDFC/ICICI/AXIS/IDBI Bank only for the amount as stated above. Cheque or Bank Guarantee will not be accepted. Earnest money deposit paid as above will be refunded to unsuccessful tenderer only after finalizing of tender. Successful tenderer has to pay full amount of Security Deposit @ 5% of the contract value including EMD by Demand draft of Nationalized Bank /IDBI /HDFC /AXIS /ICICI within 7 days from the date of issue of LOI. Payment against the work as well as detail work order will be issued only after submission of Security Deposit. If you fail to pay security deposit within 7 days from the date of LOI, order will be deemed to be cancelled and EMD paid by you shall be forfeited. Earnest Money Security deposit and Retention Money will not bear any interest. If successful tenderer does not pay initial security deposit or does not commence work as per tender / LOI/ Work Order E.M.D. paid will be liable to be forfeited. Security deposit paid by the successful tenderer shall be liable to be forfeited by the owner, if he does not able to carry out the work in accordance with the terms and condition of the tender / LOI/Purchase Order/ Work Order. This will not also prejudice that owner will complete the work at your risk and cost. Tender received without E.M.D. will be outright rejected. No relaxation on EMD/SD for any small-scale industry shall be considered. Security deposit will be refunded within three months after the completion of defect liability period of Twelve Months from the date of completion of work, on demand by Contractor. Retention money deposit will be deducted from RA bills @ 5 % of the value of the Contract amount, which will be releasedafter one year from completion of work. The retention money shall be released only after receiving NOC from the Architect. Warranty for total water proofing workto be given for 5 years period.Security Deposit @ 5% for the water proofing work amount to be retained for warranty period.
  56. 56. CHAPTER – 2: LITERATURE REVIEW M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 35 Work Completion time Schedule. Work Completion time is the essence of the contract and if Work Completion time is not made as stipulated, owner shall be at liberty to procure the material at tenderer’s Risk and cost and if thereby any extra expenditure is involved, the same shall be debited to tenderer’s account, if owner is unable to procure the material from alternate source in time and if corporation suffers any consequential loss, tenderer will have to bear the same. Bank in that case will forfeit the security deposit and will also have the right to recover the claim against party for damage incurred. Work Completion time Penalty. The work should be completed within stipulated time limit. If work is not completed as per work completion time penalty will be levied@ 0.1 % of contract value per day from the date of delaying the said work up to the maximum 10 % of contract value. This will not absolve the contractor from the responsibilityof getting the balance work done by client at his risk and cost through any other contractor. Loss and Damages: Any loss or damages or deterioration of the Building in transits shall be at the cost of the bidders.It shall be at the discretionof the corporationto reject, damaged or spoiled material, if so noticed. During the work, if any property of client damaged than book value/ repair cost + 20 % of same should be recovered from bidder. Prices: Prices quoted by the tenderer should be firm and no price increase will be allowed to the tenderer during the project execution. Defect Liability Period. : The workshould have defect liabilityperiodof 12 Months from the date of completion / Date of Final Bill certified by Architect. In case of any dispute or difference of opinion in the interpretation of any of the terms and conditions of this tender, the decision of the owner shall be final and binding to all.
  57. 57. CHAPTER 3 RESEARCH METHODOLOGY PAGE NO. 36 - 40
  58. 58. CHAPTER – 3: RESEARCH METHODOLOGY M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 36 3.1 Introduction In this chapter the work methodology or work procedure has been described in detail. Authors have planned to carry out the work by study of claims through survey questioner and after collecting the data the data was analyzed by two different methods, First is Weighted Average method and Second is Relative Importance Index method. And the results of the data were cross checked by Spearmen’s Rank Correlation method. 3.2 Data Collection Method There are two approaches of data collection were adopted in a study. Fieldwork research is the primary data collection and the other one is desk study which is the secondary data collection (Naoum, 2007). 3.2.1 Desk study According to Naoum (2007), desk study approach also called as secondary data collectionmethod because the data are obtained from other sources, which mean they are not obtained first hand. Secondary information can be stored either in a statistical or descriptive format (Naoum, 2007). Naoum (2007) defines statistical format as the official statistics collected by the state and its agencies, and these statistics are normally available in public libraries and in most university libraries. On the other hand, descriptive format is to analyse and critically appraise the contents of an archival document such as diaries, newspaper, observations, etc. (Naoum, 2007). 3.3 Questionnaire Design In this research, quantitative research was adopted by using questionnaires to collect the sufficient data due to the consideration for time constrain. The data has been collected by using survey approach. The survey questionnaires have been distributed to the clients, contractors and consultant firms by hand and through an email. There are total of 8 questions which have been categorized into 3 sections in the survey questionnaire. Section A (Question 1 to 5) is demographics information which are intended to solicit respondent’s information and such information will be used to determine the profile of respondents. The respondents are requested to answer question pertaining the location of their company based in, the type of their
  59. 59. CHAPTER – 3: RESEARCH METHODOLOGY M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 37 organization, their profession in construction industry, their working experience in construction industry and the primary type of projects which they are involved in. Along with various types of approach to scaling responses in survey research, Likert scale approach has been adopted for the following questions in the survey’s Section B, Section C and in the Section D. In the Likert scale approach there are basicallyfive point method, which are: (1) Strongly disagree, (2) Disagree, (3) Neutral, (4) Agree and (5) Strongly agree. In the Section B the opinion of respondent about the main reasons which may arise the construction disputes is been ask, In the Section C the opinion of respondents about the impacts that may be caused by construction disputes is been ask, and in the Section D the opinion of respondents regarding dispute resolution techniques which are been using in case of construction claims in construction industry. 3.4 Data Analysis Method In these thesis work the EXCEL software was used to calculate and analyze the statistical data which was collected by the questionnaire survey other than that complete statistical tests can also perform in that software. The collected data from the questionnaire survey will be analyzed by using EXCEL software so as to carry out the data analysis in this research. 3.4.1 WEIGHTED AVERAGE METHOD Data of all these tables were analyzed by a weighted average was calculated for each type of claims as follows: Weighted Average Index = (Wi* Xi) / N; Where, Wi is the weight assigned to the ith option; Xi is the number of respondents who selected the ith option; And N is the total number of respondents (70 in this study).
  60. 60. CHAPTER – 3: RESEARCH METHODOLOGY M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 38 3.4.2 RII INDEX METHOD Data of all these tables were analyzed by a RII Index was calculated for each type of claims as follows: RII Index = Σ W/ (A*N) Where, W = weight given to each factor by the respondents, ranges from 1 to 5, A = highest weight (i.e. 5 in this case) and N = total number of respondents. 3.4.3 Spearman Rank Correlation Coefficient  Spearman rank correlation is a non-parametric test that is used to measure the degree of association between two variables.  It was developed by Spearman, thus it is called the Spearman rank correlation.  Spearman rank correlation test does not assume any assumptions about the distribution of the data and is the appropriate correlation analysis when the variables are measured on a scale that is at least ordinal.  The following formula is used to calculate the Spearman rank correlation: Where: P= Spearman rank correlation di= the difference between the ranks of corresponding values Xi and Yi n= number of value in each data set Source: http://www.statisticssolutions.com/correlation-pearson-kendall-spearman/ What does this P value mean? The closer P is to +1 or -1, the stronger the likely correlation. A perfect positive correlationis +1 and a perfect negative correlationis -1. If we get the value of P nearer or equal to 1 then the result is perfect and if the value of P is nearer or equal to -1 then the result is not perfect there might be some error in the data.
  61. 61. CHAPTER – 3: RESEARCH METHODOLOGY M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 39 Source: http://geographyfieldwork.com/SpearmansRank.htm 3.5 Sample Size The below formula of Creative Research Systems, 2001 was used to determine the sample size of unlimited population: SS = [Z2 × P × (1-P)] / C2 Where, SS = Sample Size. Z = Z Value (e.g. 1.96 for 95% confidence interval). P = Percentage picking a choice, expressed as decimal, (0.50 used for sample size needed). C = Confidence interval (0.1) POP = Population SS = [1.962 × 0.5 × (1- 0.5)] / .12 = 96.04 Table – 9: Population for Survey Work CITY BUILDER/ DEVELOPER CONTRACTOR/ ENGINEER ARCHITECT AHMEDABAD 859 663 192 Total 1714 (Source: auda.org.in) Number of Builder / Developers, Contractors / Engineers and Architects in Ahmedabad are taken from Ahmedabad Urban Development Authority (AUDA) So total number of population is 1714
  62. 62. CHAPTER – 3: RESEARCH METHODOLOGY M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 40 Correction for finite population: POP SS SS SSnew 1 1    99.90 1714 104.96 1 04.96    newSS So, total responses to be collect are 91.
  63. 63. CHAPTER 4 DATA COLLECTION AND ANALYSIS PAGE NO. 41 - 55
  64. 64. CHAPTER – 4: DATA COLLECTION AND ANALYSIS M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 41 4.0 INTRODUCTION: In this chapter author has discussed about how they have collected the data and analyzed that data by different methods. In this chapter the author has gave the rank to different categories of questioner survey by Weighted Average Index and RII Index and the result is cross checked by Spearman’s Rank correlation method. 4.1 DATA COLLECTION: It was planned to collect the feedbacks from various stakeholders of construction industry from Ahmedabad city of Gujarat state of India. The survey has included Architects, Contractors and Developers. This researchwork includes use of Weighted Average Method (W.I) and Relative Importance Index method (R.I.I). Table - 10: Rate of Responses Sr. No Respondent Questionnaire Distributed Responses Received Percentage of Responses 1 Owner 52 36 69.23% 2 Contractor 38 23 60.52% 3 Architect 23 11 47.83% Total 113 70 61.95% 4 By mail 38 0 0% During the data collection stage, total 113 questionnaires were distributed out of which 70 feedbacks were received back. Out of the total responses, 36 were from Contractors, 23 from Developers, and 11 were from Architects.
  65. 65. CHAPTER – 4: DATA COLLECTION AND ANALYSIS M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 42 4.2 LIST OF RESPONDENTS: Table -11: List of Respondents LIST OF RESPONDENTS Respondent Name Category Company Name 1 Abhishek Madhu Developer Rajsyai Corp. Ltd. 2 Dilip Shah Architect Het Enterprise Ltd. 3 Bharat Chauhan Contractor Raj Contractors Ltd. 4 Sujal Parikh Consultant SPA 5 Dineshbhai Developer Vrundavan 6 Dixit Desai Architect Shyam Design 7 Praful Patel Developer Akshay Org. 8 Raghuveer Chavada Developer S&S Developer 9 Nirav Shah Developer Shyam Vandna 10 Naresh Patel Contractor 11 Dilip Amin Contractor Delta 12 Amit Gajera Contractor Vrundavan Infra. 13 Mahesh Poriya Contractor Shyam Vandna 14 Hira Bharwad Developer Vrundavan Infra. 15 Chirag Parekh Architect Creative Touch Design 16 Ankita Shah Architect Shayona Designe 17 Dhrumal Shah Contractor Ratnakar Const. 18 Vijay Savaliya Contractor Shivam Const. 19 Yogesh Patel Contractor Patel Infra. 20 Kamlesh Poriya Contractor Shyam Shradha 21 Kishor Mistry Contractor 22 Mahesh Modi Contractor Applied Engineers 23 Pankaj Poriya Contractor P & P Const. 24 Tushar Patel Architect Ved Design 25 Jaydeep Raval Contractor J & R Contractors 26 Shaeem Vora Consultant Rehman Consultancy
  66. 66. CHAPTER – 4: DATA COLLECTION AND ANALYSIS M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 43 27 Nishit Parmar Contractor Virgo Contractors 28 Hiren Pandya Architect Hetu Architect 29 Ghanshyam Patel Developer Radhe Developers 30 Akshay Desai Developer H N Safal 31 Jesal Vora Contractor Sun Heart Tiles Pvt. Ltd. 32 Chandresh Dave Contractor 33 Ranjit Chudasma Architect 34 Amit Trivedi Contractor Narayankrupa Infra. 35 Samir Jadav Contractor Spartan Builders Pvt Ltd. 36 Manish Dhruva Consultant Multi Link Infra 37 Jayesh Shah Developer Goyal & Co. 38 Jigarbhai Developer Seventh Avenue 39 Keyur Kathariya Developer Akshar Stadiya 40 Nilay Desai Developer Vrundavan Heights 41 Hemal Shah Contractor Fraylend 42 Rahul Deliwala Architect Delta Designers 43 Pragnesh Vora Contractor Navkar Contractors 44 Prakash Tank Contractor Romix Constructions 45 Digvijay Chudasama Developer Maruti Construction Pvt Ltd. 46 Nilesh Dagli Contractor B Safal Pvt Ltd. 47 Jigneshkumar Contractor Jindal Infra Pvt Ltd. 48 Kiran Parekh Contractor Kiran Contractors 49 Ankit Makwana Contractor Manav Land Developers 50 Jagdish Bhatt Contractor 51 Shaktisinh Developer Unique Infraspace Pvt Ltd. 52 Manoj Mandaliya Developer Deep Group of Companies 53 Rajeshbhai Contractor Sangani Infra India Pvt Ltd. 54 Govind Patel Contractor Shayona Shikhar 55 Bhavin Jiyani Developer B.R.Developer
  67. 67. CHAPTER – 4: DATA COLLECTION AND ANALYSIS M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 44 56 Jignesh Pawar Contractor Coffor India 57 Shailesh Shah Developer Takshshila 58 Abhijit Dixit Developer Dharmadev 59 Yash Patel Contractor Post Tensioning Sevices LLP 60 Amit Contractor Satyam Buildtech 61 Jatin Patel Contractor J.K.Associates 62 Nikhil Soni Contractor BRIXO 63 Praful Prajati Developer Swati 64 Aashish Patel Developer Aaryan Embassy 65 Deep Bhabhera Contractor Deep Builders Pvt Ltd. 66 Bharat Bhatt Contractor Unique Infraspace Pvt Ltd. 67 Bhaumik Vyas Developer Ozone India Ltd. 68 Nimesh Parikh Contractor Magnanimous Infra Pvt Ltd. 69 Shubham Bhavsar Developer Shubh Aarambh 70 Dharmesh Dave Developer D & C Developers The above table shows the list of respondents who have spend their valuable time and effort during the survey work 4.3 DATA ANALYSIS: In these thesis work the EXCEL software was used to calculate and analyze the statistical data which was collected by the questionnaire survey other than that complete statistical tests can also perform in that software. The collected data from the questionnaire survey will be analyzed by using EXCEL software so as to carry out the data analysis in this research.
  68. 68. CHAPTER – 4: DATA COLLECTION AND ANALYSIS M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 45 4.4OVERALL RANKING BY ALL IN GENERAL: 4.4.1 RANK TO CAUSES OF CONSTRUCTION DISPUTE: Table–12: OVERALL RANK TO CAUSES OF CONSTRUCTION DISPUTE Rank to Causes of Construction Dispute No. Question Wei. Avg Index Wei. Avg. Rank RII Index RII. Rank A Finance and Payment Issue 4.67 1 0.934 1 B Time Overrun 4.40 7 0.88 7 C Cost Overrun 4.46 6 0.891 6 D Price Escalation 3.61 14 0.723 14 E Work Change Orders 4.47 5 0.894 5 F Poor Communication 3.93 12 0.786 12 G Design Errors 4.56 4 0.911 4 H Inclement Weather 3.11 17 0.623 17 I Extra Items 4.60 3 0.92 3 J Unforeseen Site Condition 3.71 13 0.743 13 K Poor Work Quality 4.63 2 0.926 2 L Incomplete information in Tender 4.29 9 0.857 9 M Delay in issuing Site, Drawings, Materials 4.37 8 0.874 8 N Return of Security Deposit 3.20 16 0.64 16 O Unfair allocation of Risk 3.26 15 0.651 15 P Delay in Clients Response 4.17 11 0.834 11 Q Mistakes in Contract Document 4.23 10 0.846 10 From present study it is found that “Finance and payment issues” is having first rank among all causes for generation of dispute. Second rank was given to “Poor work quality” by the respondents. “Extra items” is having third rank and “Design errors” is having fourth rank in causes of disputes. “Inclement weather” is having lowest rank. “Return of Security Deposit” is having second lowest rank while “Unfair allocation of Risk” is having third lowest rank.
  69. 69. CHAPTER – 4: DATA COLLECTION AND ANALYSIS M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 46 4.4.2 RANK TO IMPACT OF CONSTRUCTION DISPUTE: Table–13: OVERALL RANK TO IMPACT OF CONSTRUCTION DISPUTE Rank to Impact of Construction Dispute No. Question Wei. Avg Index Wei. Avg Rank RII Index RII Rank 1 Damaged business relationship 4.64 2 0.929 2 2 Increased project costs 4.49 3 0.897 3 3 Project Delays 4.39 6 0.877 6 4 Undermine team spirit 3.54 7 0.709 7 5 Damaging company reputation 4.67 1 0.934 1 6 Dispute escalation 3.37 8 0.674 8 7 Poor client satisfaction 4.41 5 0.883 5 8 Delay in project completion 4.49 4 0.897 4 Respondents felt that disputes inconstruction industry damages the reputation of both the parties. This is found by getting first rank for “Damaging company reputation” in Impact matters. “Damaged Business Relationship” is having second rank to Impact of Dispute. Further, respondents have given lowest rank to “Dispute Escalation” matter. 4.4.3 RANK TO DISPUTE RESOLUTION METHOD USED: Table–14: OVERALL RANK TO DISPUTE RESOLUTION METHOD USED Rank to Dispute Resolution Method Used No. Question Index Rank Index Rank A Adjudication 2.8 5 0.56 5 B Arbitration 1.99 6 0.4 6 C Dispute Review Board 1.4 7 0.28 7 D Expert Determination 4.37 3 0.87 3
  70. 70. CHAPTER – 4: DATA COLLECTION AND ANALYSIS M.E CONSTRUCTION ENGINEERING AND MANAGEMENT Page 47 E Litigation 1.27 8 0.25 8 F Mini-trial 3.36 4 0.67 4 G Mediation 4.53 2 0.91 2 H Negotiation 5 1 1 1 Respondents have given first rank to “Negotiation” method for dispute resolution, second rank to “Mediation”, third to “Expert Determination” and last rank is given to “Litigation” method, second last rank is given to “Dispute review Board”, while “Arbitration” has secured third last rank. 4.5 RANKS BY INDIVIDUAL: 4.5.1 TO CAUSES OF CONSTRUCTION DISPUTE: TABLE–15: INDIVIDUAL RANK TO CAUSES OF CONSTRUCTION DISPUTE Rank given by all Individual to CCD No. Major Causes of Dispute Rank by Architect Rank by Contractor Rank by Developer 1 Finance and Payment Issue 1 1 3 2 Time Overrun 7 8 2 3 Cost Overrun 6 7 1 4 Price Escalation 9 14 11 5 Work Change Orders 3 5 5 6 Poor Communication 6 12 9 7 Design Errors 2 4 4 8 Inclement Weather 11 16 14 9 Extra Items 5 3 2 10 Unforeseen Site Condition 9 13 10 11 Poor Work Quality 4 2 2 12 Incomplete information in Tender 6 9 7 13 Delay in issuing Site, Drawings, Materials 5 6 7

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