|By Christos Papoutsy
Founder and Publisher,
Hellenic Communication Service
Construction is a complex business involving many parties, including architects, contractors, and sub-contractors. With the many people invested and involved in a construction project come numerous opportunities for miscommunication and conflict. Following are some typical scenarios requiring mediation.
There is endless variety to mid- and post-construction accidents, and in certain cases, the cause is carelessness. Pipes burst, for example, on the top floor of a thirteen-story cancer research hospital, during a winter cold snap; were they insufficiently insulated? Sewer excavation causes the foundation of a home to crack. A paper manufacturer's business is interrupted for twelve hours due to the negligence of a construction company installing new sewer lines for the city. Twenty-three tons of gravel stored on a roof during repair causes the roof to collapse. Nine parties dispute improperly installed tiles on some school buildings. A warehouse roof, covering an area of twenty-six acres, leaks; claims are brought against ten defendants.
A recent study indicates that the average cost for mediating construction disputes is just $2,335. More importantly, the estimated savings in the cases studied totalled more than 15.5 million dollars, over $40,000 per case. The estimated time saved per case, by pursuing mediation rather than arbitration, was approximately ten months.
Research also indicates that litigation is becoming costlier, and that approximately sixty percent of public construction projects will involve some type of litigation before completion. Throughout the country, numerous liability insurance companies for architects and engineers have embraced the alternative dispute resolution concept wholeheartedly and actively, and have encouraged the use of mediators to resolve claims brought against their clients.
What makes mediation a better route than arbitration, again, has to do with the inherent differences between it and arbitration. Mediation is a less formal, non-binding process in which both sides voluntarily present their case to a third party both have approved. The non-binding quality of mediation makes both sides more willing to listen than they'd be if they were constantly "on guard."
Influencing the trend toward alternative methods of dispute resolution is the ever-growing backlog of cases waiting for trial. The courts are jammed. More important than that, though, is the cost-savings factor; and settling a case more quickly makes sense for everyone involved. After all, success lies in settlement. While the trend in the 1980's was "litigation, litigation, litigation," these days most people involved in disputes are feeling like they've had enough.