DISPUTE RESOLUTION TRANSACTIONAL COSTQUANTIFICATION: WHAT DOES RESOLVING ACONSTRUCTION DISPUTE REALLY COST?

摘要

The construction industry is generally acknowledged as the world's most litigiousindustry with one industry study citing nearly $5 billion in annual expenses on litigationand arbitration in the United States alone. Yet at the same time, the construction industryhas been a champion for creating and implementing innovative new techniques forpreventing, controlling, managing and amicably resolving disputes for many years. As aresult, the construction industry has available to it a wide spectrum of disputemanagementmethods. Despite these options, no empirical data exists on the transactionalcosts for resolving disputes throughout the full spectrum of dispute resolution techniques.Inevitably, resolving a dispute costs all parties money, not just the amounts paid to settlethe dispute, but also the "transaction costs" of processing the dispute: lawyer fees,experts' fees, management time, etc. This paper explores a procedure for quantifyingtransactional costs in various dispute resolution techniques and explains how transactionalcost information can be used as a dispute-management selection tool. Data from 26projects, with total installed costs over $850 million USD, are presented to illustrateinformation on the transactional costs associated with different methods of disputeresolution from an ongoing research study at the University of Texas at Austin.