the effects of arbitration on the building industry

7/29/2019 The Effects of Arbitration on the Building Industry

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CHAPTER ONE

1.0 INTRODUCTION

1.1 BACKGROUND

The construction industry plays a very important role in contributing

significantly to the Gross Domestic Product (GDP) of any country. And it accounts

for around one-tenth of the worlds GDP, seven percent of employment, half of all

resource usage and up to 40 percent of energy consumption (United Nations

Environment Programme, UNEP report, 1996). This industry has a profound

impact on our daily lives: the buildings we live and work in, the roads and bridges

we drive on, the utility distributions systems we use, the railways, airports and

harbours we travel and trade from are all products of this vital industry. Sometimes,

in this developmental process, certain disputes are bound to arise in the

construction industry.

Construction industry based disputes are technically complex more often

than not, meaning that their investigations will be much more fact intensive than

other types of disputes. Arbitration is dispute resolution process in which the

disputing parties present their case to a third party intermediary (or a panel of

arbitrators) that examine all the evidences and then make a decision for the

parties. This decision is usually binding.

According to David Musil, (2008), The Construction industry is dynamic

and competitive environment. Relationship within construction, between clients,

contractors, sub-contractors and suppliers, are often adversarial. The


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presentations are made to prove one side right, the other wrong. Thus the parties

assume they are working against each other, not cooperatively. Arbitration is

generally not as formal as court adjudication, however, and the rules can be

altered to some extent to meet the parties needs.

Arbitration is the referral of a dispute to one or more impartial persons for final

and .economical. Parties can exercise additional control over the arbitration process

by adding specific provisions to their contract's arbitration clause or, when a

dispute arises, by modifying certain of the arbitration rules to suit a particular

dispute.

1.2 STATEMENT OF THE PROBLEM

Great concern has been expressed in recent years regarding the dramatic in

conflict and disputes in the construction industries of many countries and the

attendant high cost both in terms of direct cost (lawyers, claims consultants,

management time, delays to project completions) and indirect/ consequential

costs (degeneration of working relationships, mistrust between participants, lack

of teamwork and resultant poor standard of workmanship) Koh Cheo Poh, 2005.

There exist several parties in the construction industry and this most times

open up to many problems such as misunderstanding, different opinion and

controversy, regarding the construction work and the contract agreement. If the

disputes/ problems are not resolved in a proper manner, they (the parties


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involved) will experience serious problems such as delay in work, financial

losses and endless disputes (Aberra Bekele, 2005).

When construction disputes cannot be resolved informally, disputes may lead to

arbitration. If the construction disputes not able to reach the agreement between

two parties or more, it will be litigation case. Construction disputes may end up

involvement of high stakes such as multi-million Naira investments,

professional reputations and even business survival of the owner. As to which

method or technique is popularly accepted in the Nigerian construction industry,

this paper tends to focus on establishing the cause or causes of these disputes

and how they affect output, productivity and profitability of the construction

industry and how arbitration can be employed in resolving these disputes.

1.3 AIM AND OBJECTIVES OF STUDY

The aim or purpose of this project is to reveal useful and practical

information on the concept of arbitration and the acceptance and

implementation of arbitration as one of the methods of dispute resolution in the

Nigerian construction industry.

In order to achieve the above aim, objectives of this project have been

formulated. The primary objectives of this project are:

a) To study the nature of disputes and the resolution techniques in theNigerian Construction Industry.

b) To study the process and procedures of arbitration in the NigerianConstruction Industry.


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d) The survey of local (Nigerian) contractors to gain information about theuse of arbitration and its acceptance in the local construction industry.

The project will highlight the implementation of arbitration and how it can

contribute to the Nigerian construction industry, the advantages and

disadvantages of arbitration. And also other alternative methods besides

arbitration that can be employed to ensure the success of the settlement process

of disputes.

1.6 ABBREVIATIONS

FIDICInternational Federation of Consulting Engineers.

RIBARoyal Institute of British Architects.

NIANigerian Institute of Architect.

ADR - Alternative Dispute Resolution

DRA - Dispute Review Advisor

DRB - Dispute Review Board

DRE - Dispute Review Expert

IPImportant Index


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CHAPTER TWO

2.0 INTRODUCTION

This chapter will provide general information about the nature of disputes,

definition and causes that can lead to disputes, what arbitration is, and also how

arbitration can be employed in resolving various construction disputes. At the

end of this chapter, construction disputes are categorised according to their

characteristics. This chapter will also fulfil the first objective of this project.

It is pertinent here, as general background information, to briefly describe or

refer to the various types of building contract that are normally employed in the

building and engineering industry. Quite commonly, standard forms of

agreement are used when letting out a building or engineering contract. A

standard form is an agreement that has been drafted and or approved by a body

such as Architects, Engineers, Contractors or other international association

or professional institution. It is generally accepted and used by these bodies or

institution with or without amendments. The obvious advantage of using such

standard forms is convenience and familiarity, as all parties concerned would

have had experience and knowledge of the conditions contained in such forms.

Also, it would cut down the cost of drafting a special agreement and avoid the

loss of time that would usually be required to draft an agreement afresh. The

usual standard forms of agreement used in Nigeria (and quite commonly in

other Commonwealth countries its equivalent standard form) are the NIA


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(Nigerian Institute of Architect) standard form of Contract, FIDIC

(International Federation of Consulting Engineer), & ICE forms of contract

(Nor Azim, 2003).

The FIDIC form of agreement is usually used in an international contract

such as those let out by the World Bank, Asian Development Bank or by the

government departments, which are under certain obligation to use the FIDIC

form of agreement. Another standard form of agreement is the ICE form of

contract, which is introduced by the institute of Engineers and is usually used in

a contract involving engineering works. The other standard form of agreement

is the PAM contract, which is based on the RIBA (Royal Institute of British

Architects) form of agreement and is used for building works.

Where standard forms of agreements are not used, then specifically drafted

contract will be used incorporating terms and the parties involved may agree to

conditions as. Some owners or employers prefer to use a specifically drafted

agreement to cater to the special circumstances that may be involved or that

may arise in the course of the work.

Under prevailing circumstances, building and engineering contract have

become more difficult to administer or execute due to increase in complexity

and magnitude of such works. Added to this there is a tendency to amend or add

to the standard forms of contract without proper advice or consideration as to

the consequences of such amendment or addition. Where a specific situation

requires certain provision or omitted from the usual terms and conditions, it


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would be far more prudent to seek proper legal advice and if necessary to have a

contract specially drafted to cover such situation rather than attempt a do-it-

yourself amendment or alteration of the contract which may lead to ambiguity

or confusion giving rise to disputes.

One of the most common causes of disputes is the misinterpretation or

misunderstanding of the powers, duties and responsibility of the parties. It is not

usual to find that both the administrating party (i.e. the Architect or the

Engineer or the Superintending officer) and the contractor are quite vague

regarding the extent of their obligations, powers and responsibilities. This is

exacerbated by their reluctance to seek advice to ascertain the exact position in

any given situation in relation to the contract (Koh Cheo Poh, 2005).

However, in the event that the parties cannot come to an amicable settlement on

disputes then the only course of action remaining would be to submit such

dispute for resolution by a third party which normally in a building or

engineering contract would usually provide the proper procedures for the

reference of any matter or differences arising from the contract for arbitration.

In this respect, it is necessary to ascertain when a dispute has taken place and

when such dispute has come within the scope of the arbitration clause. But it

should be borne in mind that arbitration is normally the ultimate course in a

building or engineering contract after all efforts to resolve any disputes have

failed.


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2.1 DISPUTES IN CONSTRUCTION

Disputes can be defined, according to the Law Encyclopaedia, as a conflict

or controversy; a conflict of claims or rights; an assertion of a right, claim, or

demand on one side, met by contrary claims or allegations on the other. Dispute

is the process of expressing dissatisfaction, disagreement, or unmet expressions.

Conflict is ongoing, amorphous and intangible (Costantino and Merchant

1996).

Disputes can arise from the interpretation and or application of any part of

the contract documents and at any time during the execution of the contract. If

the contract documents are ambiguous, unplanned and conflicting they will

most certainly lead to disputes. In addition to disputes, conflict can manifest

itself in a variety of other ways- sabotage, lack of productivity, low morale, and

withholding information are some examples. Such situation can be further

aggravated if numerous additions and omissions are made to the contract and

the persons responsible for the administration of the contract on both sided are

badly equipped to understand and apply the contract documents, (including

instructions to tenderers, agreement and conditions of contract, specifications,

drawings and bills of quantities and with annexure which form part of the

contract). It can be said that the seeds of disputes are sown right from the outset

if the above-described situation exist in any contract. Where ambiguous or

conflicting provisions do exist and disputes do arise, there is a need to ascertain


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if a dispute has arisen or whether the dispute can be amicably resolved before

referring such disputes to arbitration.

2.2 CAUSES OF CONSTRUCTION DISPUTES

There is a great deal in the literature, as to the causes of conflict and

disputes. There is also a profusion of key terminology. Some writers refer to

causes of conflict, others sources reasons, or triggers.

The following are identified as causes of disagreements from literature survey:

(Aberra Bekele, 2005)

a) Misunderstandings usually occur because of poor communication.

b)Values differ between people, professionals and skills,

c) People often have unrealistic expectations. The client wants speedy

completion and a quality building at a low price. The contractor may

want more time, a more reasonable quality and maximum price.

d)Emotions play a role, the ability to handle stress causes conflict. A

persons selfesteem (or lack of it) can cause also conflict. Factors under

this heading include languages, dynamics, geography, childhood

experiences, upbringing and religion.

e) Education levels, both structured and unstructured learning can have an

influence on conflict.

f) Many things are different between projects. There are different teams,

different funders and designers.


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g)Not all people are equally skilled to visualize two-dimensional drawings

in a three dimensional way.

h)Changes to plans, deadlines, payment dates, and so on, can cause conflict.

i) It does not matter whom or what one must blame for a delay. It could be

the weather, a subcontractor, the bank or whoever. The mere fact that

there is a delay could cause conflict.

j) Parties often inadequately define quality. High quality may mean

different things to a plasterer and to the project director or project

manager. One must use objective standards to define materials and

workmanship. One must precisely describe what one requires. A client

may specify a much higher standard than what he really wants while

wanting a lower price.

k)A sub-contractor may misunderstand the actual requirements and may

quote a lower price than other contractors may, then when he realizes his

mistake, conflict results.

2.3 TYPES OF CONSTRUCTION DISPUTES

Sundra Rajoo, 2010, identified the various disputes which are brought for

resolution in arbitration which is equally applicable in Nigeria. They are as

follows:

(A)Determination of Agreement

Disputes caused by the determination of the agreement are as follows:


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(1) The failure of the contractor or sub-contractor to proceed in a competent,

diligent and satisfactory rate

(2) The contractor or sub-contractor ceasing work on site.

(3) The employer repudiating the contract by denying contractor access to site,

not making progress payment, being insolvent or claiming to determine the

contract.

(B) Payment and Time

Disputes caused by the payment issues are as follows:

(1) Non-payment of variation claims by contractor or sub-contractor.

(2) Non-payment of progress claims by contractor or sub-contractor.

(3) Non-payment of amount certified in final account.

(4) Extension of time costs claims by contractor or sub-contractor.

(5) Liquidated and ascertained damages charged against the contractor or sub-

contractor.

(6) Retention monies not held in separate account by contractor.

(7) Validity of final account and certificate.

(8) Contractor claim sums for fluctuation of prices.

(C) Execution of Works and Delay

Execution of work issues are as follows:

(1) Changes in sub-structure design and lack of temporary support during

excavations


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(2) Defective materials and claims of negligent manufacture and supply

(3) Poor quality of workmanship including defects in brickworks, tiling, footing

and wall construction.

(4) Delays and extension of time due to local authorities requirements.

(5) Negligence and nuisance.

2.4 AREAS THAT CAN GENERATE CONSTRUCTION DISPUTES

There are some specific areas of the design and construction process that can

generate conflict. Aberra Bekele (2005), identified five (5) of them and they

include the following:

2.4.1. THE DESIGN

An incomplete, inaccurate or poorly coordinated design inevitably will

produce a project with conflicts and unanticipated costs and delay. Conversely,

nothing diminishes the risk of misunderstanding and litigation, and provides

more protection for the owner, than an accurate and complete design. The

traditional single prime contract can succeed only if, when the contract is

priced, the plans and specifications are reasonably detailed and complete.

Otherwise, the contract sum becomes an unreliable figure subject to changes

and claims for delays and impact damages.

However, in order to obtain a complete and accurate design, the owner must

give its architect/engineer a reasonable period to develop a complete set of plans

and specifications, and provide a fair fee for that service. The owner who


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pinches pennies with its architect and sets an unreasonable schedule invites

substandard plans/specifications, and time and cost overruns. The owners

failure to pay fairly for adequate design and engineering will drive its design

team to use off-the-shelf specifications and uncoordinated drawings, requiring

the contractor and the design team to design the project as construction

progresses. For similar reasons, fast-track construction increases the risk of

misunderstanding and litigation. While commencing construction before a

complete design is in place may be justified by the owners economic needs, the

costs and risks of that approach should be considered when estimating cost and

projecting completion dates.

2.4.2. SITE CONDITIONS

Views differ on whether, and to what extent, a contract should provide

additional compensation for differing site conditions. Some forms of contracts

include a differing site conditions clause, which entitles the contractor to

additional compensation for unexpected subsurface conditions meeting certain

criteria. Some owners (public and private) model their contracts on these forms.

Other owners utilize contracts that are silent on the issue, or expressly prohibit

recovery for differing site conditions while placing all of the risk of the

unknown on the contractor.

The assurance of equitable compensation for differing site conditions

encourages cautious contractors to submit lower bids, unencumbered by


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contingencies for unknown conditions. Perhaps just as importantly, a differing

site conditions clause helps protect prudent contractors against being underbid

by competitors who are either too careless or too reckless to include such a

contingency. Because hidden conditions can make the difference between a

profitable contract and a financial disaster, competent contractors often insist on

an equitable adjustment clause before submitting a bid on a job with significant

risk of differing site conditions. No matter which approach is taken, the wise

owner will make a thorough subsurface investigation so that as much can be

known about the site as possible. That information should be shared with the

contractor whether performing under a differing site clause or as a part of a

contract with exculpatory language. Reliable structural engineering and design,

and realistic pricing by the contractor, cannot be generated in the absence of

such knowledge. A good exploratory program by a competent engineering firm

will diminish misunderstandings and disputes resulting from extra work and

foundation failures. The quality of this investigation, as much as an exculpatory

clause, will diminish disagreements leading to litigation.

2.4.3. SITE SERVICES

Generally, the owner has no contractual obligation to provide for inspection

or site monitoring. The contractor has the obligation to provide its work in

accordance with the plans and specifications, and free from defect.

Nevertheless, the cautious owner will provide on-site representatives for


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significant projects. That representative may be from the consultants office or

he/she may be a permanent employee of an owner who does major construction

work. Unfortunately, some owners, even on large projects, attempt to avoid

overhead costs by cutting corners here. Even if the owner ultimately proves that

the contractor made a bad pour or connected the steel improperly, it is infinitely

better that discover the defect early rather than well into the construction stage,

where litigation is usually the result. A good inspection is the contractors and

owners best friend. It is just common sense for the owner to protect itself from

the catastrophic consequence of others failures.

2.4.4. WHO IS IN CHARGE?

A careful reading of some construction contracts makes it difficult to find

anyone in charge. The architect/engineer often provides generic specifications,

pushing true design responsibilities for specialty items down through the prime

contractor to various sub-levels of subcontractors and suppliers. There might be

conflict when no one was in charge, with each of the parties attempting to shift

the risk to another. The owner and its architect/engineer, whatever their

approach to exculpatory and risk-shifting provisions, should carefully review

technical data to make certain that the project will function, that means even if

an owner has to employ outside consultants or experts during the construction

stages. The contractor also should not allow its subcontractors work to be

performed and integrated into the project without careful observation. The


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contractor is responsible for its subcontractors. He is in charge for their work,

and needs to assure that it is properly done.

2.4.5. CONTRACTOR SUBMITTALS

The shop drawing process seeks to avoid failures and misunderstandings by

allowing the contractor to demonstrate the detailed application of the

architect/engineers design. It is here that the prime contractor, the owner and

architect have the best opportunity to avoid nonconforming products or

defective work. Unfortunately, prime contractors are often approving

subcontractors or supplier submittals while relying on the architect/engineer for

final approval or disapproval.

Although the architect has final legal responsibility to approve or reject shop

drawings, a contractor who does not give time and attention to this area

substantially increases the risk of failure and litigation. Contractors have a

substantial self-interest in making sure that material and equipment suppliers

conform to the design plans, and that unauthorized changes have been made. In

short, all parties who have the opportunity to review shop drawings bear the

responsibility to do so in order to assure successful project completion, no

matter what the contract provides.


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2.5.0 DISPUTE RESOLUTION

Dispute resolution is the process of resolving disputes between parties. The

legal system provides a necessary structure for the resolution of many disputes.

However, some disputants will not reach agreement through a collaborative

process. Some disputes need the coercive power of the state to enforce a

resolution. Perhaps more importantly, many people want a professional

advocate when they become involved in a dispute, particularly if the dispute

involves perceived legal rights, legal wrongdoing, or threat of legal action

against them.

The most common form of judicial dispute resolution is litigation. Litigation

is initiated when one party files suit against another. In the Nigeria, litigation is

facilitated by the government within federal, state, and municipal courts. The

proceedings are very formal and are governed by rules, such as rules of

evidence and procedure, which are established by the legislature. Outcomes are

decided by an impartial judge and/orjury, based on the factual questions of the

case and the application law. The verdict of the court is binding, not advisory;

however, both parties have the right to appeal the judgment to a higher court.

Judicial dispute resolution is typically adversarial in nature, e.g., involving

antagonistic parties or opposing interests seeking an outcome most favourable

to their position.
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2.5.1 TYPES OF DISPUTE RESOLUTION METHODS

The two most popular and most common types of alternative dispute

resolution are mediation and arbitration. All other forms of dispute resolution

are highlighted below:

1. Litigation

Litigation (used when all other venues failed) is a dispute resolution

method that is inquisitorial and adversarial, where by the disputant initiates

legal action against the other party by going to court. It has a win/lose outcome

and rarely satisfies both parties. It is costly and results into much delay for the

disputants and may not do justice to the parties. However, the benefit of

litigation is that the court has authority to find out the truth from the parties

and the enforcement of the order or judgment is supported by other law

enforcement agencies. It is also used when parties have low resources and need

an umpire or when they cannot agree to other forms of dispute resolution.

2. Convening

Convening identifies the issues in dispute and selects the personnel

responsible for resolving the matter. The neutral, called a convenor, helps to

bring the parties together in order to begin negotiating a solution. Once the

parties have convened, they may use other ADR techniques to resolve the issues

in dispute.


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3. Conciliation

Conciliation involves a third party (conciliator) that may or may not be

neutral to the dispute. Conciliation is used when parties are unwilling, unable,

or unprepared to come to the bargaining table. The conciliator may begin by

carrying initial messages between the two parties and providing a neutral

meeting place in an effort to help establish communications. He or she attempts

to promote openness, build or re-build the relationship and clarify

misperceptions between the two parties. A conciliator must be able to deal with

strong emotions and build trust for cooperative problem solving. The conciliator

helps the parties repair the relationship. After conciliation, the parties may use

other ADR techniques to resolve the issues in dispute.

4. Facilitation

Facilitation uses a third party or facilitator to improve the flow of

information between two parties or within a group. The facilitator may or may

not be neutral to the dispute. The facilitators emphasis is on providing an

efficient procedure to continue dialog and move towards an agreement. His or

her role is not to interpret factual issues or make recommendations like a

mediator. Therefore, a facilitators role is more limited than a mediators.

5. Mediation

Mediation is the most common and most popular form of ADR. Mediation

requires a third party neutral or mediator who assists the parties in reaching an


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agreement. Mediators need not be subject matter experts. The mediator will

meet with each side individually or with both sides together as needed.

Mediators do not have any decision-making authority and cannot impose a

solution on the parties; the parties make the decision themselves. However, the

mediator, like a facilitator, serves as the supporter of the process to keep

discussions going so that the parties can resolve their dispute.

6. Settlement Judge

Settlement Judge is a form of ADR available with the Armed Services Board

of Contract Appeals. If parties elect to use a settlement judge they first draft an

agreement on the procedures that will be used to carry out the proceedings. The

agreement is drafted according to the circumstances of the case. Settlement

judges primarily act as mediators and use a variety of techniques to resolve the

dispute. The judge acts as a third party neutral to facilitate settlement

negotiations. He or she will meet privately with both sides, as in Early Neutral

Evaluation, and advise them on the merits of the case. Cases that are factually

and legally complicated are well suited for the settlement judge procedure.

7. Early Neutral Evaluation

Early Neutral Evaluation uses a third party neutral to provide an evaluation

to both sides of a dispute. The neutral is usually an expert on the issue being

disputed. Both sides informally present their case to the neutral who then

advises each side individually on the strengths and weaknesses of their cases.


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The evaluation may be binding or non-binding. Early neutral evaluation is an

excellent alternative when there are many technical issues that need to be

interpreted. It is also useful when decision makers or supervisors of one or both

parties need clarification on the value of their cases.

8. Peer Review Panel

Peer Review Panels, Dispute Panels and Dispute Resolution Panels use a

single third party neutral, or a panel to help resolve disputes as soon as they are

discovered in order to avoid traditional litigation. For workplace disputes, the

panel will be composed of fellow employees and supervisors. The panel will

review the conflicting data, fill in missing information, assess the issues, and

clarify the facts to both sides. The panel helps to resolve conflicts by assessing

the issues and making procedural or factual recommendations.

For contracting disputes, the panel will be composed of subject matter

experts that are selected by the disputing parties. The decision of the panel may

or may not be binding, depending on the agreement made by the two parties

beforehand.

9. Ombudsman

Ombudsman, Ombudsperson or Ombuds are advocates designated by the

company to confidentially investigate and resolve sensitive complaints. The

ombudsman does not normally have the authority to enforce a solution.


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Ombudsmen often work as advisors to management and a focal point for

employees to help identify problems and recommend solutions.

10. Fact-Finding

Fact-Finding and Neutral Fact-Finding involve the investigation of facts by

an impartial expert or group. The fact-finder investigates, evaluates and reports

the facts to both sides of the case. He or she is not permitted to resolve or decide

any issues of law but his or her expertise is expected to carry significant weight

with both sides. Fact-finding is successful if both parties resolve the dispute but

it is also useful if negotiations fail. The information can still be used in

traditional litigation.

11. Mini-Trial

Mini-Trial is not a small trial. Its not a trial at all. It is a process where

both sides of a dispute make brief presentations of their arguments to senior

executives in their organizations. The most important requirement is that the

senior executives have the authority to settle the dispute. After hearing the

evidence, the senior executives will privately discuss the case. A third party

neutral usually facilitates the process by helping with the presentation of

evidence and acting as a mediator in order to reach a settlement. This technique

is available mostly in the private sector.


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12. Mediated Arbitration

Mediated Arbitration (Med-Arb) is a combination of mediation and

arbitration. Med-Arb uses a neutral mediator to resolve as many of the issues as

possible. After reaching an impasse, the mediator or a new neutral then

arbitrates the remaining issues in dispute. His or her decision can be binding or

non-binding. Med-Arb allows both sides to quickly resolve simple issues so that

efforts can now be placed on the more difficult issues.

13. Summary Jury Trial

The Summary Jury Trial is a formal but abbreviated trial involving a

presentation by the disputing parties to a panel of jurors. This process reality

tests the case with a non-binding verdict to encourage the parties to negotiate

for a settlement based upon their new assessment of litigation risk. The

summary jury trial should not be confused with a mini-trial, an entirely different

process.

14. Arbitration

Arbitration is the second most popular type of ADR. It has been used

extensively in recent years to resolve labor/management and commercial

disputes. In arbitration, both parties present their issues to a third party neutral

or panel. Generally, both sides have a role in selecting the arbitrator. The

arbitrator is usually a subject matter expert. The rules of evidence are relaxed.

Both sides can agree before hand on the amount of evidence allowed and the


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time limits. The arbitrator makes a decision that has the full force and effect of

law and is not open for appeal. The decision is usually binding but is kept

private and does not set a precedent.

15. Private Judging

Private Judging is a technique that falls between arbitration and litigation in

terms of formality and control of the parties. The parties present their case to a

judge in a private courtroom. Private Judges are usually retired judges who are

experts in the matter under review.

2.5.2ADVANTAGES OF ALTERNATIVE DISPUTE RESOLUTION

The biggest advantage of ADR over litigation is it can provide the best

solution with the least amount of resources. ADR techniques are extremely

flexible. They allow parties to choose the amount of control they maintain and

the amount of authority given to the third party neutral. Additionally, ADR is a

non-adversarial process that helps to preserve the relationship between the two

parties by making the communication cooperative vice combative. This

cooperative atmosphere is attainable due to the confidential nature of the

proceedings. Parties are more open to discussion if their statements are not

available for public scrutiny.


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2.5.3 DISADVANTAGES OF ALTERNATIVE DISPUTE RESOLUTION

When agreeing to ADR, there is always an inherent lack of finality. Another

inherent weakness is the lack of enforcement authority given to the neutral. The

biggest disadvantage to ADR is that there is no guarantee that the dispute will

be resolved. Because of these doubts, parties may feel that ADR is a waste of

time and that ADR will only increase litigation costs by providing the other side

with information that makes them vulnerable. To some parties, agreeing to

ADR may be viewed as a weakness by the other side.

Using ADR depends on the willingness and the good-faith of the other

party. If one party acts in bad-faith they could merely be delaying action,

which will cause further damage to the relationship.

There is often a lack of information or lack of training on ADR on one or both

sides. The lack of rules may lead lawyers to recommend against using ADR.

Lastly, ADR lacks due process, procedural safeguards and does not set a

precedent.

2.6 THE ORIGIN OF ARBITRATION

It is not known exactly when formal non-judicial arbitration first began but it

can be said with some certainty that arbitration, as a way of resolving disputes

predates formal courts. Records from ancient Egypt attest to its use especially

with high priests and their interaction with the public. Arbitration was popular

both in ancient Greece and in Rome.
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UnderEnglish law, the first law on arbitration was the Arbitration Act 1697,but

when it was passed arbitration was already common. The first recorded judicial

decision relating to arbitration was in England in 1610. The noted Elizabethan

English legal scholarSir Edward Coke refers to an earlier decision dating from

the reign of Edward IV (which ended in 1483). Early arbitrations at common

law suffered from the fatal weakness that either party to the dispute could

withdraw the arbitrator's mandate right up until the delivery of the award if

things appeared to be going against them (this was rectified in the 1697 Act).

The Jay Treaty of 1794 between Britain and the United States sent

unresolved issues regarding debts and boundaries to arbitration, which took 7

years and proved successful (Wikipedia, 2010).

In the first part of the twentieth century, many countries (France and the

United States being good examples) began to pass laws sanctioning and even

promoting the use of private adjudication as an alternative to what was

perceived to be inefficient court systems.

The growth of international trade however, brought greater sophistication to

a process that had previously been largely ad hoc in relation to disputes between

merchants resolved under the auspices of the lex mercatoria. As trade grew, so

did the practice of arbitration, eventually leading to the creation of a variant
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now known as international arbitration, as a means for resolving disputes under

international commercial contracts.

In the United States, the so-called "forced arbitration" or mandatory binding,

arbitration has recently been strongly criticized by Public Citizen, a

Washington-based public interest advocacy group, which points out a tendency

of arbitrators to rule against consumers and in favour of corporations or

institutions.

Today, arbitration also occurs online, in what is commonly referred to as

Online Dispute Resolution, or ODR. Typically, ODR proceedings occur

following the filing of a claim online, with the proceedings taking place over the

internet, and judgment rendered on the basis of documentation presented.

2.7 HISTORICAL ANTECEDENTS OF ABITRATION IN NIGERIA

According to Akin Akinbote 2008, the Arbitration Ordinance 1914, which

was predicated on the English Arbitration Act 1889, is the first formal statute on

Arbitration in Nigeria and dates back to the colonial times. Nigeria had its first

set of Laws of the Federation in 1958, two years before independence in 1960.

The Arbitration Ordinance 1914 was re-enacted as the Arbitration Ordinance

Act Cap 13, Laws of the Federation of Nigeria and Lagos, 1958. By virtue of

paragraph 2 of Section 1 of the Arbitration Ordinance Act 1958, the Act was

applicable to the Northern, Western and Eastern Regions, Federal Territory of
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Lagos; and interestingly or coincidentally, the then Southern Cameroons. It is

interesting that this conference is taking place on the Cameroonian soil. It will

equally be interesting to find out if the Law is still applicable today in an

adopted or assimilated form. In any event, delving into this will certainly be

hors sujet.

The provisions of the 1958 Act was limited to domestic arbitration only as

no reference was made to international commercial arbitration. One is not

certain if there was any international commercial arbitration involving Nigerian

parties or foreign parties either in Nigeria or abroad, prior to Independence in

1960. If there was, Nigeria then a colony of Britain would probably have been

covered by the 1958 New York Convention. It is not clear whether Britain,

being a signatory to the Convention, in the exercise of its sovereignty over the

former colonies, could rightly have made the Convention applicable to Nigeria.

It will be a subject of further research for one to reach a conclusion that

Recognition and Enforcement of Foreign Arbitral Awards (The York

Convention) was ever put into practice in Nigeria prior to Nigeria becoming a

signatory to the Convention in 1988.

The first indigenous Statute on Arbitration and Conciliation was enacted in

1988, by a military Decree. It was known as the Arbitration and Conciliation

Decree 1988 (ACA1988) and came into effect on 13th

March, 1988.


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2.8 ARBITRATION IN CONSTRUCTION

Arbitration has become recognized as the dispute settlement mechanism in

the construction industry. It is seen as the final mode of dispute resolution

which is beyond the usual attractions of arbitration, such as privacy, speed,

flexibility and choice of the arbitrator. In the construction industry, arbitration is

the norm because firstly, the prevalence of arbitration clauses in standard forms

of contract; secondly, the technical content of disputes, leading to the use of

arbitrators skilled in technical disciplines; and finally the need in many disputes

for the arbitrator be empowered to open up, review and revise decisions or

certificates, rising from the architects orengineers judgment in administering

the building contract.

The construction industry generates disputes that arise from matters of

considerable scientific or technical difficulty. Two points working in

combination increase the technical content and the utilization of technically

qualified arbitrators in their resolution which are further enhanced by the

consultants discretion in the various standard forms of building contracts.

Firstly, the various standard form of building contracts instead of determining

matters of uncertainty by prior contractual arrangements, tend to postpone them.

The architect or engineer is given the discretion to decide on them later. This at

times gives rise to uncertainty as regard to the scope of work to be undertaken,

the time or schedule it should be completed, and the payment due to be paid on

it. The architect or engineer when administrating the contract may make


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evaluations. The disputes that arise from such determination are normally

technical in nature although they may involve legal and contractual issues.

Secondly, nowadays these ex post facto technical evaluations involve not only

the consultants but also claim consultants. The latter are involved in promoting,

preparing, arguing, defending, appealing claims and disputing technical

evaluations. Eventually, given the frequency and experience of participants in

such disputes encourages them to be more specialists in their resolution, and

make their careers in construction arbitration.

2.9 ADVANTAGES AND DISADVANTAGES OF ARBITRATION

Parties should consider whether or not to provide for arbitration as the

chosen method of dispute resolution every time they enter into a contract. It is

particularly important to do so where the parties or their assets are in different

countries or where disputes give rise to complex technical issues. The most

important advantages and disadvantages of arbitration that should be considered

(according to Advocates for International Developments Guide to

Arbitration), when deciding whether to provide for arbitration as the dispute

resolution methods in a contract are listed below:

(A) ADVANTAGES

1. Enforceability: Due to international conventions, the potential forenforcing arbitral awards worldwide is much greater than that for court

judgements. As there is little point in obtaining a court judgment which


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cannot be enforced against suitable assets, this feature often conclusively

determines the choice of arbitration over litigation for international

contracts. The most important enforcement convention is the New York

Convention which provides for the enforcement of arbitral awards in over

140 countries.) There is no such wide-ranging convention providing for

the enforcement of court judgements (the closest being the Brussels

Regulation, which is limited to parties in Europe).

2. Flexibility: Arbitration rules are generally simpler and more flexible thanthose of court proceedings. They are relatively easy to understand for

parties of different nationalities, and the parties can adapt the dispute

resolution process to suit their relationship and the nature of their dispute.

In many cases, parties (or tribunals exercising discretion left to them by

the parties) choose to follow a procedure that is similar to court

proceedings. In some cases, the parties make significant changes to court

procedure. For example, they may decide that their dispute should be

determined on the basis of documents only, without a hearing.

3. Neutrality: Frequently, one party will not wish to submit to the localcourts of another party. For example, party A may not be familiar with

the language, legal culture or court procedure in party B's country or may

fear that the courts in party B's country are not impartial. This will be a

particular worry to party A where party B is a sovereign state, e.g. where

A, a company based in Austria, has entered into a contract with B, the


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Republic of Bolivia. Arbitration can provide politically neutral dispute

resolution. The parties can select a neutral venue in a third country for the

arbitration (e.g. London, England), appoint a multinational tribunal,

request that international procedural rules be applied and choose a

language for the proceedings with which they are comfortable (very

frequently English).

4. Technical expertise and experience: Parties may select arbitrators withthe appropriate expertise or experience in the subject matter of the

dispute. Although some jurisdictions have very good specialist courts,

parties run the risk of their dispute being decided by a judge with little or

no relevant experience.

5. Choice of arbitrators: Unlike court proceedings, where parties generallyhave no input into the choice of judge for their case, the parties to an

arbitration usually appoint, nominate or at least have some input into the

selection of the tribunal. Most developed international arbitration laws

require that all the arbitrators be impartial. However, a party can use its

input into the selection process to help ensure that, as far as possible, the

tribunal will understand the commercial context, the relevant issues and

the parties' procedural preferences.

6. Cost / Speed / Finality: Lawyers' fees generally account for the majorityof costs of proceedings (whether litigation or arbitration). The cost of the

proceedings therefore generally depends on the complexity of the dispute,


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the way the proceedings are conducted and their length. Arbitration can

be speedier and less costly than litigation because of the finality of the

award. Whereas a court judgment can often be appealed (prolonging

matters by months and years), parties to international contracts normally

agree that there is no right of appeal on the merits from any award. In

many countries, awards may only be reviewed in strictly limited

circumstances. Arbitration costs initially can be higher than those of court

proceedings because the parties have to pay for arbitrators, any

administering institution and the hiring of hearing venues. Arbitration can

also take longer if the tribunal fails to impose strict deadlines. However,

there are no court fees, and the parties can agree on streamlined or "fast-

track" procedures. Moreover, it is increasingly common for a successful

party to be awarded all or part of its costs of the arbitration whereas this

is not the norm in litigation in many countries.

7. Privacy: Although national laws and arbitration rules vary as to thedegree of confidentiality afforded to arbitration, there can be no doubt

that arbitration provides greater privacy and confidentiality than litigation

(which is often public). The parties can expect that there will be no public

right of access to the hearings and can provide for the required degree of

confidentiality in their arbitration agreement, subject to any mandatory

reporting obligations imposed by law, for example where there is a

requirement to record any potential exposure to liability in the context of


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financial reporting. Any confidentiality might come to an end or at least

be put at risk if enforcement through the courts becomes necessary.

8. Commencement of proceedings: Arbitration proceedings can often becommenced more quickly than court proceedings. A party need generally

only submit a short document to the appropriate arbitral institution and /

or the other party to start the arbitration. The commencement of court

proceedings can be more complicated, e.g. requiring a party to seek leave

to serve process on the other party if that other party is abroad.

(B)DISADVANTAGES

The disadvantages of arbitration stem from the same characteristics.

Arbitration is adversarial, thus it generally does nothing to create win-win

solutions or improve relationships. Often it escalates a conflict; just as court-

based adjudication is likely to do. In addition, arbitration takes decision making

power away from the parties. This results in a resolution of the current conflict,

but does nothing to help the parties learn how to resolve their own conflicts

more effectively in the future, as does mediation. Other people also fault

arbitration for being too informal and potentially unjust. Only the courts, with

their carefully regulated procedures can provide justice, some researchers

believe.

Some of the disadvantages summarized include:

1.

Arbitration may become highly complex


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2. Arbitration may be subject to pressures from powerful law firmsrepresenting the stronger and wealthier party

3. Arbitration agreements are sometimes contained in ancillary agreements,or in small print in other agreements, and consumers and employees

sometimes do not know in advance that they have agreed to mandatory

binding pre-dispute arbitration by purchasing a product or taking a job

4. If the arbitration is mandatory and binding, the parties waive their rights toaccess the courts and have a judge or jury decide the case

5. In some arbitration agreements, the parties are required to pay for thearbitrators, which adds an additional layer of legal cost that can be

prohibitive, especially in small consumer disputes

6. In some arbitration agreements and systems, the recovery of attorneys'fees is unavailable, making it difficult or impossible for consumers or

employees to get legal representation; however most arbitration codes and

agreements provide for the same relief that could be granted in court

7. If the arbitrator or the arbitration forum depends on the corporation forrepeat business, there may be an inherent incentive to rule against the

consumer or employee

8. There are very limited avenues for appeal, which means that an erroneousdecision cannot be easily overturned


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9. Although usually thought to be speedier, when there are multiplearbitrators on the panel, juggling their schedules for hearing dates in long

cases can lead to delays

10.In some legal systems, arbitral awards have fewer enforcement optionsthan judgments; although in the United States arbitration awards are

enforced in the same manner as court judgments and have the same effect

11.Arbitrators are generally unable to enforce interlocutory measures againsta party, making it easier for a party to take steps to avoid enforcement of

an award, such as the relocation of assets offshore

12.Unions may only make a weak effort to defend one member or a smallgroup of members in arbitration due to increasing legal fees, without

explaining to the members the adverse consequences of an unfavourable

ruling

13.Rule of applicable law is not necessarily binding on the arbitrators,although they cannot disregard the law

14.Discovery may be more limited in arbitration or entirely nonexistent15.The potential to generate billings by attorneys may be less than pursuing

the dispute through trial

16.Unlike court judgments, arbitration awards themselves are not directlyenforceable. A party seeking to enforce an arbitration award must resort to

judicial remedies, called an action to "confirm" an award


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17.Although grounds for attacking an arbitration award in court are limited,efforts to confirm the award can be fiercely fought, thus necessitating

huge legal expenses that negate the perceived economic incentive to

arbitrate the dispute in the first place.

2.10 ARBITRATION AGREEMEMENT

In theory, arbitration is a consensual process; a party cannot be forced to

arbitrate a dispute unless he agrees to do so. In practice, however, many fine-

print arbitration agreements are inserted in situations in which consumers and

employees have no bargaining power. Moreover, arbitration clauses are

frequently placed within sealed users' manuals within products, within lengthy

click-through agreements on websites, and in other contexts in which

meaningful consent is not realistic. Such agreements are generally divided into

two types:

Agreements which provide that, if a dispute should arise, it will beresolved by arbitration. These will generally be normal contracts, but they

contain an arbitration clause

Agreements which are signed after a dispute has arisen, agreeing that thedispute should be resolved by arbitration (sometimes called a "submission

agreement")
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The former is the far more prevalent type of arbitration agreement.

Sometimes, legal significance attaches to the type of arbitration agreement. For

example, in certain Commonwealth countries, it is possible to provide that each

party should bear their own costs in a conventional arbitration clause, but not in

a submission agreement.

The courts have also upheld clauses which specify resolution of disputes other

than in accordance with a specific legal system. These include provision

indicating:

that the arbitrators "must not necessarily judge according to the strict lawbut as a general rule ought chiefly to consider the principles of practical

business"

"internationally accepted principles of law governing contractualrelations".

Agreements to refer disputes to arbitration generally have a special status in

the eyes of the law. For example, according to the Arbitration and Conciliation

Act (Chapter 19, Laws of the Federation of Nigeria, 1990), this stipulates;

1) Every arbitration agreement shall be in writing contained-

(a) in a document signed by the parties; or
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(b) in an exchange of letters, telex, telegrams or other means of communication

which provide a record of the arbitration agreement; or

(c) in an exchange of points of claim an of defence in which the existence of an

arbitration agreement is alleged by one party and denied by another.

(2) Any reference in a contract to a document containing an arbitration clause

constitutes an arbitration agreement if such contact is in writing and the

reference is such as to make that clause part of the contract.

2. Unless a contrary intention is expressed therein, an arbitration agreement

shall be irrevocable except by agreement of parties or by leave of the court or

judge.

3. An arbitration agreement shall not be invalid by reason of death of any party

thereto but shall, in such an event, by enforcement by or against the personal

representative of the deceased.

4. (1) A court before which an action which is the subject of an arbitration

agreement is brought shall, if any party so request not later than when

submitting his first statement on the substance of the dispute, order or stay of

proceedings and refer the parties to arbitration.

(2) Where an action referred to in subsection (1) of this section has been

brought before a court, arbitral proceedings may nevertheless be commenced or


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continued, and an award may be made by the arbitral tribunal while the matter

is pending before the court.

5. (1) If any party to an arbitration agreement commences any action in any

court with respect to any matter which is the subject of an arbitration agreement

any party to the arbitration agreement may, at any time after appearance and

before delivering any pleadings or taking any other steps in the proceedings,

apply to the court to stay the proceedings.

(2) A court to which an application is made under subsection (1) of this section

may, if it is satisfied-

(a) That there is no sufficient reason why the matter should not be referred to

arbitration in accordance with the arbitration agreement; and

(b) That the applicant was at the time when the action was commenced and still

remains ready and willing to do all things necessary to the proper conduct of the

arbitration, make an order staying the proceedings.

2.11 APPOINTMENT OF ARBITRATOR

According to the Arbitration and Conciliation Act (Chapter 19, Laws of the

Federation of Nigeria, 1990), the parties can agree on a procedure for

appointing the arbitrator or arbitrators. If they are unable to agree, each party

will appoint one arbitrator and the two appointed arbitrators will appoint the


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third arbitrator who will act as a presiding arbitrator. [section 11(3)]. If one of

the parties does not appoint an arbitrator within 30 days, or if two appointed

arbitrators do not appoint third arbitrator within 30 days, the party can request

Chief Justice to appoint an arbitrator. [section 11(4)]. The Chief Justice can

authorise any person or institution to appoint an arbitrator. [Some High Courts

have authorised District Judge to appoint an arbitrator]. In case of international

commercial dispute, the application for appointment of arbitrator has to be made

to Chief Justice of India. In case of other domestic disputes, application has to

be made to Chief Justice of High Court within whose jurisdiction the parties are

situated. [section 11(12)].

2.11.1 CHALLENGES TO APPOINTMENT OF ARBITRATOR

An arbitrator is expected to be independent and impartial. If there are some

circumstances due to which his independence or impartiality can be challenged,

he must disclose the circumstances before his appointment. [section 12(1)].

Appointment of Arbitrator can be challenged only if (a) Circumstances exist

that give rise to justifiable doubts as to his independence or impartiality (b) He

does not possess the qualifications agreed to by the parties. [section 12(3)].

Appointment of arbitrator cannot be challenged on any other ground.. The

challenge to appointment has to be decided by the arbitrator himself. If he does

not accept the challenge, the proceedings can continue and the arbitrator can

make the arbitral award. However, in such case, application for setting aside


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arbitral award can be made to Court. If the court agrees to the challenge, the

arbitral award can be set aside. [section 13(6)]. Thus, even if the arbitrator does

not accept the challenge to his appointment, the other party cannot stall further

arbitration proceedings by rushing to court. The arbitration can continue and

challenge can be made in Court only after arbitral award is made (Arbitration

and Conciliation Act, Chapter 19, Laws of the Federation of Nigeria, 1990).

2.12 PROCEDURE PROIR TO HEARING

The Arbitral Tribunal should treat the parties equally and each party should

be given full opportunity to present his/ her case. The Arbitral Tribunal is not

bound by Code of Civil Procedure, that is, the parties to arbitration are free to

agree on the procedure to be followed by the Arbitral Tribunal. If the parties do

not agree to the procedure, the procedure will be as determined by the arbitral

tribunal.

Arbitral Tribunal has full powers to decide the procedure to be followed,

unless parties agree on the procedure to be followed. The Tribunal also has

powers to determine the admissibility, relevance, materiality and weight of any

evidence. Place of arbitration will be decided by mutual agreement. However, if

the parties do not agree to the place, the same will be decided by tribunal.

Similarly, language to be used in arbitral proceedings can be mutually agreed.

Otherwise, Arbitral Tribunal can decide.


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2.13 ARBITRATION HEARING

Participation in a professional standards hearing - arbitration or ethic - can

be an intimidating experience for first time participants, witnesses and even new

panel members. Knowing what will likely happen can make it a less stressful

experience.

Although the arbitration hearing process is based on the judicial model of a

civil trial, there are important differences between a trial and an arbitration

hearing. While parties to any professional standards proceeding are entitled to

fundamental due process, technical rules of evidence and procedure do not

apply in an arbitration hearing. While the burden of proof rests with the parties,

arbitration panel members can ask questions (directly or through the chair) to

ensure that they have a clear understanding of relevant issues and facts. This is

key to rendering a fair decision.

Parties are entitled to have legal counsel present but must respond to

questions asked by panel members - or asked by other parties or their counsel

when directed to respond by the chair.

Prior to the hearing, parties have the opportunity to challenge potential panel

members for cause. While there are no preemptory or "automatic" challenges,

boards/associations make all reasonable efforts to ensure that panel members

will be impartial, unbiased, and fair.


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particulars. All relevant documents must be submitted. Such claim or defence

can be amended or supplemented any time.

After submission of documents and defence, unless the parties agree

otherwise, the Arbitral Tribunal can decide whether there will be oral hearing or

proceedings can be conducted on the basis of documents and other materials.

However, if one of the partys requests, the hearing shall be oral, sufficient

advance notice of hearing should be given to both the parties. [Thus, unless one

party requests, oral hearing is not compulsory].

It is permissible for parties to arrive at mutual settlement even when arbitration

is proceeding. In fact, even the Tribunal can make efforts to encourage mutual

settlement. If parties settle the dispute by mutual agreement, the arbitration shall

be terminated. However, if both parties and the Arbitral Tribunal agree, the

settlement can be recorded in the form of an arbitral award on agreed terms.

Such Arbitral Award shall have the same force as any other Arbitral Award.

2.15 THE MAKING AND FORM OF AN AWARD

Decision of Arbitral Tribunal is termed as 'Arbitral Award'. Arbitrator can

decide the dispute ex aequo et bono (In justice and in good faith) if both the

parties expressly authorise him to do so. [section 28(2), Arbitration and

Conciliation Act]. The decision of Arbitral Tribunal will be by majority. The

arbitral award shall be in writing and signed by the members of the tribunal.

[section 29]. The award must be in writing and signed by the members of


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Arbitral Tribunal. [section 31(1)].. It must state the reasons for the award unless

the parties have agreed that no reason for the award is to be given. [section

31(3)]. The award should be dated and place where it is made should be

mentioned. Copy of award should be given to each party. Tribunal can make

interim award also. [section 31(6)].

Arbitration act has over-riding effect; this is because, the act clarifies that

notwithstanding anything contained in any other law for the time being in force,

in matters governed by the act, the judicial authority can intervene only as

provided in this act and not under any other act.

2.16.1 ENFORCEMENT OF FOREIGN AWARD

The foreign awards which can be enforced in Nigeria are as follows: -

(a) New York convention Award (made after 11th October, 1960)

(b) Geneva convention Award - made after 28th July, 1924.

Since most of the countries have signed New York convention, normally, New

York convention awards are enforceable in Nigeria. New York convention was

drafted and kept in United Nations for signature of member countries on 21st

December, 1958. Each country became party to the convention on the date on

which it signed the convention.


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Party which intends to enforce a foreign award has to produce the arbitral award

and agreement of arbitration [original or its certified copy] to the district court

having jurisdiction over the subject matter of the award. The enforcement of

award can be refused by court only in cases specified. Otherwise, the foreign

award is enforceable through court as if it is a decree of the court. If the court

declines to enforce the arbitral award, appeal can be made to the court where

appeal normally lies from the district court. However, no further appeal can be

made (except appeal to Supreme Court). [Probably, the aggrieved party may be

able to approach International Court of Justice, as the convention is an

international convention, signed by many of the member countries].

One advantage of foreign award, according to foreign parties, is that Nigerian

courts come into picture only at the time of implementation of award. The

courts can refuse to implement the award only on limited grounds.

2.1. SUMMARY OF CHAPTER

Construction is an amalgam of complex activities requiring a careful

allocation of resources and preparation. The lack of such allocation and

preparation can bring about workmanship and quality control problems. It may

arise from personality clashes and differing goals espoused between various

parties and members of the consultant team. This can poison the atmosphere

without proper communication between the parties. The consultants may end up


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issuing unclear and/or late instructions. Parties may lack good faith to resolve

disputes on an amicable basis thus leading on to arbitration.


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CHAPTER THREE

3.0 RESEARCH METHODOLOGY

This chapter discusses data collection process in order to achieve the aim and

objectives of this study. The following are the necessary steps during data

collection:

1. Data on the causes of construction disputes and its impact on clientorganizations.

2. Questionnaire development3. A sample selection.4. Responses to Questionnaire Survey.

The way in which research is conducted may be conceived of in terms of the

research philosophy subscribed to, the research strategy employed and so the

research instruments utilised (and perhaps developed) in the pursuit of a goal

the research objective(s) - and the quest for the solution of a problem - the

research question. For any research to be successfully carried out, relevant data

should be clearly defined and the informal investigation should show that the

project is economically feasible, the next important step is to develop the most

efficient plan for gathering the needed information. This means the researcher

would design a plan as to where and how to get the desired relevant data.


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3.1 RESEARCH DESIGN

Research design is the overall operational pattern framework of the project.

It stipulates the information to be collected, from which source or sources and

by what procedure through which the information will be collected and also the

nature of analysis required to analyse the collected information.

Research design provides the glue that holds the research project together. A

design is used to structure the research, to show how all of the major parts of the

research project - the samples or groups, measures, treatments or programs, and

methods of assignment - work together to try to address the central research

questions (William M. Trochim, 2006).

3.2 DATA SOURCES

The term data refers to groups of information that represent the qualitative or

quantitative attributes of a variable or set of variables. Data are typically the

results of measurements and can be the basis ofgraphs, images, or observations

of a set of variables. Data are often viewed as the lowest level of abstraction

from which information and knowledge are derived (Wikipedia, 2010).

Literature review in Chapter II helps to identify the problems of the research.

The details study on the role of clients, designers and contractor in construction

process were carried out to identify the potential causes of dispute. Besides, the

impact of construction dispute was also been identified. A standard

questionnaire was prepared to ensure all relevant information is gathered. Pilot
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survey and discussion with industry professional were carried out with the aim

to test the prepared questionnaire.

3.2 THE QUESTIONNAIRE

The questionnaire survey shown in the appendix A was formulated to access

the collective perceptions of arbitration from clients, consultants and

contractors, as to identify the causes of dispute and the effects of arbitration on

construction projects in Nigeria.

The questionnaire consisted of four sections, which are:

Section A; which asked questions about the general information of respondents

and types of organization.

Section B; this collects the views of respondents with regards the significance

of each cause of dispute and classified into 3 categories where category 1 is

causes contributed by clients, category 2 is causes contributed by designers and

category 3 is causes contributed by contractors.

Section C, is to collect the views of the respondents with regards to the most

significance of each impact of the poor construction documentation on clients

organizations.

Section D, is to examine the level of understanding ofArbitration and source

of disputes encounter by respondent, best solution to resolve dispute at site and

lastly precaution methods to avoid disputes occurring.


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The questionnaire has been designed in such as way that to preserve the

overview and provide unambiguous picture due to the cross flows between the

groups and preventing any biases of group ratings and rankings. The ratings

were assigned by each respondent on a scale from 1 to 5, where 1 represents

very insignificant, 2 represents insignificant, 3 represents average, 4 represents

significant and 5 represents very significant.

3.3.1 RESPONSE TO QUESTIONNAIRES

Thirty- Five (35) questionnaires were sent to randomly selected numbers of

Construction companies, which are mainly based in Abuja. This included the

following:

a)Bullet International Nig. Limited.b) Sazak Acres Biloque Company Limited.c)Julius Berger Nig. Limited.d) S.C.C Limited.e)Acres Limited.

f) Cachez Nig. Limited.

Out of the 35 questionnaires sent out, 27 were sent back, which equates to

77% response rate. The composition of respondents that returned their

questionnaires were clients (15.0%), designers (41.0%) contractors (41.0%) and

others (3.0%).


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The results provide a breakdown of valid responses by the respondent type as

shown below:-

Table 3.1: Detail Breakdown of Respondents

Type of Samples Return Percentage

Client Oriented 4 15

Designer (Architect, Quantity Survey,Structural Engineer & Services Engineer)

11 41

General Contractors 11 41

Others (Specialist contractors & Suppliers) 1 3

TOTAL 27 100%

(Researchers Survey, 2010)

The response rate in this survey is ok, although some companies refused to

answer the questionnaire and gave various excuses. Among the most common

reasons were:

1) The suitable person to fill the questionnaire is not available

2) You better ask someone there,Im not suitable for this

3) Im busy with my works now, can youcome back later?

4) Sorry, I dont understand, look for someone else

5) Can u come again tomorrow, my boss / superioris not in

6) Company policy..cant answer any questionnaire


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3.3.2 DATA SUMMARY/ RESPONDENTS POINT OF VIEW

Data summary was important step to provide data for analysis. In order to

achieve the study objectives, the data collected from questionnaire survey was

categorized into 4 sections as below;

1) General profile

2) Respondents point of views

3) Others point of views

4) Additional questions on dispute issues.

3.3.2.1 SUMMARY OF RESPONSES

The total questionnaires collected in the questionnaire survey were 27

numbers. The Questionnaire responses for overalls points of views were

summarized as per below;

1. General Profile

This section shows the job description of the respondents and their general job

profile.

Fig 3.1: Bar chart showing the Respondents years of experience

0

2

4

6

8

10

1214

16

Less than 2 years 2-5 years 5-10 years 10-15 years 15 yr above

No.ofRepondents

Years of Experince


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Fig 3.2: Pie chart showing the breakdown of Respondent.

2. Respondents Point of Views

In the subsequent tables below, the indicators; 1,2,3,4 & 5 represents the

following;

1 = frequency ofthe very insignificant response.

2 = frequency of the insignificant response.

3 = frequency of the average response.

4 = frequency of the significant response.

5 = frequency of the very significant response.

Client Oriented

15%

Designer

41%

Contractor

41%

Others

3%


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(A) Disputes leading to Arbitration (Category 1)

Table 3.2.1: Respondents view on Disputes leading to Arbitration (Category 1)

INDICATORS 1 2 3 4 5

Response to Q1 2 6 11 7 1

Response to Q2 - 4 16 5 2

Response to Q3 1 - 9 15 2






(C)Disputes leading to Arbitration (Category 2)

Table 3.2.2: Respondents view on Disputes leading to Arbitration (Category 2)


Response to Q1 1 9 13 4 -








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(D)Disputes leading to Arbitration (Category 3)Table 3.2.3: Respondents view on Disputes leading to Arbitration (Category 3)










(E)The impact of Construction Disputes (Section C)Table 3.2.4: Respondents view on impact of Construction Disputes (Section C)










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Response to Q8 - 8 12 7 -




4. Additional Questions on Dispute (Section D)

In this section D, the questions aim to find out the opinions of the

respondents about the level of understanding the term Arbitration, kinds of

construction disputes encountered based on their working experiences, best

solutions and methods to resolve disputes at construction site and precautions

and avoidances to be taken account as to avoid disputes occurring at

construction site.

3.3.3 PRELIMINARY ANALYSIS

After collecting the information from the respondents, the next step is to

analyze the information and available data. The method used in analyzing the

information in the next chapter is the Important Index. The method used in

ranking of causes of dispute and impacts on clients organization is by adopting

the likert scale with 5- point scale. The formula of important index is shown

below;

Important Index = (ai Xi) x 100

b


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Where,

ai = Constant expressing the weight given each response (1-5)b = Number of option for weighting, if 5point scale of response is

assigned, then b = 5

Xi = n / N Where,

N = Total of responses

ni = Frequency of the response,

i = 1,2,3,4,5 and illustrated as below.

n1 = frequency ofthe very insignificant response and corresponding to a1 =

1.

n2 = frequency of the insignificant response and corresponding to a2 = 2.

n3 = frequency of the average response and corresponding to a3 = 3.

n4 = frequency of the significant response and corresponding to a4 = 4.

n5 = frequency of the very significant response and corresponding to a5 = 5.


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CHAPTER FOUR

4.0DATA ANALYSIS

This chapter discusses how the data will be analyzed, interpreted and

presented as to achieve the objectives of identifying the causes of construction

dispute according to its nature of occurrence during the construction process

which results in arbitration and to identify its impact on clients organizations. It

also evaluates and determines the significance of each cause and impact of

construction disputes on clients organizationsbased on point of views of major

parties involved in construction process.

Moreover, the analysis would help in deriving the conclusion on the major

contributor that causes the construction dispute as well as the most appropriate

measures to overcome the disputes occurrences that leads to arbitration. The

data obtained from the questionnaire survey were analyzed.

4.1 ANALYSIS OF DATA AND DISCUSSION

The logical step after collecting all information and data needed from

questionnaire and unstructured interviewed with industry professionals is to

analyze the gathered data. Although the causes of construction dispute and its

impact on clients organization were researched and investigated by many

researchers but the cases here in Nigeria maybe quite different from those

abroad. Researches in Nigeria did not cover much, thus most of the information

are from overseas. Causes of construction dispute are identified by more


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developed countries and are important to identify the causes of construction

the effects of arbitration on the building industry

Documents