YOUR CHALLENGE:
One of the major challenges in Construction Development Projects in Kenya is dispute resolution mechanism for disputes arising out of various contractual or non-contractual engagements between various players in the construction and real estate supply chain.
The most common dispute is between the Construction Developers and Construction Contractors, which range from dispute related to claims for variations of works, work payments, delays in completion of works, and quality of work. Other common disputes include those between the Contractor and Sub-Contractor, as well as Suppliers of Building Materials and the Contractor.
THE SOLUTIONS:
Contract Dispute resolution in Development Construction Projects involves any process targeted to bring about the settlement of a dispute. This can range from the most informal negotiations between the parties in the dispute, to more directive intervention from external neutral third parties, as well as to full court hearing.
The following Dispute Resolution Mechanisms exists in Kenya Construction Industry for Development and Construction Projects. The mechanisms have been presented in the order of efficiency in managing time and costs between the parties:
i) Negotiations: This is the most efficient dispute resolution mechanism in relation to managing time and cost. The parties attempt to settle their differences through various techniques ranging from concession, compromise, coercion, and confrontation. The process usually requires goodwill between parties for it to work. It is also recommended for the parties to reduce the outcome of the negotiation in writing for the agreement to be binding.
ii) Mediation: Mediation is a voluntary dispute resolution process in which a neutral third party helps the parties to reach a negotiated solution to the conflict, especially when negotiations have failed. The third party can be a professional with contract management expertise in the construction, or any other person who can understand the particulars of the disputes.
iii) Conciliation: Conciliation is a mediation process in which the neutral third party can propose a solution to the conflict. In this case, the conflicting parties lose control of the process to the neutral third party.
iv) Mediation-Arbitration Combination: This is a combination of both Mediation and Arbitration, whereby the parties agrees to mediate, but if they fail to reach a settlement solution, then the dispute is referred to Arbitration. The parties may also opt to arbitrate first, and thereafter opt to resolve the dispute through mediation mechanism.
v) Expert Determination: In this case, the conflicting parties submit their case to an expert in the field or area of dispute for determination. The expert would then give his decision based on his expertise, for example a Quantity Surveyor valuing the value of work done, or an Engineer testing the structural strength of concrete works in a building.
vi) Adjudication: An impartial, third party neutral person known as an Adjudicator is appointed in Adjudication dispute resolution process to make a fair, rapid, and inexpensive decision on a dispute arising under a construction development contract. Adjudication is meant to be operated under tight time scales, mostly less than 30 days. The decision arrived by the Adjudicator is binding unless the matter is referred to Arbitration.
vii) Arbitration: Arbitration is a dispute resolution mechanism governed by Acts of Parliament and Civil Procedure rules. Arbitration usually arises when all the other processes have failed. The dispute resolution mechanism involves a neutral third party either appointed by the parties in the dispute or an appointing authority to determine the dispute and give a final and bidding award settlement
viii) Litigation: Litigation also arises when all the other processes have failed. It involves the parties taking their claims to a court of law adjudicated by a Magistrate or a Judge, whose judgment is final and binding to the parties, but with right of appeal to the parties.
For easy dispute resolution, parties are encouraged to enter into written Contract Agreement with the assistance of a qualified profession in the Construction Industry, such as Quantity Surveyors or an Architect for Development Construction Works, or an Engineers for Infrastructure developments.
THE CONSULTANT TO ENGAGE:
The Consultant to engage for advisory into mechanism of dispute resolution process for Construction Development Project is a Quantity Surveyor or an Architect.
WRITER OF THE ARTICLE:
This Article is written by Buildafrique Consulting Group, Kenya multi-disciplinary consultancy, that offers END-TO-END DEVELOPMENT CONSULTANCY, REAL ESTATE, and PROJECT FINANCE solutions through specialized subsidiaries. Among our solutions includes:
- Feasibility Studies and Market Research.
- Project Finance and Capital Raising.
- Project Management.
- Investment Design Appraisal.
- Quantity Surveying.
- Construction Cost Consultancy.
- Physical Planning and Planning Permissions.
- Environmental Management and Impact Assessment
- Real Estate Development and Structured Investment Solutions
- Property Valuation
- Marketing and Property Sales Agency
- Property Management and Facility Management
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