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Dispute Resolution Procedures

Document Type: Procedure
Version: 1.0
Last Updated: February 2026
Distribute To: Project Managers, Executives

Purpose​

Establish procedures for resolving construction disputes efficiently while protecting company interests.

Dispute Resolution Hierarchy​

   NEGOTIATION (Direct Discussion)
            ↓
   ESCALATION (Management Level)
            ↓
   MEDIATION (Neutral Facilitator)
            ↓
   ARBITRATION or LITIGATION (Binding Decision)

Step 1: Direct Negotiation​

First Approach:​

At Project Level:

  • PM to PM discussion
  • Superintendent to superintendent
  • Review facts together
  • Seek mutual resolution

Best Practices:

  • Address issues early
  • Be professional
  • Focus on facts
  • Document discussions
  • Confirm agreements in writing

Documentation:​

  • Meeting notes
  • Emails confirming discussions
  • Written positions
  • Settlement offers

Step 2: Management Escalation​

When to Escalate:​

  • Project-level discussions stall
  • Significant dollar value
  • Relationship at risk
  • Time-sensitive issue

Process:​

  1. Brief management on facts
  2. Provide documentation
  3. Schedule management meeting
  4. Present positions
  5. Negotiate resolution

Step 3: Mediation​

What is Mediation?​

  • Voluntary process
  • Neutral third party facilitates
  • Non-binding (unless settlement)
  • Confidential
  • Parties control outcome

When to Mediate:​

  • Direct negotiation failed
  • Before arbitration/litigation
  • Want to preserve relationship
  • Complex issues benefit from neutral
  • Contract requires mediation first

Mediation Process:​

  1. Select mediator (jointly)
  2. Exchange position statements
  3. Mediation session
  4. Joint and private sessions
  5. Work toward settlement
  6. Memorialize agreement

Mediation Advantages:​

  • Less costly than litigation
  • Faster resolution
  • Preserves relationships
  • Confidential
  • Parties control outcome

Step 4: Arbitration​

What is Arbitration?​

  • Formal proceeding
  • Neutral arbitrator(s) decide
  • Binding decision (usually)
  • Per contract requirements
  • More formal than mediation

Common Construction Arbitration:​

  • AAA Construction Rules
  • JAMS
  • Private arbitrators

Process:​

  1. File demand
  2. Select arbitrator(s)
  3. Preliminary hearing
  4. Discovery
  5. Hearing
  6. Award issued

Arbitration vs. Litigation:​

FactorArbitrationLitigation
Decision makerArbitratorJudge/jury
RulesPer agreementCourt rules
DiscoveryLimitedExtensive
AppealVery limitedAvailable
PrivacyPrivatePublic
SpeedOften fasterOften slower
CostVariableOften higher

Step 5: Litigation​

When Necessary:​

  • Arbitration not required
  • Need court remedies
  • Large/complex disputes
  • Multiple parties
  • Public interest

Process:​

  1. File complaint
  2. Service on defendants
  3. Responsive pleadings
  4. Discovery
  5. Motions
  6. Trial
  7. Judgment
  8. Appeal (if any)

Contract Dispute Provisions​

Review Your Contract For:​

  • Dispute resolution requirements
  • Mediation first?
  • Arbitration or litigation?
  • Venue and jurisdiction
  • Statute of limitations
  • Attorney's fees provision

Common Language:​

"Disputes shall first be submitted to mediation. If not resolved, disputes shall be decided by binding arbitration under AAA Construction Industry Rules."

Dispute Documentation​

Maintain:​

  • All correspondence
  • Meeting notes
  • Contract documents
  • Change orders
  • Daily reports
  • Photos
  • Schedules
  • Cost records
  • Witness information

Organize:​

  • Chronologically
  • By issue
  • Accessible
  • Protected/backed up

Dispute Analysis​

Before Proceeding, Evaluate:​

FactorConsideration
MeritHow strong is our position?
ValueHow much is at stake?
CostWhat will resolution cost?
TimeHow long will it take?
RelationshipWorth preserving?
PrecedentImpact on future?
RiskWhat if we lose?

Settlement Considerations​

When to Settle:​

  • Uncertainty of outcome
  • Cost of proceeding exceeds value
  • Relationship value
  • Time and distraction cost
  • Risk tolerance

Settlement Documentation:​

  • Written agreement
  • Clear terms
  • Release language
  • Confidentiality (if desired)
  • Payment terms

Dispute Tracking Log​

================================================================
            DISPUTE TRACKING LOG
================================================================

Dispute #: _________________________________________________

Project: ___________________________________________________

Other Party: _______________________________________________

Issue: _____________________________________________________

Amount in Dispute: $________________________________________

================================================================

DATE | ACTION | STATUS
-----|--------|-------
     |        |
     |        |
     |        |

================================================================

CURRENT STATUS:
☐ Negotiation
☐ Escalated to management
☐ Mediation
☐ Arbitration
☐ Litigation
☐ Resolved

RESOLUTION:
Date: _____________________________________________________
Amount: $__________________________________________________
Terms: ____________________________________________________

================================================================
  • Claims Procedures
  • Change Order Management
  • Contract Review
  • Notice Requirements

Template provided by support.construction. Always involve legal counsel for significant disputes.