Disputes seem to be inevitable in the construction industry. Alternative Dispute Resolution (ADR) is commonly adopted in resolution of disputes in construction contracts. Cost of ADR, especially the costs of Arbitration, is huge. Who bears these large costs?
On the face of it, the parties in dispute equally bear the costs. However, it should be noted that there is no other source of income, than from clients, to the construction industry. The ADR cost of a contractor will become his overhead cost. These costs will then be apportioned in his prices, and will be recovered from the clients. Therefore, it is the client who fully bears the ADR cost, directly and indirectly. However, the indirect component is shared by all the clients, no matter if they had any dispute or not. Therefore, minimizing of disputes will bring large benefit to the clients.
When parties are in dispute, a large sum of money is spent on legal professionals. This means that, a sum of money, which ought to have been shared in the construction industry becomes unavailable. This reduces the overall standard of living of everybody in the construction industry. It is not only the contractors are affected, but also the consultants. The establishment of the Institute of Dispute Management Professionals (IDMP) brings hope for everybody in building industry for a better future.