The advantages of mediation in general for resolving almost any dispute are well known: It’s fast, relatively low-cost, informal and private. In any dispute where speed and cost are considerations, mediation should always be one of the first seriously considered methods of resolving disputes.
For the construction industry – on all sides, including investors and contractors – mediation is even more essential. Even when there is no formal alternative dispute resolution (ADR) provision in the contracts covering a construction project, construction mediation is an essential tool in resolving issue for three very important reasons.
- Speed. More so than any other business arrangement, construction disputes need to be resolved as quickly as possible. This is because many aspects of the construction industry are time sensitive: Permits often expire, and carrying costs for developing property can be enormous, especially if they extend far beyond original estimates.
- Insurance. Insurers have proven to be more willing to underwrite construction projects that have an ADR provision than those that don’t. Thus, planning ahead to have a mediated resolution to conflict can make it much easier, and in some cases cheaper, to acquire necessary insurance for a project.
- Relationships. Construction is an industry that requires personal engagement, and a consistent relationship. Disputes can sour those relationships – between investors and builders, between contractors and sub-contractors, or between buyers and sellers. Mediation is a friendlier and more personal way of approaching conflicts, and can be more effective in maintaining relationships than other more aggressive resolution techniques.
Construction mediation can be incredibly effective in resolving disputes specific to the industry, and should be a standard part of every contract signed between all players. But the final beauty of mediation is that if an agreement is lacking, mediation is so informal it can still be engaged in.