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i
Major Causes of Dispute in the Ethiopian
Construction Industry
A PROJECT REPORT
Under the guidance of
Prof. D.G.L.Chandra Rao __________________________
Submitted by: KIFLE SEMU SIMA Registration No. 531010358
_________________________
in partial fulfillment o f the requirement for the award of the degree
Of
MBA
IN
Project Management
February, 2012
ii
Acknowledgement: I wish to express my deep appreciation to Prof. D.G.L.Chandra Rao, who
served as my advisor, for all the support and guidance. I also appreciate
his positive comments and advice throughout my research.
Thanks are due also to other members of the thesis committee
Acknowledgement is due to Sikkim Manipal University, Directorate of
Distance Education.
Also, I wish to express my sincere gratitude to all my friends and
colleagues who have participated in this research,sacrificing their
invaluable time.
My thanks and gratitude is due also to my wife,(Alemtsehaye Mamo) for
her encouragement and patience without which this work would not have
been possible.
iii
Bonafide Certificate:
BONAFIDE CERTIFICATE
Certified that this project report titled
……………………………………………..” is the bonafide work of
“…………..<NAME OF THE CANDIDATE(S)>.…………” who carried out
the project work under my supervision.
SIGNATURE SIGNATURE HEAD OF THE DEPARTMENT FACULTY IN CHARGE
<Academic Designation> <Department> <Department> <<Full address of the Dept & College >> <Full address of the Dept & College >
iv
Abstract: Construction projects are becoming increasingly complex, resulting in complex
contract documents. Complex construction can likewise result in complex
disputes. Disputes are inevitable in construction projects which predominantly
arise from Complexity and magnitude of works, multiple prime contracting
parties, poorly Prepared and /or executed contract documents, inadequate
planning, financial issues and communication problems. Any one of these factors
can overturn a project and lead to complicated litigation and arbitration, increased
costs, time overrun, and a breakdown in the parties’ interest and relationship.
Thus, the objectives of this study are to study, identify and review the major
causes of dispute contributed by clients, consultants and contractors in
construction projects and give suggestions and recommendations on how to
minimize or avoid the occurrences of construction disputes.
A questionnaire survey was carried in the various regions of Ethiopia and the
feedbacks were collected and analyzed using important indices (Likert Scale) and
Relative Importance Index (RII) analysis. The results show that Contractors’
Financial Difficulties, Price escalation, inadequate investigation before bidding,
Consultants’ Poor Contract management & Supervision, and other factors
contribute to such disputes. By and large, unresolved construction disputes
will only bring in negative impact on client’s organization like time and cost
overruns, diminution of respect between parties, deterioration of relationship,
breakdown in cooperation and additional expenses.
v
TABLE OF CONTENTS Page Acknowledgement: .................................................................................................................. ii
Bonafide Certificate: ............................................................................................................... iii
Abstract: ................................................................................................................................. iv
TABLE OF CONTENTS ..........................................................................................................v
List of Tables: ......................................................................................................................... ix
List of Figures: .........................................................................................................................x
Abbreviations and Glossary of Important Terms ..................................................................... xi
Abbreviations ..................................................................................................................... xi
Glossary of Important Terms ............................................................................................. xii
CHAPTER One: .......................................................................................................................1
1.0 Introduction ....................................................................................................................1
1.1 Background of the study..................................................................................................3
1.2 Statement of Problem ......................................................................................................3
1.3 Research Objectives ........................................................................................................4
1.4 Scope and Limitation of Research ...................................................................................5
1.4.1 Scope .......................................................................................................................5
1.4.2 Limitations ...............................................................................................................5
1.5 Research Methodology and Design .................................................................................5
1.6 Significance of the Study ................................................................................................7
1.7 Thesis Organization ........................................................................................................7
1.8 Summary.........................................................................................................................9
CHAPTER Two: Literature Review ........................................................................................ 10
vi
2.1 Introduction .................................................................................................................. 10
2.2 Key Terms and Concepts .............................................................................................. 10
2.3 Occurrence and Causes of Construction Dispute .................................................. 13
2.3.1 During the Design Phase......................................................................................... 14
2.3.2 During the Bid and Contract Award Phase .............................................................. 15
2.3.3 During the Construction Phase................................................................................ 15
2.4 summary ....................................................................................................................... 17
CHAPTER Three: Data Collection and Preliminary Analysis ................................................. 18
3.1 Introduction .................................................................................................................. 18
3.2 Sampling Methods ........................................................................................................ 18
3.3 Non-probability Sampling Strategies ............................................................................. 18
3.3.1Haphazard Sampling ............................................................................................... 19
3.3.2 Purposive Sampling ................................................................................................ 19
3.3.3 Convenience Sampling ........................................................................................... 19
3.3.4 The Sampling Method used in the Study ................................................................. 20
3.4 Questionnaire Development .......................................................................................... 20
3.4.1 Distribution of Questionnaires .................................................................................... 21
3.5 Data Summary .............................................................................................................. 22
3.5.1 Summary of Respondents Profile ............................................................................... 22
3.5.2 Response to Category 1: Employer Related Factors: ............................................... 23
3.5.3 Response to Category 2: Contractor Related Factors ............................................... 23
3.5.3 Response to Category 3: Consultant Related Factors ............................................... 24
3.5.4 Response to Category 4: Material, Labor & Equipment Related Factors ................. 24
3.5.5 Response to Category 5: Contract & Contract Relationship Related Factors ........... 24
3.5.6 Response to Category 6: External Factors ............................................................... 25
3.6 Summary and conclusion .............................................................................................. 25
vii
CHAPTER Four: Data Analysis ............................................................................................. 26
4.1 Introduction .................................................................................................................. 26
4.2 Calculation of relative importance of Index ................................................................... 26
4.2 Analysis of Data ............................................................................................................ 27
4.2. 1 Causes of Dispute .................................................................................................. 27
4.3 Findings and Discussions .............................................................................................. 28
4.3.1. Contractor’s Financial Difficulties ......................................................................... 31
4.3.2. Price escalation ...................................................................................................... 32
4.3.3 Inadequate investigation before bidding .................................................................. 33
4.3.4 Consultants’s Poor Contract management & Supervision ....................................... 34
4.3.5. Shortage in material ............................................................................................... 35
4.3.6 Exceptionally Low Bid ........................................................................................... 36
4.3.7 Employer’s Slow decision making ......................................................................... 36
4.3.8 Equipment availability and failure .......................................................................... 36
4.3.9. Contractor’s poor site management ........................................................................ 37
4.3.10 Consultants delay in preparation & approval of drawings ..................................... 37
4.4 Dispute Resolution Methods........................................................................................ 37
4.4.1 Mediation ............................................................................................................... 38
4.4.2 Dispute Review Board ............................................................................................ 39
4.4.3 Dispute Adjudication Board.................................................................................... 39
4.4.4 Arbitration .............................................................................................................. 46
4.4.5Court Litigation ....................................................................................................... 48
4.5 Summary....................................................................................................................... 49
CHAPTER Five: Conclusions and Recommendations ............................................................. 50
5.1 Introduction .................................................................................................................. 50
5.2 Conclusions .................................................................................................................. 50
5.2.1 Employers’ point of view...................................................................................... 50
5.2.2 Consultants’ point of view .................................................................................... 52
viii
5.2.3 Contractors’ point of view .................................................................................... 53
5.2.4 Overall respondents point of view ......................................................................... 54
5.3 Recommendations ......................................................................................................... 57
5.3.1 Recommendations for the Employers/ Clients ......................................................... 57
5.3.2 Recommendations for the Consultants .................................................................... 57
5.3.3 Recommendations for the Contractors .................................................................... 58
5.3.4 General Recommendations ..................................................................................... 58
References: ............................................................................................................................. 60
Appendices: ..................................................................................................................... 61
Appendix 1: Cover letter for questionnaire .......................................................................... 62
Appendix 2; Questionnaire Survey ................................................................................ 63
Appendix 3: Calculation of Relative Importance of Index (RII) (based on overall view) ..... 66
Appendix 4: Calculation of Relative Importance of Index (RII) (based on Employers view)69
Appendix 5: Calculation of Relative Importance of Index (RII) (based on Contractors view)
........................................................................................................................................... 72
Appendix 6: Calculation of Relative Importance of Index (RII) (based on Consultants view)
........................................................................................................................................... 75
Appendix 7: Comparison of overall view with Employers, Contractors & Consultants View
........................................................................................................................................... 78
ix
List of Tables:
Table 3.1: Respondents’ return rate
Table 3.2: Summary of Respondents Profile
Table 3.3: Overall respondents’’ view (Category 1)
Table 3.4: Overall respondents’’ view (Category 2)
Table 3.5: Overall respondents’’ view (Category 3)
Table 3.6: Overall respondents’’ view (Category 4)
Table 3.7: Overall respondents’’ view (Category 5)
Table 3.8: Overall respondents’’ view (Category 6)
Table 4.1: Ranking of causes (based on overall view)
Table 5.1: Summary the top 10 causes of dispute (based on Employers’ point of view)
Table 5.2: Summary the top 10 causes of dispute (based on Consultants’ point of view)
Table 5.3: Summary the top 10 causes of dispute (based on Contractor’ point of view)
Table 5.4: Summary the top 10 causes of dispute (based on overall respondents view)
x
List of Figures:
Figure 1.1 Flowchart of the Research Methodology
Figure 2.1 Disagreement Escalation Diagram
Figure 4.3: The ten most important causes of disputes (based on all
respondents)
xi
Abbreviations and Glossary of Important Terms
Abbreviations
ADR : Alternate Dispute Resolution
CEDR : Centre for Effective Dispute Resolution
DAB : Dispute Adjudication Board
DB : Dispute Board
DRB : Dispute Review Board
EoI : Expression of Interest
FIDIC : The Fédération Internationale des Ingénieurs-Consei
ICC : International Chamber of Commerce
ITT : Invitation to Tender
JCT : Joint Contracts Tribunal
MDB : Multilateral Development Bank
MoWUD : Ministry Of Works & Urban Development
PASDEP : Plan For Accelerated And Sustained Development To End
Poverty
qv, qvv : quod vide À indicates a term that has a definition of its
own
UNCITRAL : United Nations Commission on International Trade Law
xii
Glossary of Important Terms
Adjudication
The legal process by which an arbiter or judge reviews evidence and
argumentation including legal reasoning set forth by opposing parties or
litigants to come to a decision which determines rights and obligations
between the parties involved. It is The final judgment in a legal
proceeding; the act of pronouncing judgment based on the evidence
presented
Alternate Dispute
Resolution(ADR)
A procedure for settling a dispute by means other than litigation, such
as arbitration or mediation. -
Arbitration
A method of dispute resolution involving one or more neutral third
parties who are usually agreed to by the disputing parties and whose
decision is binding
Claim
1. The aggregate of operative facts giving rise to a right enforceable by
a court 2) The assertion of an existing right; any right to payment or to
an equitable remedy, even if contingent or provisional 3.)A demand for
money, property, or a legal remedy to which one asserts a right
Construction
Construction is a process that consists of the building or assembling of
infrastructure, In general, there are three types of construction: Building
construction , Heavy / civil construction , Industrial construction
(Each type of construction project requires a unique team to plan,
design, construct and maintain the project.)
Dispute Resolution
Agreement
Legal agreement between two parties that lays out the method and
timetable for solving conflict between them, such as between
employers and employees, partners, stockholders (shareholders).
Invitation to
Tender (ITT)
A document that the department will issue to tenderers. The document
will request that the tenderers reply to a precisely defined requirement
in a prescribed format. It is typically comprised of lodging of tender,
terms of tender, conditions of contract, contract schedules, service
specifications, offer to be bound and articles of agreement.
xiii
Likert Scale
A method of ascribing quantitative value to qualitative data, to make it
amenable to statistical analysis. A numerical value is assigned to each
potential choice and a mean figure for all the responses is computed at
the end of the evaluation or survey.
Litigation The process of carrying on a lawsuit
Service levels Service levels are the standards of service with which the service
provider must comply. They must be clear and measurable.
Stakeholders
A stakeholder is anyone who has a vested interest in the project.
Stakeholders are individuals and organizations who are actively
involved in the project, or whose interest may be positively or
negatively affected as a result of project execution or successful project
completion.
Tort
A civil wrong other than a breach of contract or a breach of trust or other merely equitable obligation and which gives rise to an action for un liquidated damages at common law (Sir John Salmond).
Literally the word is French for ‘wrong’. The essential point is that it is a breach of a civil duty imposed by the law generally. The most important tort today is negligence (qv), but other torts include nuisance (qv), trespass (qv) and defamation (qv).
1
CHAPTER One:
1.0 Introduction The role the construction industry plays in socio-economic development is
significant. The industry is a distinct sector of the economy, which makes its
direct contributions to economic growth. It provides the basis upon which
other sectors can grow by constructing the physical facilities required for the
production and distribution of goods and services. The industry has a significant
multiplier effect on the economy as a whole.
Economic growth is one of the most effective ways of reducing poverty, and
infrastructure delivery has been identified as one of its key drivers. The
construction industry has great employment generation potential as labor
intensive technologies are economically viable for most items of construction
work.
The present state of the construction industry falls short of meeting domestic and
international quality standards and the performance demand expected from the
sector. Its percentage of GDP only amounts to 3%, considerably lower than the
sub-Saharan average of 6%. However, in line with the overall economic growth
of 5% in the past 4 years, the Construction Industry has registered an 8.2%
growth. Moreover, Public construction projects consume an average annual rate
of nearly 60% of the Government’s capital budget. 1
1 (MoWUD, Plan for Accelerated and Sustained Development to End Poverty (PASDEP))
2
While construction's direct contributions to development are significant, it also
stimulates a sizeable amount of economic growth through backward and forward
linkages. Construction's requirements for goods and services from other
industries are considerable; the development of the construction industry
therefore stimulates these ancillary industries, thus encouraging further economic
growth. In developing countries the construction of physical facilities makes up
more than one half of gross domestic investment and tends to be concentrated on
basic infrastructure in agriculture, mining, transportation, communication, and
utilities. Infrastructural services make some contribution to GDP, but they also
stimulate the development of other industries which, in turn, contribute more
directly to economic growth. Once the basic infrastructure is created, more effort
can be devoted to construction for manufacturing, commerce, and services and to
the building of dwellings and institutional facilities.
Construction's contributions to employment creation are naturally parallel to its
contributions to output generation. A common condition of underdevelopment is
unemployment and underemployment. In the past, the question of employment
was generally neglected because of the apparent conflict between economic
growth and employment creation. The extent to which growth and employment
creation should be balanced in developing countries is a matter of importance and
necessarily depends largely upon local economic, technical, social, and political
conditions. The construction industry could play an important role in resolving
this conflict because it is technologically flexible, implying that many of its
operations can be made more or less labor-intensive depending upon conditions in
the country at the time.
3
1.1 Background of the study The subject of study is identified after more than 20years of local & international
work experience in infrastructure development and related projects. This was
initiated to study the underlying reasons for construction contract disputes in
Ethiopian construction industry and to identify methods used for dispute
avoidance and resolution. The objectives of the subject are identified through the
observations of construction conflicts and disputes which were encountered by
clients, consultants and contractors.
1.2 Statement of Problem The construction industry has become very complicated such that political
and economic trends are increasing the economic pressure resulting in disputes.
Complex construction has brought about complex disputes in the industry. There
are so many different types of sources that may lead to disputes, the most
common of these: Contracts, Defective work, Variations or ‘extra works’, Delays
and extensions of time, Failure to adequately document the works & daily events,
etc, and this eventually becomes a burden to the industry in terms of production.
Great concern has been expressed in the recent years regarding the dramatic
conflicts and disputes in the construction industry in the whole world and this has
resulted in:
a) Time delays and cost overruns.
b) Deterioration of relationship and breakdown in cooperation.
4
c) Additional expenses in management and administration
d) Possibility of escalation to litigation.
Often seen stakeholders(employers, consultants & contractors) blaming each
other because of problems they come across during the construction process,
because of poorly done designs, claims, and poor administration and delays and
these have been overlooked. There are questions which arise on what is it that is
actually causing disputes in the industry? And why disputes have become a nature
of event in the industry?
Disputes and conflicts have gained frequent rise during construction of projects
and this needs an involvement of a neutral body to resolve disputes as early as
possible.
1.3 Research Objectives The goal of this study is to identify the major causes of construction disputes in
the Ethiopian construction industry, contributed by clients, consultants and
contractors and eventually identify the occurrences of the construction disputes
during the process of construction.
The objectives of this study can be summarized as follows:
1.3.1 To identify the root/major causes of construction2 disputes
2 Building construction, Heavy / civil construction, Industrial construction
5
1.3.2 To identify the perceptions of clients, consultants, and contractors on
the relative importance of causes and effects of dispute
1.3.3 To identify contribution of clients, consultants, and contractors to the
causes and effects of dispute
1.4 Scope and Limitation of Research
1.4.1 Scope The research has been carried out with a careful study on data collected mainly on
questionnaire survey, literature review and observations (personal experience).
The research will focus on all kinds of project i.e. private and government
projects which are faced with the problem of construction disputes.
The questionnaire survey was designed based on factors identified from literature
review that contributed to causes of disputes, effects of disputes and methods to
minimize disputes.
1.4.2 Limitations The shortcomings/ limitations are unavailability of adequate documented
information in the field of the study, and the reluctance of some stakeholders in
the construction industry to provide information related to the subject
issues/dispute/.
1.5 Research Methodology and Design The research methodology is the essential stages to determine the success of
achieving the aim and objectives. The major processes involved in this study
includes: Questionnaire survey, literature review, data collection, data analysis
and conclusion.
6
A questionnaire was developed to assess the perceptions of clients, consultants,
and contractors on the relative importance of causes and effects of dispute in
Ethiopian construction industry. The questionnaire will be divided into two parts.
The first part requested background information about the respondents.
The second part of the questionnaire focused on causes of construction disputes.
The respondents will be asked to indicate their response category on Six (6) &
well-recognized major categories of construction dispute factors
Category 1: Employer Related Factors;
Category 2: Contractor Related Factors;
Category 3: Consultant Related Factors
Category 4: Material, Labor & Equipment Related Factors
Category 5: Contract & Contract Relationship Related Factors
Category 6: External Factors
The data collected from the questionnaire survey will be analyzed using the five-
point Likert scales and the Likert scale taking the following format: 1. Very
Insignificant, 2. Insignificant, 3.Average, 4.Significant, And 5.Very Significant.
Finally, results of the questionnaires surveys will be analyzed. The findings and
conclusion will be elaborated based on the analysis.
7
Figure 1.1 Flowchart of the research Methodology
Specify objective(Problem-Statement)
Select method of data collection
Questionnaire Design
Data Collection, processing and
analysis
Reporting Findings
1.6 Significance of the Study This study will identify the root causes of construction dispute caused by the
client, consultants and contractors. It also covers the impact of construction
disputes in a client’s organization and methods of disputes resolutions. These
factors had been seen as the major factors in affecting production in the industry,
thus it is a necessity to manage them or rather to avoid them for the better part of
the performance of the industry.
1.7 Thesis Organization This thesis is divided into five chapters. The first chapter introduces the subject,
background and justification for this study. This chapter also specifies the aim
8
and objectives, the methodology of conducting this study and a brief summary on
the structure of the research.
Chapter two highlights the related issues on causes of construction disputes from
available literature which include the following: Definition of disputes; Disputes
Occurrence; Research related to construction Disputes; The causes of
construction dispute; Impact of disputes on client organization;
Chapter three describes in details the process of data collection that involved in
the study which included introduction, data on the causes of construction disputes
questionnaire development, sampling, data summary, and summary and
conclusion.
Chapter four discusses the process of the data analysis to achieve the aim and
objectives of this study which included introduction, analysis of data, important
index, findings and discussion, and conclusion.
Finally, the last chapter summarizes the conclusion from the research findings of the study and recommendation.
9
1.8 Summary This chapter covered the introduction to the problem of disputes in the
construction industry that has prompted to this study. Moreover it states the aim
and objectives, scope, methodology used and the significance of the findings.
This project is based on identifying construction disputes that have been seen to
be affecting the industry’s performance. The results to be obtained from the study
will help in improving the production of the industry by means of implementing
the decisions obtained from the results of the study.
10
CHAPTER Two: Literature Review
2.1 Introduction Construction contracts entered into by various agencies are frequently attended by
significant risk of exposure to change order requests and claims. These claims
involve numerous issues, such as contract ambiguities, changes and additions to
the contract, differing site conditions, schedule delays, stop work orders, errors
and omissions in the contract plans and specifications, acceleration of the contract
by the agency, defective work by the contractor seeking indemnification from
third parties, warranty/guaranty clauses, recovery of liquidated damages. As the
volume of unresolved disputes grows, relationships with the contracting
community can deteriorate. This may lead to higher bid costs and the actual
withdrawal from the bidding of some otherwise capable contractors. The early
recognition, identification, and resolution of disputes can lessen management
costs and administrative efforts and lower overall program costs, benefiting the
public, the agency, and the contractor.
2.2 Key Terms and Concepts The two particular definitions that are important to this report are the key terms
“dispute” and “claim” As used in this thesis, a dispute refers to a contract related
issue that has not yet become a matter of formal process; a claim develops from a
dispute and has reached the stage where formal proceedings or legal actions are
underway.
The definitions are as follows:3
1. Dispute-- Strictly, a calling into question. In the context of construction
contracts it is usually associated with adjudication (qv) or arbitration (qv) 3 Building Contract Dictionary
11
when it refers to a disagreement between two parties. Usually, that will
take the form of a proposition by one party which the other has rejected,
although sometimes long silence or delay in responding on the part of the
other party may also be considered a rejection. A dispute may exist for the
purpose of adjudication or arbitration even though it may be obvious which
party is correct.
Adjudication and arbitration clauses usually refer to ‘dispute or difference’,
but they probably have essentially the same meaning in this context. The
Arbitration Act 1996 s. 82 (1) says that ‘dispute’ includes ‘difference’. No
adjudication or arbitration can take place unless a dispute or difference
exists
2. Claim-- The dictionary defines ‘claim’ as ‘an assertion of a right’ and,
under standard building contracts, the word conveys the concept of
additional payment which the contractor seeks to assert outside the
contractual machinery for valuing the work itself. The word is also used in
respect of the contractor’s applications for an award of extensions of time
(qv). The main types of claim which may be made by a contractor are:
3. Contractual claims: which are those made under specific provisions of the
Contract, e.g. one for ‘direct loss and/or expense’ under JCT 98, clause 26,
or for ‘expense’ under GC/Works/1 (1998), clause 46. This type of claim is
also occasionally described as being ex contractu, i.e. arising from the
contract. Under JCT terms À and most other forms of contract À it is only
claims of this type which the architect has authority under the contract to
settle.
12
4. Common law claims: which are those which arise apart from the express
provisions of the contract. They include claims in tort (qv), claims for a
quantum meruit (qv), claims for a quantum valebat (qv), claims for breach
of express or implied terms of the contract or warranty (qv). All the current
standard forms allow additional or alternative claims for breach of contract,
based on the same facts. Usually they are based on implied terms relating
to non-interference with the contractor’s progress (see: Hindrance or
prevention). They are sometimes called ex contractual or extra contractual
claims.
5. Ex gratia claims: are those without legal foundation and are usually made
on moral or hardship grounds. Very rarely, there may be an advantage to
meeting such a claim as a matter of grace, e.g. if the contractor is on the
brink of insolvency (qv) and, as a result, the employer would face greater
expense if the contractor could not carry on and completion contractors had
to be employed.
13
Disagreement
Argument
Dispute
When two parties express difference of opinion. The mater is usually resolved to the mutual satisfaction of all Parties
Where the disagreement can not be so readily resolved and discussion become heated
Major disagreements, often over contracts that can not be resolved by the parties without recourse to a formal process
Figure 2.1 Disagreement Escalation Diagram (Source: (IAN M Elenberg), Dispute Resolution in Construction Management)
2.3 Occurrence and Causes of Construction Dispute 4 Numerous construction disputes that arise largely through miscommunication
between the various parties in a design/construction effort. Usually, these disputes
occur even though the parties involved all are well intended. This often happens
because someone “drops the ball” by failing to communicate effectively with
another concerning design issues, compensation and payment issues, scope
change issues and the like, leading to legal disputes.
The occurrence of some of the common causes of dispute are discussed below
A review of these disputes shows that many, if not all, can be avoided through
better communication — whether through more effective contract writing, oral
4 Ineffective Communication: Common Cause of Construction Disputes (Jeffery M. Hall, Esq. Folk & Associates, P.C. Vol.13, No.2, May/June 2002 )
14
presentation and/or people communication skills
2.3.1 During the Design Phase
1. Design and specification oversights, and errors or omissions resulting from
uncoordinated civil, structural, architectural, mechanical and electrical
designs can result in unexpected change orders, wholesale scope changes,
and project delays. They may ultimately lead to inadvertently ill-
constructed projects filled with construction defects due to bad project
documentation.
2. The design professional’s failure to remain within an owner’s project
budget and design objectives, leads to dissatisfied owners and to design
professional liability.
3. A similar dispute may occur when an owner’s design vision of a project is
not communicated effectively to the design team. Perhaps due to an
owner’s inexperience, this breakdown may result in an unrealistic project
square footage, unnecessary architectural features, and/or finishes that
cannot be achieved within budget. Over-design is a predictable cause of
disputes, particularly when an owner turns to third-party consultants for
input that is not coordinated effectively with the design team while the
overall design is evolving and maturing.
4. The owner’s failure to contract with the consultants for construction
administration/construction observation services can lead to poor
coordination of the project, especially in cases involving absentee or
inexperienced owners. The owner should make a determination at the
15
outset whether this service will be provided by the design team or a third
party such as a construction manager, and then engage this party for those
services.
Design phase issues like these can be avoided by addressing them up front and
providing for them in properly drawn construction documents.
2.3.2 During the Bid and Contract Award Phase Lack of understanding and agreement between the owner and contractor as to
whether the contract is a lump-sum, cost-reimbursable (time and materials),
cost-plus fixed fee, or guaranteed maximum price contract arrangement.
Other issues that arise during contract formation include (1) defining what
costs are allowable and reimbursable; (2) the budget breakdown and schedule
of values for pay items that are essential in controlling billed costs, progress
and earned revenue; and (3) the allocation of change orders to budget or pay
items relative to billing practices and progress measurement.
2.3.3 During the Construction Phase 1. Starting construction of a project prior to design completion is a recipe for
trouble. A complete, fully coordinated set of project documents is critical to
realizing a successful project from all parties’ perspectives. Without fully
coordinated drawings and specifications, the project will most assuredly be
faced with budget issues, disputes arising from bid allowances due to
undefined scopes, and ultimately in changes and cost increases.
16
2. Construction disputes due to lack of access to utilities, unanticipated site
conditions and/or inclement weather impacts on working conditions can result
in claims for inefficiency and delay-related costs.
3. The contractor’s failure to coordinate its subcontractors’ work through
effective and timely exchange of shop drawings, failure to provide timely
responses to the consultant and client, and purchasing and schedule
mismanagement that may impact the work of others, are all factors that also
result in delays, inefficiency, rework, defects and cost overruns that lead to
claims and disputes.
4. Contractor over-billings often are the result of a fundamental
misunderstanding of what is allowable under the terms of the contract. This
includes unsupported costs, disallowed costs under the construction contract,
or costs for non-compensable delays, inefficiency, rework and
mismanagement.
5. Consultant’s failure in its contractual administrative duties for such things as
field observations and reporting with regard to construction defects, quality,
progress, and conformance of the work with the contract documents; and the
evaluation of contractor change orders and pay applications.
6. Cost overruns often lead to disputes because of an owner’s unwillingness or
inability to pay, even when they are the result of legitimate scope changes
and/or project upgrades. The owner’s contribution to these cost overruns also
typically causes contractor delays, acceleration and inefficiency.
17
2.4 summary This chapter highlights issues related to causes of construction disputes from
available literature which including: Definition of disputes; Occurrence & The
causes of construction dispute, etc.
18
CHAPTER Three: Data Collection and Preliminary Analysis
3.1 Introduction Data Collection is an important aspect of any type of research study. Inaccurate
data collection can impact the results of a study and ultimately lead to invalid
results.
The purpose of data collection is to obtain information to keep on record, to make
decisions about important issues, to pass information on to others. Primarily, data
is collected to provide information regarding a specific topic
3.2 Sampling Methods One of the most important decisions that any researcher makes is how to obtain
the type of participants needed for the study.
In most situations, it is impossible to study an entire population. Typically a
subset of people drawn from a larger population will be studied and use
inferential statistics to make an inference from the sample back to the population.
The validity of that inference depends on how representative the sample or subset
is of the population from which it is drawn. Given the time constraint, the prime
goal of this paper, is to obtain the most representative sample using the
appropriate type of non probability sampling strategies.
3.3 Non-probability Sampling Strategies There are three types of non-probability sampling strategies: Haphazard,
Convenience and Purposive
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3.3.1Haphazard Sampling Haphazard sampling is a strategy that is almost guaranteed to introduce bias into
your study. It should be avoided at all costs. A typical haphazard strategy uses a
"man-on-the-street" technique to recruit those who wander by or selects a
sampling frame that does not accurately reflect the population.
3.3.2 Purposive Sampling Purposive sampling targets a particular group of people. When the desired
population for the study is rare or very difficult to locate and recruit for a study,
purposive sampling may be the only option. For example, you are interested in
studying cognitive processing speed of young adults who have suffered closed
head brain injuries in automobile accidents. This would be a difficult population
to find.
3.3.3 Convenience Sampling Convenience sampling selects a particular group of people but it does not come
close to sampling all of a population. Researchers want to study the effectiveness
of a diversion program for preventing further criminal activity among first-time
juvenile offenders. Many cities across the nation have such programs but the
researchers study the program in their city. The sample would generalize only to
similar programs in similar cities. Convenience sampling is widely used in
student research projects. Students contact professors that they know and ask if
they can use their classes to recruit research subjects.5
5 http://www.wadsworth.com/psychology_d/templates/student_resources/workshops/res_methd/sampling/sampling_32.html
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3.3.4 The Sampling Method used in the Study The sampling method used in this study was convenience sampling. This
sampling comes under the class of non-probability sampling techniques. As the
name implies, sample elements are identified by convenience (friends). This
method of sampling is preferred when it is difficult to get response from sample
elements selected at random. The questionnaires were distributed through friends
working in various, Employer, consulting and construction firms. This sampling
method enabled us to obtain a large number of completed questionnaires quickly
and economically.
3.4 Questionnaire Development A questionnaire survey shown in Appendix 2 was formulated to compare the
collective perceptions of personnel from clients, consultants and contractors, as to
categorize the major causes of dispute on client’s organization on construction
projects in Ethiopia.
The respondents were asked to indicate their response category on 29(Twenty-
Nine) well-recognized construction delay factors and these causes were
categorized into the following 6(six) major groups:
Category 1: Employer Related Factors: Failure to finance and payments of
completed works, Owner interference, slow decision making, unrealistic
contract duration and requirements imposed.
Category 2: Contractor Related Factors: inadequate investigation before, Site
management, Construction methods, Poor planning and use of wrong
equipment, Mistakes during construction stage, Inexperienced contractor,
Financial Difficulties, Exceptionally Low Bid
21
Category 3: Consultant Related Factors: Poor Contract management &
Supervision, Preparation and approval of drawings, Frequent Changes in
orders & Designs, Waiting time for approval of tests and inspection
Category 4: Material, Labor & Equipment Related Factors: Quality of
Material, Shortage in material, Shortage of Labor supply, Labor productivity,
Equipment availability and failure
Category 5: Contract & Contract Relationship Related Factors: Change
orders, Mistakes and discrepancies in contract document, Inappropriate overall
organizational structure linking to the project, Lack of communication
between the parties
Category 6: External Factors: Inclement Weather condition, Regulatory
changes, Unforeseen site condition
3.4.1 Distribution of Questionnaires Out of the 75(seventy-five) questionnaires sent to prospective respondents’
working in Employer, Consultants, 69(sixty-nine), questionnaires were filled and
were sent back,(the reason for this high rate of response is the method of
sampling used, which is (“convenience sampling”) which equates to 92 % overall
response rate. The composition of respondents is Employer/clients (96%),
consultants (87%) contractors (93%),(Please refer Table 3.1 below) Table 3.1: Respondents’ return rate
Item No Sample type sent return %
1 Employer(Client) 25 24 96% 2 Consultant 23 20 87% 3 Contractor 27 25 93%
Total 75 69 92%
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3.5 Data Summary
3.5.1 Summary of Respondents Profile The respondents’ data profile with respect Positional distribution includes
General Managers, project managers, department heads, resident engineers and
supervisors
With respect to years of experience 14.49% of the sample are less than or equal to
5years of experience, 31.88% of the sample between 6 to 10 years of experience,
17.39% of the sample between 11 to 15 years of experience, 55% of the sample
between 16 to 20 years of experience 20.29 % of the sample are more than 20
years of experience,
With respect to Type of Organization 34.78% of the sample are from Employer
(client) Organization), 28.99% of the sample are from Consultant Organization,
and 36.23% of the sample is from Consultant Organization (please refer Table 3.2,
below) Table 3.2: Summary of Respondents Profile
Item No
Characteristics No. of response
Percent
I Number of Years of Experience Less than 5 years 10 14.49% 6 to 10 years 22 31.88% 11 to 15 years 12 17.39% 16 to 20years 11 15.94%
23
More Than 20 years 14 20.29% Total 69 100.00% II Type of Organization Employer(client) 24 34.78% Consultant 20 28.99% Contractor 25 36.23% Total 69 100.00%
3.5.2 Response to Category 1: Employer Related Factors: Table 3.3: Overall respondents’’ view (Category 1)
Sr. No.
Description Indicator Total 1 2 3 4 5
1 Failure to finance and payments of completed work 13 12 15 16 13 69 2 Owner Interference 7 16 23 15 8 69 3 Slow decision making 2 5 15 34 13 69
4 Unrealistic contract duration and requirements imposed 2 14 14 23 16 69
3.5.3 Response to Category 2: Contractor Related Factors Table 3.4: Overall respondents’’ view (Category 2) Sr. No. Description Indicator Total
1 2 3 4 5 1 Inadequate investigation before bidding 4 6 11 13 35 69 2 Site management 3 7 19 23 17 69 3 Construction methods 4 10 28 17 10 69 4 Poor planning and use of wrong equipment 4 7 19 22 17 69 5 Mistakes during construction stage 8 20 25 10 6 69 6 Inexperienced contractor 3 18 18 20 10 69 7 Financial Difficulties 2 0 6 24 37 69 8 Exceptionally Low Bid 4 6 10 29 20 69
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3.5.3 Response to Category 3: Consultant Related Factors Table 3.5: Overall respondents’’ view (Category 3) Sr. No. Description Indicator Total
1 2 3 4 5 1 Poor contract management & Supervision 1 5 17 24 22 69 2 Preparation and approval of drawings 2 6 24 20 17 69 3 Frequent Changes in orders & Designs 2 7 25 22 13 69 4 Waiting time for approval of tests and inspection 3 9 26 20 11 69
3.5.4 Response to Category 4: Material, Labor & Equipment Related Factors Table 3.6: Overall respondents’’ view (Category 4)
Sr. No. Description Indicator Total 1 2 3 4 5
1 Quality of material 5 6 25 22 11 69 2 Shortage in material 2 5 15 29 18 69 3 Shortage of Labor supply 8 15 26 15 5 69 4 Labor productivity 5 13 16 25 10 69 5 Equipment availability and failure 2 5 20 28 14 69
3.5.5 Response to Category 5: Contract & Contract Relationship Related Factors Table 3.7: Overall respondents’’ view (Category 5)
Sr. No.
Description Indicator Total 1 2 3 4 5
1 Change orders 1 9 24 24 11 69 2 Mistakes and discrepancies in contract document 2 7 17 32 11 69 3 Inappropriate overall organizational structure linking to
the project 2 10 26 22 9 69
4 Lack of communication between the parties 0 10 27 22 10 69
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3.5.6 Response to Category 6: External Factors Table 3.8: Overall respondents’’ view (Category 6)
Sr. No. Description Indicator Total 1 2 3 4 5
1 Inclement Weather condition 7 18 28 14 2 69 2 Regulatory changes 10 15 28 14 2 69 3 Unforeseen site condition 1 7 29 25 7 69 4 price escalation 1 2 14 24 28 69
3.6 Summary and conclusion The survey results have been collated and the necessary computation has been
done (please refer Appendix 3, 4, 5, 6 &7)
The overall ratings of the major causes of disputes and the findings and analysis
of top 10 causes of disputes is listed and discussed in details in Chapter 4
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CHAPTER Four: Data Analysis
4.1 Introduction Data analysis is a practice in which raw data is ordered and organized so that
useful information can be extracted from it. The process of organizing and
thinking about data is key to understanding what the data does and does not
contain. There are a variety of approaches to data analysis, and it is notoriously
easy to manipulate data during the analysis phase to push certain conclusions or
agenda. For this reason, it is important to pay attention when data analysis is
presented, and to think critically about the data and the conclusions which were
drawn. Raw data can take a variety of forms, including measurements, survey
responses, and observations. The source of raw data for this research is mainly
questionnaire survey responses and interviews, during the course of the data
analysis process, survey results are tallied, so that one can see at a glance how
many people answered the survey, and how people responded to specific
questions.
4.2 Calculation of relative importance of Index The Relative Importance Index (RII) method was adopted in this study within
various Categories (i.e. Category1-Category6)). The five-point scale ranged from
1 (Very Insignificant) to 5 (Very Significant) was adopted and transformed to
relative importance indices (RII) for each factor as follows:
RII= ∑W
-------------* 100 A* N
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where W is the weighting given to each factor by the respondents (ranging from 1
to 5), A is the highest weight (i.e. 5 in this case), and N is the total number of
respondents. The RII value had a range from 0 to 1 (0 not inclusive), higher the
value of RII, more important was the cause or effect of disputes.
The RII was used to rank (R) the different causes. These rankings made it
possible to cross-compare the relative importance of the factors
Each individual cause’s RII perceived by all respondents were used to assess the
general and overall rankings in order to give an overall picture of the causes of
construction disputes in the Ethiopian construction industry. The same procedure
was adopted for ranking the effects.
4.2 Analysis of Data Converting all responses into numerical data, will help analyze the data in which
one can draw conclusions on the findings. Analyzing the data is a task that
requires good analytical skills to interpret data accumulated from the
questionnaire.
4.2. 1 Causes of Dispute The primary data collected from the questionnaire was analyzed from the
perspective of respondents. Each individual cause’s Relative Importance Index,
(RII) perceived by all respondents was computed for overall analysis.
The Relative Importance Index, (RII), was computed for each cause to identify
the most significant causes. The causes were ranked based on RII values. From
the ranking assigned to each cause of disputes, Based on the ranking, the 6 (Six)
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most important causes of construction disputes from each category as perceived
by all respondants were:
(1) contractor’s Financial Difficulties (RII = 0.8725) Category 2: Contractor
Related Factors;
(2) price escalation (RII = 0.8203); Category 6: External Factors
(3) Poor Contract management & Supervision (RII = 0.7768) Category 3:
Consultant Related Factors;
(4) Shortage in material (RII = 0.7623) Category 4: Material, Labor &
Equipment Related Factors
(5) Slow decision making (RII = 0.7478), Category 1: Employer Related Factors
(6) Mistakes and discrepancies in contract document(RII = 0.7246) Category 5:
Contract & Contract Relationship Related Factors
4.3 Findings and Discussions This section discusses the results obtained in the earlier section., we discuss the
results obtained by analyzing the causes of disputes.
Table 4.1 shows the ranking of causes based on response of all respondents
(clients, contractors and consultants). Table 4.1: Ranking of causes (based on overall respondents view) Item No.
Description
Indicator Total RII
(%) Rank 1 2 3 4 5
CATEGORY 1: Employer Related Factors
1 Failure to Finance and payments of completed work 13 12 15 16 13 69 61.16 22
2 Owner Interference 7 16 23 15 8 69 60.29 23 3 Slow decision making 2 5 15 34 13 69 74.78 7
4 Unrealistic contract duration and requirements imposed 2 14 14 23 16 69 70.72 12
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Item No.
Description
Indicator Total RII
(%) Rank 1 2 3 4 5
5 Other (if any)
CATEGORY 2: Contractor Related Factors
1 Inadequate investigation before bidding 4 6 11 13 35 69 80.00 3 2 Site management 3 7 19 23 17 69 72.75 9 3 Construction methods 4 10 28 17 10 69 65.51 20
4 Poor planning and use of wrong equipment 4 7 19 22 17 69 71.88 11
5 Mistakes during construction stage 8 20 25 10 6 69 55.94 25 6 Inexperienced contractor 3 18 18 20 10 69 64.64 21 7 Financial Difficulties 2 0 6 24 37 69 87.25 1 8 Exceptionally Low Bid 4 6 10 29 20 69 75.94 6 9 Other (if any)
CATEGORY 3: Consultant Related Factors
1 Poor Contract management & Supervision 1 5 17 24 22 69 77.68 4
2 Preparation and approval of drawings 2 6 24 20 17 69 72.75 9 3 Frequent Changes in orders & Designs 2 7 25 22 13 69 70.72 12
4 Waiting time for approval of tests and inspection 3 9 26 20 11 69 67.83 17
CATEGORY 4: Material, Labor & Equipment Related Factors
1 Quality of material 5 6 25 22 11 69 68.12 16 2 Shortage in material 2 5 15 29 18 69 76.23 5 3 Shortage of Labor supply 8 15 26 15 5 69 58.26 24 4 Labor productivity 5 13 16 25 10 69 66.38 19 5 Equipment availability and failure 2 5 20 28 14 69 73.62 8 6 Other (if any)
CATEGORY 5: Contract & Contract Relationship Related Factors
1 Change orders 1 9 24 24 11 69 70.14 13
2 Mistakes and discrepancies in contract document 2 7 17 32 11 69 72.46 10
3 Inappropriate overall organizational structure linking to the project 2 10 26 22 9 69 67.54 18
4 Lack of communication between the 0 10 27 22 10 69 69.28 14
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Item No.
Description
Indicator Total RII
(%) Rank 1 2 3 4 5
parties
CATEGORY 6: External Factors 1 Inclement Weather condition 7 18 28 14 2 69 55.94 25 2 Regulatory changes 10 15 28 14 2 69 55.07 26 3 Unforeseen site condition 1 7 29 25 7 69 68.70 15 4 price escalation 1 2 14 24 28 69 82.03 2
The ten most important causes of disputes (based on all respondents) as shown in
the Table 4.1 were:
(1) Contractor’s Financial Difficulties (RII = 0.8725),
(2) Price escalation (RII = 0.8203),
(3) Inadequate investigation before bidding (RII = 0.80),
(4) Consultants’s Poor Contract management & Supervision (RII = 0.7768),
(5) Shortage in material (RII = 0.7623),
(6) Exceptionally Low Bid (RII = 0.7594),
(7) Employer’s Slow decision making (RII = 0.7478),
(8) Equipment availability and failure (RII = 0.7362,
(9) Site management (RII = 0.7275), and
(10) Preparation and approval of drawings (RII = 0.7275).
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Figure 4.3: The ten most important causes of disputes (based on all respondents)
1.Contractor’s Financial Difficulties
2.Price
escalation
3.Inadequate
investigation before bidding
4Consultants’
Poor Contract management
& Supervision
7Employer’s
Slow decision making
6Exceptionally Low Bid
5Shortage in
material
9Contractor’s
poor site management
8Equipment availability and failure
10Consultants
delay in Preparation &
approval of drawings
Top 10(Ten) Construction Dispute Factors
4.3.1. Contractor’s Financial Difficulties Whether large or small, contractors can and do experience financial difficulty. In
some cases, this distress becomes so severe that the contractor is forced into
bankruptcy or liquidation. What is important to understand is that when a
contractor develops financial problems, the contract will be at risk.
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To save money, contractors may substitute lower quality products and/or services.
Moreover, companies in financial distress often experience low morale and high
turnover, where the most experienced and talented people are the first to leave.
These companies either do not replace positions or have a difficult time attracting
new employees, thereby creating potential service issues.
Therefore, performing a financial responsibility analysis helps to determine
whether a contractor has the necessary financial resources to begin and complete
a contract successfully.
Financial analysis also helps determine what payment terms to utilize (e.g.,
interim, progress, or advance payments) and whether other contract terms may
need to be added or modified to mitigate risk. While a financial responsibility
analysis needs to be done before entering into a contract, it should also be
performed periodically throughout contract administration for multi-year
contracts.
4.3.2. Price escalation Cost is the fundamental component for any construction project. However, cost
overrun is observed as one of the most frequently occurring issues in
construction projects
Construction cost increases usually occur as a result of market forces, and reflect
increases in the cost of labour/materials and higher levels of construction
activity.
Employers should ensure that the budgets set for construction projects are
achievable, allowing where appropriate for price escalation.
When formulating a project budget, employers must consider cost escalation that
may occur prior to the tender date and duringthe terms of the contract.
33
These anticipated increases in cost should be built into the project budget and
used when preparing budget submissions for funding.
Given the current market conditions for various building materials and the
potential for trouble when the cost escalation occurs, a price escalation clause that
allows for an equitable adjustment for the increased costs of certain materials may
be advisable.
Escalation clauses should be tailored to the individual project and commodity. A
price escalation clause allows the parties an opportunity to plan for the
uncertainty and allocate how and to what extent the additional costs will be
absorbed.
4.3.3 Inadequate investigation before bidding Contractors should do the risk analysis and estimate the risks so that they can
include the price of taking these risks in their cost estimation, but it does not
always happen this way. In most cases, contractors do not carryout suffiecient
risk analysis before bidding and make a realistic cost estimate. It leads to dispute
because the contractors bring cost claim on projects which do not come under the
construction budget, and if the client contradicts to these claims then disputes
initiate.
Tenderers for a construction contract need to study hydrological and sub-surface
data, to the extent that the data are relevant to the particular type of works, in
order to plan and estimate the costs of the excavation and other works.
At pre-contract stage, the employer or client should disclose the project
requirements combined with site data and other useful information in order to
enable the contractor or consultant to submit an offer.
34
However, all forms of contracts including FIDIC forms of contract clearly create
retroactive obligations. According to Sub-Clause 4.10 the Contractor shall carry
out inspections and examinations of the site before submitting his tender.
4.3.4 Consultants’s Poor Contract management & Supervision A number of construction projects have suffered as a result of poor performance
in Contract management & Supervision activities by design and supervision
consultants. Consequently, Employers/clients need to establish a guideline for the
periodic Evaluation of Consultant's Performance to improve Consultant's
performance and a reduce of consequential problems which includes:
Disputes & Implementation difficulties resulting from inappropriate
designs and solutions,
Claims resulting from poor quality documents
Budget overrun resulting from inaccurate cost estimates.
Dispute and Budget overrun resulting from poor quality and inaccurate
geotechnical and topographical surveys.
Dispute & implementation difficulties resulting from poor supervision
Tender documents must be drafted with care, particularly in respect of quality,
tests and performance criteria for Contractor-design contracts. If tender
documents are deficient, the Employer may pay an exorbitant price for
unacceptable works. He must therefore ensure that adequate resources are
allocated to the skilled tasks of drafting the technical and commercial aspects of
the tender documents, and of analysing the tenderers' proposals.
35
4.3.5. Shortage in material Material resources, including construction materials and equipment, are
fundamental to the development of a construction project from design through
procurement to physical erection. Also, they represent a large portion of the total
budget.
Materials management is the expertise that mainly copes with procurement
management and site management. Primarily, procurement management has to
ensure the flow of construction materials to the construction sites. This is done
through an integrated procurment process that involves planning, monitoring and
control of the physical flow of material resources (design, manufacturing,
transportation, and handling) and the administrative and contract implications
towards suppliers and subcontractors.
Site management is involved with directing the construction site, the field
logistics and building operations, with special focus on quality and safety.
Typically, site management is responsible for acceptance and control of materials
shipped to the site, storage and management. Building activities require site
managers to oversee construction through inspections, reviews, quality assurance
procedures, organization and direction of foremen and workers.
Shortages in basic materials like sand, cement, stones, bricks, and iron can cause
major delays in projects. often times demand exceeds the supply and this causes
prices to increase. The contractors postpone the purchase activities until the prices
decrease.
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4.3.6 Exceptionally Low Bid When the competitive bidding environment in the construction industry is all
about price, then employer will get a good deal. Competing on price alone leads
to a number of problems that raise the cost of a project in the long run, including
poor planning, poor work quality, delays, the need to redo work and dispute.
There are some good practices that can help the system work better, For
example, owners can specify a condition which disallow contractors from
participaing in the bid if they do not meet certain requirements (such as success
on past projects). The bidding itself should also be fair, open and transparent, so
competing bidders aren’t played one against the other by secretive clients trying
to cut down the price.
4.3.7 Employer’s Slow decision making Any delay in a project can lead to cost and time overruns and these two are
linked. Whenever there are delays, there are disputes as to who should bear the
responsibility and the cost.
This research has indicated that “Employer’s Slow decision making” have a
negative impact on the project progress and efficiency,which may lead to delay in
work progress and dispute.
These disputes often lead to an arbitration process by third parties and failure in
this process leads to litigation where the disputes are settled by the court.
4.3.8 Equipment availability and failure Many of the contractors do not own equipments that are required for the
construction work. They rent the equipments when required. During the season
when there are many construction projects, the equipments are in short supply and
37
are poorly maintained. This leads to failure of the equipments causing the
progress to be hampered.
“Although most wood and concrete building materials can be obtained locally and
several firms are providing sophisticated steel products, Ethiopia must depend on
imports for most other inputs in the construction industry. For example, Ethiopia
imports diesel fuel, explosives, steel panels, welding parts, timber and plywood,
composite material panels, and bitumen from overseas. The majority of these
materials are brought in from Europe and Saudi Arabia.”6
4.3.9. Contractor’s poor site management Contractor’s poor site management is one of the most significant factor in causing
the construction delays. The results of this research indicate that local contractors
face deficiency in site planning, implementation and controls.
A poor site management results in delays in responding to the issues that arise at
the site and causes negative impact on the overall work progress.
4.3.10 Consultants delay in preparation & approval of drawings Inadequate consultants’experience was an important factor and this could be
linked to the contract awarding procedure where most projects were awarded to
the lowest bidder. A cconsultant with inadequate experience cannot plan and
manage the projects properly and this can lead to disastrous consequences.
4.4 Dispute Resolution Methods
Whenever possible, it is advisable to solve any differences or disputes by
amicable settlement, since disputes are time-consuming and expensive.
6 Ethiopian Business Development Services Network (EBDSN)
38
Most contract forms therefore provide express stipulations through which the
parties to them attempt to avoid disputes. Some of them even require endeavors to
be made to reach an amicable settlement before any difference or dispute can be
referred either to the courts or to arbitration. As both court and arbitration
proceedings are expensive and time-consuming the business community has
developed so called alternative dispute resolution (ADR) proceedings, which are
either used exclusively or as compulsory interim proceedings, thus baring the
referral to courts or arbitration until these preliminary proceedings have come to
an end.
4.4.1 Mediation According to the CEDR (Centre for Effective Dispute Resolution) definition,
mediation is a flexible process conducted confidentially in which a neutral person
actively assists parties in working towards a negotiated agreement of a dispute or
difference, with the parties in ultimate control of the decision to settle and the
terms of resolution. Key features of mediation are:
Mediation is voluntary.
However, refusal to mediate can give rise to cost sanctions.
Courts actively encourage parties to consider mediation.
The mediator facilitates the process but the parties are and remain
responsible for the outcome.
Any settlement reached during mediation is binding once put into writing
and signed by the parties subject to the governing law
39
Mediation is presumed to have a number of advantages over litigation and
arbitration proceedings:
4.4.2 Dispute Review Board Dispute Review Boards (DRBs) are also a very appropriate means for solving
disputes in the course of the project development. Dispute review consists of a
procedure wherein the dispute reviewer takes no decision but provides his opinion
on the merits of the case. Usually DRBs, issues a non-binding recommendation,
which the parties may use in order to reach an amicable settlement based on a
clear legal position. Dispute review evolved from the former role of the engineer
as decision-maker in the first instance under various standard forms of
construction contracts, such as the old FIDIC Red Book 1987 (fourth Edition).
For example, earlier editions of the FIDIC contracts provided that disputes were
to be determined in the first instance by the Engineer under the contract. The
Engineer’s decision was binding upon the parties until it was reversed by
arbitration.
However, Dispute Review Boards lack the advantage of rendering a decision
which is binding on the parties. There is always an underlying possibility that
negotiations do not lead to an amicable settlement and the parties have wasted a
lot of time for no visible result.
4.4.3 Dispute Adjudication Board The Disputes Adjudication Board (DAB) is an impartial and independent panel of
one or three people who are ideally appointed at the start of project and give
decisions on any disputes. When the DAB requested by both the Employer and
40
the Contractor shall be available to give advice and opinions on any matter
relevant to the contract.
The DAB has four main functions:
i. To visit the site periodically and become familiar with the details of the
project
ii. To keep up to date with activities, progress, developments and problems at
the site
iii. Encourage the resolution of disputes by the parties
iv. When a dispute is referred to it, hold a hearing, complete its deliberations
and prepare a Decision in professional and timely manner
Dispute Adjudication is the most recent form of alternative dispute resolution but
likely to be the most successful and satisfactory one at the same time, because it
is very effective. Unlike dispute review dispute adjudication leads to a decision of
the adjudicator on the merits of the case which becomes temporarily binding until
revised by either an arbitral or a state court.
Due to its success in some jurisdictions, dispute adjudication legislation has been
set in force. Usually dispute adjudication starts by a notice of reference to dispute
adjudication, whose Disputes purpose is to warn the adverse party of the intention
to start dispute adjudication and which is a precondition for the appointment of
the adjudicator, if necessary (say, if the parties did not agree to a permanent
adjudicator during the whole phase of contract execution). At a second stage the
referral to adjudication follows, containing a written statement by which the
claimant substantiates the merits of the case and defines its demand. The
41
adjudicator will hear the case and provide the defending party with an opportunity
to answer to the complaint. Depending on the adjudication agreement of the
parties he may obtain evidence, require expert advice and visit the site. Once
having heard the parties the adjudicator will render a decision which he shall
notify to the parties. The decision usually becomes temporarily binding until
revised by subsequent arbitration or court proceedings. The adjudicator’s decision
is neither an arbitral award capable of enforcement under the New York
Convention, nor does it have the status of a court judgment. Instead, the decision
is binding only as a matter of contract between the parties. Failure to comply with
a temporarily binding adjudication decision constitutes breach of contract and the
appropriate method of enforcing an adjudicator’s decision is by way of an action
for breach of contract unless ruled otherwise by national law. Depending on the
applicable law the winning party may obtain a summary judgment or similar in
order to enforce the adjudication decision.
FIDIC 1999 introduce a formal procedure for the resolution of disputes. If a
dispute of any kind develops between the Employer and the Contractor in
connection with or arising out of the Contract or the execution of the Works, it is
referred to the DAB under Sub clause 20.4. This procedure is not restricted to
consideration of disputes arising from claims.
The Contract contains detailed provisions for establishing the DAB and the
procedural rules under which it should operate. These can be amended or
augmented in the Particular Conditions if required. However, proper
consideration should be given to any changes that are made.
42
The Contract will determine whether the DAB should consist of one or three
members, how they should be appointed and reimbursed and the terms of
reference and procedures under which the DAB will operate.
A decision must be made whether the DAB shall comprise one or three members
and whether any potential members of the board should be nominated in the
tender documents.
If there are to be any changes to the Dispute Adjudication Agreement or to the
Procedural Rules they should be included in the Particular Conditions.
The intention is that the DAB should be appointed at the beginning of the
Contract and visit the Site periodically. The DAB will also be sent copies of
correspondence, notices and minutes of meetings so that it is kept abreast of
progress and is aware of the background to any problems that may arise.
During its visits to Site, the DAB will inspect the work and meet the personnel on
site. Any issue may be raised jointly with the DAB, which can be asked for an
opinion. This process has been found to reduce the frequency with which claims
or other problems escalate into more serious disputes and to assist in their
resolution.
If a dispute cannot be resolved by negotiation between the parties, it can be
referred formally to the DAB by any of them, provided that the required notices
are given. Any decision reached by the DAB must be complied with by both the
Employer and Contractor. Either of these can give a notice of dissatisfaction
within 28 days. The decision of the DAB then becomes temporarily binding and
remains in effect until arbitration is concluded.
43
The MDB Edition replaces the DAB with a Dispute Board (DB). However, there
appears to be little difference between the way in which the DAB and DB operate
or in their powers or authority, although the MDB Edition does not allow parties
to consult the DB about problems other than in accordance with the procedural
rules. This appears to be intended to disallow the Parties from referring anything
but a dispute to the DB.
However, the, or a, member of the DB can give advice and opinions on any
matter relevant to the Contract when requested by both the Employer and the
Contractor. In addition, the procedural rules require the DB to try to prevent
potential problems or claims from becoming disputes. This would require the DB
to intervene before a dispute arose and was referred to it under the provisions of
Clause 20. Clause 20, deals specifically with Claims, Disputes and Arbitration. It
envisages the establishment of a Dispute Adjudication Board, known as the DAB.
A DAB is a panel of experienced, respected, impartial and independent
reviewers. The board is normally organized before construction begins and meets
at the job site periodically. The DAB members are provided with the contract
documents, plans and specifications and become familiar with the project
procedures and the participants and are kept abreast of job progress and
developments. The DAB meets with the
Employer’s and Contractor’s representatives during regular site visits and
encourages the resolution of disputes at job level. When any dispute flowing from
the contract or the work can not be resolved by the parties it is referred to the
DAB for Decision.
44
4.4.3.1 General Conditions of Dispute Adjudication Agreement
The appendix to the General Conditions of the 1999 FIDIC form of Contract
contains conditions upon which Dispute Adjudication will be undertaken in the
Contract. The Dispute Adjudication Agreement is a tripartite agreement between
the parties to the contract on the one hand and the board member on the other.
The board member is an individual and the agreement is personal to him alone.
He is not permitted to assign or subcontract the agreement without the prior
agreement of the parties.
The agreement will define whether the member is a sole adjudicator or a member
of a panel and if he is to be acting as chairman.
The general provisions of the agreement define the period of the DAB and
particularly define the start date and the completion date which is normally the
discharge date mentioned in Clause 14.12 of the contract. The start date takes
effect on the occasion of a number of alternatives:
The commencement date of the contract
The date when all the participant in the tripartite agreement have executed
the agreement, or
When all the tripartite agreements between the parties and other DAB
members have been executed.
When the agreements have taken effect then it is the responsibility of teach of the
parties to notify each of the board members.
It is evident that when a DAB has not been constituted at the beginning of a
project then procedural delays may be encountered after the agreement of the
45
DAB constitution, but before it has any jurisdiction to act. If it is considered that
delays in the commencement of the DAB activities may give rise to extensions of
period under
Clause 20.4 (period in which a DAB has to reach a decision) then a further clause
more closely defining the commencement date of the tripartite agreement should
be considered. This may take the form of a definition of an actual commencement
date or a date unrelated to any further notice by either of the parties, such as the
date of execution of the tripartite agreement alone.
The member is obligated to remain available to undertake the provisions of the
tripartite agreement despite a period of 6 months elapsing during which the
silence of the parties is permitted. This may be problematic to a busy practitioner
who needs to make decisions regarding the most beneficial use of his time.
Parties should attempt in all cases to minimize the delays between the execution
of the tripartite agreement and the commencement of the DAB activities.
During periods of non confirmation of the contract commencement the member is
During periods of non confirmation of the contract commencement the member is
obliged to remain available to the parties, however will be at risk of the
agreement not proceeding. He will be uncompensated for the period prior to the
termination or confirmation of the agreement. The long period of allowable
silence prior to the determination of the agreement will in the long term inflate
the costs of DAB participation to the industry.
The agreement may be terminated by the resignation of the member. Applicable
law may entitle the member to resign under certain conditions. Clause 6 of the
46
agreement also entitles him to resign in the case of the non payment of his fees
and expenses.
Resignation is a very drastic action to be taken by the member and one which
may have considerable consequences. Confidence of the parties and their
supporters in the DAB system will be undermined if a member resigns in
anything other than a genuine circumstance not already envisaged in the contract.
4.4.4 Arbitration At one time arbitration was seen as the only and unique alternative to the court
system. Accordingly for a long period of time arbitration was the only means to
escape from court proceedings. It has since become a common method of dispute
settlement and national legislation usually accepts clauses by which the parties to
a contract derogate court proceedings in favor of arbitration. If the parties to a
contract have agreed to arbitration the national courts usually lack jurisdiction. By
consequence a national court will reject any complaint brought before it.
If any dispute or difference arises, the parties have to refer it to the agreed
arbitration. Arbitration does not mean that there is a worldwide accepted
international arbitral court providing a number of arbitral judges waiting for
work. Referring to arbitration usually means that the parties agree to an
arbitration procedure according to a named procedure such as the ICC procedure
rules or the UNCITRAL procedure rules. These sets of rules provide all necessary
regulations as to the nomination of the arbitrators and the proceedings itself. Most
often national law provides complementary provisions as to arbitration which
must be taken into consideration by the arbitrators and the parties.
47
Article 1 7
1. Where the parties to a contract have agreed in writing* that disputes in relation
to that contract shall be referred to arbitration under the UNCITRAL Arbitration
Rules, then such disputes shall be settled in accordance with these Rules subject
to such modification as the parties may agree in writing.
2. These Rules shall govern the arbitration except that where any of these Rules is
in conflict with a provision of the law applicable to the arbitration from which the
parties cannot derogate, that provision shall prevail.
The Ethiopian civil procedure code on chapter 4, article 315(principle) stipulates
the following:
1. Where Arbitration Is Required by Law, or persons have entered into a
written agreement to submit present or future differences to arbitration the
provisions of this chapter shall apply.
2. No arbitration may take place in relation to administrative contracts as
defined in Art.3132 of the Civil Code or in any other case where it is
prohibited by law.
3. No person shall submit a right to arbitration unless he is capable under the
law of disposing such right.
4. Nothing in this chapter shall affect the provisions of Art.3325-3346 of the
Civil Code.
7 UNCITRAL ARBITRATION RULES
48
4.4.5Court Litigation Litigation is the formal process whereby claims relating to the construction
dispute are taken through the civil courts and conducted in public. The judgments
are binding on parties subject to rights of appeal.
In litigation, the parties are referred to as the plaintiff (one who brings the charge)
and the defendant (one against whom the charge is brought).
Court litigation means proceedings in a court of the country stated in the contract,
following the procedures of that court. In some countries there are courts
specifically for dealing with this type of litigation. In UK a Technology and
Construction Court (TCC) is located in London and specialist TCC judges
officiate in the main provincial centers.
The protocols require full or substantial disclosure of documents by both parties.
Technical experts may be engaged and this, in conjunction with the cost of
solicitors, barristers and court charges, can make litigation an expensive and
lengthy process.
Both sides of the case must be set out in detail in documents; witnesses have to
produce detailed statements of their evidence and experts must provide reports.
Because of the complexity and cost of the exercise, it is frequently preferable to
resolve the dispute through negotiation or mediation.
49
4.5 Summary Choosing the right form of dispute resolution is a critical aspect when preparing
international contracts. Jurisdiction of a court or arbitral court strongly influences
questions of applicable law. Procedural law including regulations as to evidence
and service of documents can have big influence on the result of any dispute.
Time consuming proceedings should be avoided but the advantages of quality of
dispute resolution should not be underestimated. It is thus a tremendous task to
find the best solution for each contract. There is a broad freedom of choice and a
widespread offer of all forms of dispute resolution. It can be presumed that
recommendations as to the form of dispute resolution and clauses concerning
jurisdiction issues which can be found in international standard forms are well
considered and usually suitable for the disputes arising during the execution of
the contract. However it is worthwhile researching different forms of dispute
resolution and the advantages and disadvantages of any place of jurisdiction.
50
CHAPTER Five: Conclusions and Recommendations
5.1 Introduction This is the last chapter of the study, which will conclude all the study that had
been carried out. The aim of this research was to carryout an “Investigation into
Major Causes of Dispute in the Ethiopian Construction Industry” and based on
the grouping of respondents, the findings are analyzed in four categories i.e. (i),
based on employers’ point of view (ii) based on consultants’ point of view (iii)
contractors’ point of view, and finally, (iv) based on the combined or overall
respondents point of view. Lastly, after the conclusion; some recommendations
to avoid the causes of construction disputes are also mentioned.
5.2 Conclusions This section deals with the most significant disputes and draws conclusions from
the analyzed data. The report will provide an interpretation of the results
5.2.1 Employers’ point of view Based on the Employers’ point of views, the top three significant causes of
construction dispute are (i) Financial Difficulties of the contractor, with Relative
Importance Index (RII), value of 90.83%, (ii) Inadequate investigation before
bidding with Relative Importance Index (RII), value of 88.33%, which are
contractor related causes and the third significant cause is related to “Shortage in
material” with Relative Importance Index (RII), value of 81.67%,
Furthermore, the research also identified that both Exceptionally Low Bid and
Price Escalation with equal Relative Importance Index (RII), value of 80.83%,
51
are ranked 4th, Poor planning and use of wrong equipment with Relative
Importance Index (RII), value of 79.17%, is ranked 5th, and unforeseen site
condition, consultants’ Poor Contract management & Supervision and
contractors’ poor Site management with equal Relative Importance Index (RII),
value of 75%, are ranked 6th, and also problems related to Preparation and
approval of drawings by the consultants with Relative Importance Index (RII),
value of 74.17%, is ranked 7th. Table 5.1: Summary the top 10 causes of dispute (based on Employers’ point of view)
No Cause of Dispute RII (%) Rank Category
1 Financial Difficulties of the contractor 90.83 1st, Contractor
2 Inadequate investigation before bidding 88.33 2nd, Contractor
3 Shortage in material 81.67 3rd, Material related
4 Exceptionally Low Bid of the contractor 80.83 4th, Contractor
5 Price Escalation 80.83 4th, External
6 Poor planning and use of wrong equipment 79.17 5th, Contractor
7 Unforeseen site condition 75.00 6th, External
8 Consultants’ Poor Contract management & Supervision
75.00 6th Consultant
9 Contractors’ poor Site management 75.00 6th Contractor
10 Problems related to Preparation and approval of drawings by the consultants
74.17 7th, Consultant
In accordance with the employers’ point of view, among the top ten major causes,
five of them are Contractor related factors, two consultants related, two external
related and one Material related factor.
52
5.2.2 Consultants’ point of view According to the consultants’ point of views, (i) Consultants Poor Contract
management & Supervision, with Relative Importance Index (RII), value of
82.00%, (ii) price escalation, with Relative Importance Index (RII), value of
81.00%, and (iii) Financial Difficulties of the contractor with Relative Importance
Index (RII), value of 80.00%, are the top three significant causes of construction
dispute.
Besides, the research also identified that, contractors’ poor Site management with
Relative Importance Index (RII), value of 75%, is ranked 4th, and both
Employers’ Unrealistic contract duration and requirements imposed & Mistakes
and discrepancies in contract document with equal Relative Importance Index
(RII), value of 73.00%, are ranked 5th, and Inadequate investigation before
bidding , with Relative Importance Index (RII), value of 71.00%, is ranked 6th,
and also both poor quality of material, shortage in material, Failure &
unavailability of Equipment and Lack of communication between the parties,
with equal Relative Importance Index (RII), value of 69.00%, are ranked 7th.
Table 5.2: Summary the top 10 causes of dispute (based on Consultants’ point of view)
No Cause of Dispute RII (%) Rank Category
1 Poor Contract management & Supervision, of the consultant
82.00 1st, Consultant
2 Price escalation 81.00 2nd, External
3 Financial Difficulties of the contractor 80.00 3rd, Contractor
4 Contractors’ poor site management 75.00 4th, Contractor
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5 Employers’ Unrealistic contract duration and requirements imposed
73.00 5th, Employer
6 Mistakes and discrepancies in contract document
73.00 5th, Contract document related factor
7 Inadequate investigation before bidding 71.00 6th, Contractor
8 Poor quality & Shortage of material 69.00 7th, Material Related
9 Failure & unavailability of Equipment 69.00 7th, Contractor
10 Lack of communication between the parties 69.00 7th, Contract relation related factor
According to the Consultants’ point of view, among the top ten major causes,
four of them are Contractor related factors, two Contract document &
relationship related factor, and Material, Consultant, External and Employers’
related factor one each.
5.2.3 Contractors’ point of view Based on the contractors’ point of views, (i) Financial Difficulties of the
contractor, with Relative Importance Index (RII), value of 89.60%, (ii) price
escalation, with Relative Importance Index (RII), value of 84.00%, and (iii)
Inadequate investigation before bidding, with Relative Importance Index (RII),
value of 79.20%, are the top three significant causes of construction dispute.
Moreover, the research also identified that, Employers Slow decision making &
Contractors Exceptionally Low Bid with equal Relative Importance Index (RII),
value of 78.40%, are ranked 4th, and also Frequent Changes in orders &
Designs by the consulting firm and Failure & unavailability of Equipment with
equal Relative Importance Index (RII), value of 77.60%, are ranked 5th, and
Shortage in material, with Relative Importance Index (RII), value of 76.80%,
54
consultants’ Poor Contract management & Supervision with Relative Importance
Index (RII), value of 76.00%, and Consultants’ delay in Preparation and
approval of drawings with Relative Importance Index (RII), value of 75.20%,
are ranked 6th, 7th, and 8th, respectively. Table 5.3: Summary the top 10 causes of dispute (based on Contractor’ point of view)
No Cause of Dispute RII (%) Rank Category
1 Financial Difficulties” of the contractor 89.60 1st, Contractor
2 Price escalation 84.00 2nd, External
3 Contractors’ Inadequate investigation before bidding
79.20 3rd,
Contractor
4 Employers’ Slow decision making 78.40 4th, Employer
5 Exceptionally Low Bid of the contractor 78.40 4th, Contractor
6 Frequent Changes in orders & Designs by the consulting firm
77.60 5th, Consultant
7 Failure & unavailability of Equipment 77.60 5th, Equipment Related
8 Shortage in material 76.80 6th, Material Related
9 Consultants’ Poor Contract management & Supervision
76.00 7th, Consultant
10 Consultants’ delay in Preparation and approval of drawings
75.20 8th, Consultant
The Contractors’ point of view, shows that among the top ten major causes,
Contractor & Consultant related factors, score three each, Equipment & Material
Related factors one each, and Employer and External related factors one each.
5.2.4 Overall respondents point of view Based on overall respondents view, the analysis reveals that the most significant
causes of construction dispute is(i) “Financial Difficulties” of the contractor with
55
Relative Importance Index (RII), value of 87.25%, followed by (ii) “Price
escalation” with Relative Importance Index (RII), value of 82.03%, and (iii)
contractors’ “Inadequate investigation before bidding,” with Relative Importance
Index (RII), value of 80.00%,
Moreover, Poor Contract management & Supervision, of the consultant, with
Relative Importance Index (RII), value of 77.68%,Shortage in material, with
Relative Importance Index (RII), value of 76.23%,Exceptionally Low Bid of the
contractor, with Relative Importance Index (RII), value of 75.94%,Employers’
Slow decision making, with Relative Importance Index (RII), value of 74.78%,
and Failure & unavailability of Equipment, with Relative Importance Index (RII),
value of 73.62%, are ranked 4th, 5th, 6th,7th,and 8th, respectively and also
Consultants’ delay in Preparation and approval of drawings and contractors’ poor
site management with equal Relative Importance Index (RII), value of 72.75%,
are ranked 9th, Table 5.4: Summary the top 10 causes of dispute (based on overall respondents view)
No Cause of Dispute RII (%) Rank Category
1 Financial Difficulties” of the contractor 87.25 1st, Contractor
2 Price escalation 82.03 2nd, External
3 Contractors’ “Inadequate investigation before bidding
80.00 3rd, Contractor
4 Poor Contract management & Supervision, of the consultant
77.68 4th, Consultant
56
5 Shortage in material 76.23 5th, Material related
6 Exceptionally Low Bid of the contractor 75.94 6th, Contractor
7 Employers’ Slow decision making 74.78 7th, Employer
8 Failure & unavailability of Equipment 73.62 8th, Equipment Related
9 Consultants’ delay in Preparation and approval of drawings
72.75 9th, Consultant
10 contractors’ poor site management 72.75 9th, Contractor
Finally, the combined overall point of view, demonstrates that among the top ten
major causes,
i. Contractors’ related factors, score four ;
ii. Consultants’ related factors, score two;
iii. Material &Equipment Related Factor Score One each;
iv. Employers’ related factors, score one; and
v. External related factors, score one;
Depending on the grouping of respondents, point of view the ranking of the major
causes of disputes is slightly different from each other. However, the results of
this study can be helpful to the parties (Clients, Contractors and Consultants) to
visualize and better understand the characteristic or manner of an interaction of
disputes in the construction industry and make efforts to reduce the incidences of
disputes.
57
5.3 Recommendations The recommendations to adopt can be divided into three groups: (1)
recommendations for the clients, (2) recommendations for the consultants, and (3)
recommendations for the contractors.
5.3.1 Recommendations for the Employers/ Clients 1. While selecting the contractors, clients have to make sure that the contractors
are not selected based only on the lowest bid. The selected contractor must
have sufficient experience, technical capability, financial capability, and
sufficient manpower to execute the project,
2. Clients should not interfere frequently during the execution and keep making
major changes to the requirements. This can cause excessive delays in the
project,
3. Clients should have the finances in time to pay the contractors after
completion of a work. Therefore, clients should work closely with the
financing bodies and institutions to release the payment on schedule, and
4. Clients must make quick decisions to solve any problem that arise during the
execution.
5.3.2 Recommendations for the Consultants 1. While drawing the contract between the client and contractor, the consultant
must include items such as duration of contract, mechanism to solve disputes,
mechanism to assess the causes of delay, if there are any and risk management
plans,
2. consultants should prepare and approve drawings on time, and
58
3. Consultants should monitor the work closely by making inspections at
appropriate times.
4. Confirm all oral agreements/changes in writing and maintain daily records of
the project.
5.3.3 Recommendations for the Contractors 1. Contractors should not take up the job in which they do not have sufficient
expertise,
2. Contractors should have able site-managers for the smooth execution of work,
3. Contractors must plan their work properly and provide the entire schedule to
the clients, and
4. Contractors must make sure they have a sound financial backing and financial
management system
5.3.4 General Recommendations Some disputes may not be prevented by prior action, but many can. Ensuring that
a formal contract agreement is executed between parties to a contract is a first
step towards avoiding disputes.
Contractual precautions that provide some safeguard against disputes include:
Ensuring that the parties enter into a finalised contract before work
commences;
Ensuring that the scope of works is clearly defined prior to tender;
Ensuring that the quality constraints are fully defined prior to tender;
Ensuring that the conditions of the contract are fair and clear, using
standard forms unless non standard provisions are essential;
59
Ensuring that the contract provides for early notification of potential
disputes and that dispute resolution procedures are stipulated and not
restricted to arbitration or litigation; and
Ensuring that contract management is effective.
60
References:
1. A Thomson Reuters business, Black’s Law Dictionary 9th edition, page 127, 244
2. (David Chappell, Derek Marshall, Vincent Powell-Smith, Simon Cavender)Building
Contract Dictionary Third Edition , page 70, 71, 134, 135
3. (IAN M Elenberg),Dispute Resolution In Construction Management, Page 9-12
4. Federal Democratic Republic of Ethiopia , Ministry of Works and Urban Development
,PLAN FOR ACCELERATED AND SUSTAINED DEVELOPMENT TO END
POVERTY(PASDEP) (2005/06-2009/10) Page 11
5. Ethiopian Business Development Services Network (EBDSN)
6. FIDIC-A Guide for Practitioners , page 418-423
7. Alberto De Marco Project Management for Facility Constructions( A Guide for
Engineers and Architects) page 50-52
8. (Fred Moavenzadeh ,Professor of Civil Engineering & Janet Ann Koch Rossow
Graduate Research Assistant)The Construction Industry In Developing Countries,
page 3-5
9. Ineffective Communication: Common Cause of Construction Disputes (Jeffery M. Hall,
Esq. Folk & Associates, P.C. Vol.13, No.2, May/June 2002
10. Wikipedia, the free encyclopedia ;
61
Appendices:
62
Appendix 1: Cover letter for questionnaire Dear Mr. _________________ Good Day!
As you already know, I am working on a research paper on the subject issue of
“Construction Disputes”. Accordingly, I have developed a questionnaire to assess
the perceptions of engineers on the relative importance of causes and effects of
dispute in Ethiopian construction industry.
Enclosed you will find the questionnaire (3pages, pdf. file). Hence, I kindly
request you to respond to the simple questions. I shall be very grateful if you will
also use your influence to include your colleagues & friends to fill the
questionnaire survey.
Thanks and Regards,
Kifle Semu
63
Appendix 2; Questionnaire Survey SECTION A: RESPONDENT PROFILE Please fill in the blank
1 Respondent Name:
2 Company Name:
3 Type of Job/Position:
4 Year of Experience
5 Type of Organization [Employer/ Contractor/Consultant]
64
Please indicate your best opinion for the following cause of Construction Disputes
1 Very Insignificant 2 Insignificant 3 Average 4 Significant 5 Very Significant
Item No. Question
Indicator
1 2 3 4 5
CATEGORY 1: Employer Related Factors
1 Failure to Finance and payments of completed work
2 Owner Interference
3 Slow decision making
4 Unrealistic contract duration and requirements imposed
5 Other (if any)
CATEGORY 2: Contractor Related Factors
1 Inadequate investigation before bidding
2 Site management
3 Construction methods
4 Poor planning and use of wrong equipment
5 Mistakes during construction stage
6 Inexperienced contractor
7 Financial Difficulties
8 Exceptionally Low Bid
9 Other (if any)
CATEGORY 3: Consultant Related Factors
65
Item No. Question
Indicator
1 2 3 4 5
1 Poor Contract management & Supervision
2 Preparation and approval of drawings
3 Frequent Changes in orders & Designs
4 Waiting time for approval of tests and inspection
5 Other (if any)
CATEGORY 4: Material, Labor & Equipment Related Factors
1 Quality of material
2 Shortage in material
3 Shortage of Labor supply
4 Labor productivity
5 Equipment availability and failure
6 Other (if any)
CATEGORY 5: Contract & Contract Relationship Related Factors
1 Change orders
2 Mistakes and discrepancies in contract document
3 Inappropriate overall organizational structure linking to the project
4 Lack of communication between the parties
CATEGORY 6: External Factors
1 Inclement Weather condition
2 Regulatory changes
3 Unforeseen site condition
4 Price escalation
5 Other (if any)
66
Appendix 3: Calculation of Relative Importance of Index (RII) (based on overall view) Item No Description n1 n2 n3 n4 n5 N a1=1 a2=2 a3=3 a4=4 a5=5 W A=5 RII=
CATEGORY 1: Employer Related Factors
1 2 3 4 5 ∑ a1*X1 a2*X2 a3*X3 a4*X4 a5*X5 ∑aiXi ∑aiXi/N*A ∑aiXi/N*(100/5)
1 Failure to Finance and payments of completed work
13 12 15 16 13 69 13 24 45 64 65 211 3.06 61.16
2 Owner Interference 7 16 23 15 8 69 7 32 69 60 40 208 3.01 60.29 3 Slow decision making 2 5 15 34 13 69 2 10 45 136 65 258 3.74 74.78 4 Unrealistic contract duration and
requirements imposed 2 14 14 23 16 69 2 28 42 92 80 244 3.54 70.72
5 Other (if any) CATEGORY 2: Contractor
Related Factors
1 Inadequate investigation before bidding
4 6 11 13 35 69 4 12 33 52 175 276 4.00 80.00
2 Site management 3 7 19 23 17 69 3 14 57 92 85 251 3.64 72.75 3 Construction methods 4 10 28 17 10 69 4 20 84 68 50 226 3.28 65.51 4 Poor planning and use of wrong
equipment 4 7 19 22 17 69 4 14 57 88 85 248 3.59 71.88
5 Mistakes during construction stage
8 20 25 10 6 69 8 40 75 40 30 193 2.80 55.94
6 Inexperienced contractor 3 18 18 20 10 69 3 36 54 80 50 223 3.23 64.64 7 Financial Difficulties 2 0 6 24 37 69 2 0 18 96 185 301 4.36 87.25 8 Exceptionally Low Bid 4 6 10 29 20 69 4 12 30 116 100 262 3.80 75.94
67
Item No Description n1 n2 n3 n4 n5 N a1=1 a2=2 a3=3 a4=4 a5=5 W A=5 RII=
9 Other (if any) CATEGORY 3: Consultant
Related Factors
1 Poor Contract management & Supervision
1 5 17 24 22 69 1 10 51 96 110 268 3.8841 77.68
2 Preparation and approval of drawings
2 6 24 20 17 69 2 12 72 80 85 251 3.6377 72.75
3 Frequent Changes in orders & Designs
2 7 25 22 13 69 2 14 75 88 65 244 3.5362 70.72
4 Waiting time for approval of tests and inspection
3 9 26 20 11 69 3 18 78 80 55 234 3.3913 67.83
5 Other (if any) CATEGORY 4: Material, Labor
& Equipment Related Factors
1 Quality of material 5 6 25 22 11 69 5 12 75 88 55 235 3.4058 68.12 2 Shortage in material 2 5 15 29 18 69 2 10 45 116 90 263 3.8116 76.23 3 Shortage of Labor supply 8 15 26 15 5 69 8 30 78 60 25 201 2.913 58.26 4 Labor productivity 5 13 16 25 10 69 5 26 48 100 50 229 3.3188 66.38 5 Equipment availability and
failure 2 5 20 28 14 69 2 10 60 112 70 254 3.6812 73.62
6 Other (if any) CATEGORY 5: Contract &
Contract Relationship Related Factors
1 Change orders 1 9 24 24 11 69 1 18 72 96 55 242 3.5072 70.14 2 Mistakes and discrepancies in
contract document 2 7 17 32 11 69 2 14 51 128 55 250 3.6232 72.46
3 Inappropriate overall organizational structure linking to the project
2 10 26 22 9 69 2 20 78 88 45 233 3.3768 67.54
4 Lack of communication between 0 10 27 22 10 69 0 20 81 88 50 239 3.4638 69.28
68
Item No Description n1 n2 n3 n4 n5 N a1=1 a2=2 a3=3 a4=4 a5=5 W A=5 RII=
the parties CATEGORY 6: External
Factors
1 Inclement Weather condition 7 18 28 14 2 69 7 36 84 56 10 193 2.7971 55.94 2 Regulatory changes 10 15 28 14 2 69 10 30 84 56 10 190 2.7536 55.07 3 Unforeseen site condition 1 7 29 25 7 69 1 14 87 100 35 237 3.4348 68.70 4 price escalation 1 2 14 24 28 69 1 4 42 96 140 283 4.1014 82.03 5 Other (if any)
69
Appendix 4: Calculation of Relative Importance of Index (RII) (based on Employers view) Item No Description n1 n2 n3 n4 n5 N a1=1 a2=2 a3=3 a4=4 a5=5 W A=5 RII=
CATEGORY 1: Employer Related Factors
1 2 3 4 5 ∑ a1*X1 a2*X2 a3*X3 a4*X4 a5*X5 ∑aiXi ∑aiXi/N*A ∑aiXi/N*(100/5)
1 Failure to Finance and payments of completed work
7 5 3 7 2 24 7 10 9 28 10 64 2.67 53.33
2 Owner Interference
6 2 7 6 3 24 6 4 21 24 15 70 2.92 58.33
3 Slow decision making
1 1 6 12 4 24 1 2 18 48 20 89 3.71 74.17
4 Unrealistic contract duration and requirements imposed
6 8 6 4 24 0 12 24 24 20 80 3.33 66.67
5 Other (if any) CATEGORY 2:
Contractor Related Factors
1 Inadequate investigation before bidding
1 1 2 3 17 24 1 2 6 12 85 106 4.42 88.33
2 Site management 1 9 9 5 24 0 2 27 36 25 90 3.75 75.00 3 Construction
methods 2 15 5 2 24 0 4 45 20 10 79 3.29 65.83
4 Poor planning and use of wrong equipment
1 6 10 7 24 0 2 18 40 35 95 3.96 79.17
5 Mistakes during construction stage
1 9 9 2 3 24 1 18 27 8 15 69 2.88 57.50
70
Item No Description n1 n2 n3 n4 n5 N a1=1 a2=2 a3=3 a4=4 a5=5 W A=5 RII=
6 Inexperienced contractor
1 7 4 9 3 24 1 14 12 36 15 78 3.25 65.00
7 Financial Difficulties
2 7 15 24 0 0 6 28 75 109 4.54 90.83
8 Exceptionally Low Bid
2 3 11 8 24 0 4 9 44 40 97 4.04 80.83
9 Other (if any) CATEGORY 3:
Consultant Related Factors
1 Poor Contract management & Supervision
1 1 6 11 5 24 1 2 18 44 25 90 3.75 75.00
2 Preparation and approval of drawings
3 7 8 6 24 0 6 21 32 30 89 3.7083 74.17
3 Frequent Changes in orders & Designs
1 2 12 6 3 24 1 4 36 24 15 80 3.3333 66.67
4 Waiting time for approval of tests and inspection
1 4 8 9 2 24 1 8 24 36 10 79 3.2917 65.83
5 Other (if any) CATEGORY 4:
Material, Labor & Equipment Related Factors
1 Quality of material
1 10 9 4 24 0 2 30 36 20 88 3.6667 73.33
2 Shortage in material
6 10 8 24 0 0 18 40 40 98 4.0833 81.67
3 Shortage of Labor supply
3 6 10 4 1 24 3 12 30 16 5 66 2.75 55.00
4 Labor 5 6 11 2 24 0 10 18 44 10 82 3.4167 68.33
71
Item No Description n1 n2 n3 n4 n5 N a1=1 a2=2 a3=3 a4=4 a5=5 W A=5 RII=
productivity 5 Equipment
availability and failure
1 1 9 7 6 24 1 2 27 28 30 88 3.6667 73.33
6 Other (if any) CATEGORY 5:
Contract & Contract Relationship Related Factors
1 Change orders 3 7 11 3 24 0 6 21 44 15 86 3.5833 71.67 2 Mistakes and
discrepancies in contract document
1 3 6 11 3 24 1 6 18 44 15 84 3.5 70.00
3 Inappropriate overall organizational structure linking to the project
1 4 10 6 3 24 1 8 30 24 15 78 3.25 65.00
4 Lack of communication between the parties
4 10 9 1 24 0 8 30 36 5 79 3.2917 65.83
CATEGORY 6: External Factors
1 Inclement Weather condition
2 7 8 6 1 24 2 14 24 24 5 69 2.875 57.50
2 Regulatory changes
5 4 11 3 1 24 5 8 33 12 5 63 2.625 52.50
3 Unforeseen site condition
1 8 11 4 24 0 2 24 44 20 90 3.75 75.00
4 price escalation 1 6 8 9 24 0 2 18 32 45 97 4.0417 80.83 5 Other (if any)
72
Appendix 5: Calculation of Relative Importance of Index (RII) (based on Contractors view) Item No Description n1 n2 n3 n4 n5 N a1=1 a2=2 a3=3 a4=4 a5=5 W A=5 RII=
CATEGORY 1: Employer Related Factors
1 2 3 4 5 ∑ a1*X1 a2*X2 a3*X3 a4*X4 a5*X5 ∑aiXi ∑aiXi/N*A ∑aiXi/N*(100/5)
1 Failure to Finance and payments of completed work
2 4 6 6 7 25 2 8 18 24 35 87 3.48 69.60
2 Owner Interference 1 7 9 6 2 25 1 14 27 24 10 76 3.04 60.80 3 Slow decision making 1 7 9 8 25 1 0 21 36 40 98 3.92 78.40 4 Unrealistic contract duration and
requirements imposed 2 4 3 8 8 25 2 8 9 32 40 91 3.64 72.80
5 Other (if any) CATEGORY 2: Contractor
Related Factors
1 Inadequate investigation before bidding
4 5 4 12 25 0 8 15 16 60 99 3.96 79.20
2 Site management 2 3 7 8 5 25 2 6 21 32 25 86 3.44 68.80 3 Construction methods 1 6 7 6 5 25 1 12 21 24 25 83 3.32 66.40 4 Poor planning and use of wrong
equipment 1 4 8 6 6 25 1 8 24 24 30 87 3.48 69.60
5 Mistakes during construction stage
2 8 9 4 2 25 2 16 27 16 10 71 2.84 56.80
6 Inexperienced contractor 2 5 7 7 4 25 2 10 21 28 20 81 3.24 64.80 7 Financial Difficulties 2 9 14 25 0 0 6 36 70 112 4.48 89.60 8 Exceptionally Low Bid 1 1 4 12 7 25 1 2 12 48 35 98 3.92 78.40 9 Other (if any) CATEGORY 3: Consultant
Related Factors
73
Item No Description n1 n2 n3 n4 n5 N a1=1 a2=2 a3=3 a4=4 a5=5 W A=5 RII=
1 Poor Contract management & Supervision
2 8 8 7 25 0 4 24 32 35 95 3.8 76.00
2 Preparation and approval of drawings
3 9 4 9 25 0 6 27 16 45 94 3.76 75.20
3 Frequent Changes in orders & Designs
3 4 11 7 25 0 6 12 44 35 97 3.88 77.60
4 Waiting time for approval of tests and inspection
2 1 8 6 8 25 2 2 24 24 40 92 3.68 73.60
5 Other (if any) CATEGORY 4: Material, Labor
& Equipment Related Factors
1 Quality of material 3 5 7 6 4 25 3 10 21 24 20 78 3.12 62.40 2 Shortage in material 1 2 4 11 7 25 1 4 12 44 35 96 3.84 76.80 3 Shortage of Labor supply 3 2 9 7 4 25 3 4 27 28 20 82 3.28 65.60 4 Labor productivity 4 7 8 6 25 0 8 21 32 30 91 3.64 72.80 5 Equipment availability and
failure 1 7 11 6 25 0 2 21 44 30 97 3.88 77.60
6 Other (if any) CATEGORY 5: Contract &
Contract Relationship Related Factors
1 Change orders 2 9 9 5 25 0 4 27 36 25 92 3.68 73.60 2 Mistakes and discrepancies in
contract document 1 7 14 3 25 1 0 21 56 15 93 3.72 74.40
3 Inappropriate overall organizational structure linking to the project
3 9 9 4 25 0 6 27 36 20 89 3.56 71.20
4 Lack of communication between the parties
4 8 6 7 25 0 8 24 24 35 91 3.64 72.80
CATEGORY 6: External Factors
74
Item No Description n1 n2 n3 n4 n5 N a1=1 a2=2 a3=3 a4=4 a5=5 W A=5 RII=
1 Inclement Weather condition 3 7 11 3 1 25 3 14 33 12 5 67 2.68 53.60 2 Regulatory changes 3 6 10 6 25 3 12 30 24 0 69 2.76 55.20 3 Unforeseen site condition 4 10 10 1 25 0 8 30 40 5 83 3.32 66.40 4 price escalation 1 4 8 12 25 1 0 12 32 60 105 4.2 84.00 5 Other (if any)
75
Appendix 6: Calculation of Relative Importance of Index (RII) (based on Consultants view) Item No Description n1 n2 n3 n4 n5 N a1=1 a2=2 a3=3 a4=4 a5=5 W A=5 RII=
CATEGORY 1: Employer Related Factors
1 2 3 4 5 ∑ a1*X1 a2*X2 a3*X3 a4*X4 a5*X5 ∑aiXi ∑aiXi/N*A ∑aiXi/N*(100/5)
1 Failure to Finance and payments of completed work
4 3 6 3 4 20 4 6 18 12 20 60 3.00 60.00
2 Owner Interference 5 8 3 4 20 0 10 24 12 20 66 3.30 66.00 3 Slow decision making 5 3 12 20 0 10 9 48 0 67 3.35 67.00 4 Unrealistic contract duration and
requirements imposed 4 3 9 4 20 0 8 9 36 20 73 3.65 73.00
5 Other (if any) CATEGORY 2: Contractor
Related Factors
1 Inadequate investigation before bidding
3 1 4 6 6 20 3 2 12 24 30 71 3.55 71.00
2 Site management 1 3 3 6 7 20 1 6 9 24 35 75 3.75 75.00 3 Construction methods 3 2 6 6 3 20 3 4 18 24 15 64 3.20 64.00 4 Poor planning and use of wrong
equipment 3 2 5 6 4 20 3 4 15 24 20 66 3.30 66.00
5 Mistakes during construction stage
5 3 7 4 1 20 5 6 21 16 5 53 2.65 53.00
6 Inexperienced contractor 6 7 4 3 20 0 12 21 16 15 64 3.20 64.00 7 Financial Difficulties 2 2 8 8 20 2 0 6 32 40 80 4.00 80.00 8 Exceptionally Low Bid 3 3 3 6 5 20 3 6 9 24 25 67 3.35 67.00 9 Other (if any) CATEGORY 3: Consultant
76
Item No Description n1 n2 n3 n4 n5 N a1=1 a2=2 a3=3 a4=4 a5=5 W A=5 RII=
Related Factors 1 Poor Contract management &
Supervision 2 3 6 9 20 0 4 9 24 45 82 4.1 82.00
2 Preparation and approval of drawings
2 8 8 2 20 2 0 24 32 10 68 3.4 68.00
3 Frequent Changes in orders & Designs
1 2 9 5 3 20 1 4 27 20 15 67 3.35 67.00
4 Waiting time for approval of tests and inspection
4 10 5 1 20 0 8 30 20 5 63 3.15 63.00
5 Other (if any) CATEGORY 4: Material, Labor
& Equipment Related Factors
1 Quality of material 2 8 7 3 20 2 0 24 28 15 69 3.45 69.00 2 Shortage in material 1 3 5 8 3 20 1 6 15 32 15 69 3.45 69.00 3 Shortage of Labor supply 2 7 7 4 20 2 14 21 16 0 53 2.65 53.00 4 Labor productivity 5 4 3 6 2 20 5 8 9 24 10 56 2.8 56.00 5 Equipment availability and
failure 1 3 4 10 2 20 1 6 12 40 10 69 3.45 69.00
6 Other (if any) CATEGORY 5: Contract &
Contract Relationship Related Factors
1 Change orders 1 4 8 4 3 20 1 8 24 16 15 64 3.2 64.00 2 Mistakes and discrepancies in
contract document 4 4 7 5 20 0 8 12 28 25 73 3.65 73.00
3 Inappropriate overall organizational structure linking to the project
1 3 7 7 2 20 1 6 21 28 10 66 3.3 66.00
4 Lack of communication between the parties
2 9 7 2 20 0 4 27 28 10 69 3.45 69.00
CATEGORY 6: External
77
Item No Description n1 n2 n3 n4 n5 N a1=1 a2=2 a3=3 a4=4 a5=5 W A=5 RII=
Factors 1 Inclement Weather condition 2 4 9 5 20 2 8 27 20 0 57 2.85 57.00 2 Regulatory changes 2 5 7 5 1 20 2 10 21 20 5 58 2.9 58.00 3 Unforeseen site condition 1 2 11 4 2 20 1 4 33 16 10 64 3.2 64.00 4 price escalation 1 4 8 7 20 0 2 12 32 35 81 4.05 81.00 5 Other (if any)
78
Appendix 7: Comparison of overall view with Employers, Contractors & Consultants View
Based overall view RII (%)
Rank
Based on employer’s view
RII (%)
Rank
Based on contractors view
RII (%)
Rank
Based on consultants view
RII
%
Rank
Financial Difficulties(Category 2: Contractor Related Factors)
87.25 1
Financial Difficulties(Category 2: Contractor Related Factors)
90.83 1
Financial Difficulties(Category 2: Contractor Related Factors)
89.60 1
Poor Contract management & Supervision (Category 3: Consultant Related Factors)
82 1
price escalation(Category 6: External Factors)
82.03 2
Inadequate investigation before bidding Category 2: Contractor Related Factors)
88.33 2
price escalation(Category 6: External Factors)
84.00 2
price escalation(Category 6: External Factors)
81 2
Inadequate investigation before bidding(Category 2: Contractor Related Factors)
80.00 3
Shortage in material(Category 4: Material, Labor & Equipment Related Factors)
81.67 3
Inadequate investigation before bidding(Category 2: Contractor Related Factors)
79.20 3
Financial Difficulties(Category 2: Contractor Related Factors)
80 3
Poor Contract management & Supervision (Category 3: Consultant Related Factors)
77.68 4
price escalation(Category 6: External Factors)
80.83 4
Slow decision making(Category 1: Employer Related Factors)
78.4 4
Site management(Category 2: Contractor Related Factors)
75 4
Shortage in material(Category 4: Material, Labor & Equipment Related Factors)
76.23 5
Exceptionally Low Bid (Category 2: Contractor Related Factors)
80.83 5
Exceptionally Low Bid (Category 2: Contractor Related Factors)
78.4 5
Unrealistic contract duration and requirements imposed Category 1: Employer Related Factors)
73 5
Exceptionally Low Bid (Category 2: Contractor Related Factors)
75.94 6
Poor planning and use of wrong equipment(Category 2: Contractor Related
79.17 6
Frequent Changes in orders & Designs(Category 3: Consultant Related
77.6 6
Mistakes and discrepancies in contract document(Category
73 6
79
Based overall view RII (%)
Rank
Based on employer’s view
RII (%)
Rank
Based on contractors view
RII (%)
Rank
Based on consultants view
RII
%
Rank
Factors) Factors) 5: Contract & Contract Relationship Related Factors)
Slow decision making(Category 1: Employer Related Factors)
74.78 7
Site management(Category 2: Contractor Related Factors)
75.00 7
Equipment availability and failure (Category 4: Material, Labor & Equipment Related Factors)
77.6 7
Inadequate investigation before bidding(Category 2: Contractor Related Factors)
71 7
Equipment availability and failure (Category 4: Material, Labor & Equipment Related Factors)
73.62 8
Poor Contract management & Supervision (Category 3: Consultant Related Factors)
75.00 8
Shortage in material(Category 4: Material, Labor & Equipment Related Factors)
76.8 8
Quality of material(Category 4: Material, Labor & Equipment Related Factors)
69 8
Site management(Category 2: Contractor Related Factors)
72.75 9
Unforeseen site condition(Category 6: External Factors)
75.00 9
Poor Contract management & Supervision (Category 3: Consultant Related Factors)
76.00 9
Shortage in material(Category 4: Material, Labor & Equipment Related Factors)
69 9
Preparation and approval of drawings(Category 3: Consultant Related Factors)
72.75 10
Preparation and approval of drawings(Category 3: Consultant Related Factors)
74.17 10
Preparation and approval of drawings(Category 3: Consultant Related Factors)
75.20 10
Equipment availability and failure (Category 4: Material, Labor & Equipment Related Factors)
69 10
80