Dispute resolution transactional cost quantification: What does resolving a construction dispute really cost?

Richard J. Gebken, G. Edward Gibson, James P. Groton

Research output: Chapter in Book/Report/Conference proceedingConference contribution

3 Scopus citations

Abstract

The construction industry is generally acknowledged as the world's most litigious industry with one industry study citing nearly $5 billion in annual expenses on litigation and arbitration in the United States alone. Yet at the same time, the construction industry has been a champion for creating and implementing innovative new techniques for preventing, controlling, managing and amicably resolving disputes for many years. As a result, the construction industry has available to it a wide spectrum of dispute-management methods. Despite these options, no empirical data exists on the transactional costs 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 settle the dispute, but also the "transaction costs" of processing the dispute: lawyer fees, experts' fees, management time, etc. This paper explores a procedure for quantifying transactional costs in various dispute resolution techniques and explains how transactional cost information can be used as a dispute-management selection tool. Data from 26 projects, with total installed costs over $850 million USD, are presented to illustrate information on the transactional costs associated with different methods of dispute resolution from an ongoing research study at the University of Texas at Austin.

Original languageEnglish (US)
Title of host publicationConstruction Research Congress 2005
Subtitle of host publicationBroadening Perspectives - Proceedings of the Congress
EditorsI.D. Tommelein
Pages889-898
Number of pages10
StatePublished - Nov 14 2005
Externally publishedYes
EventConstruction Research Congress 2005: Broadening Perspectives - Proceedings of the Congress - San Diego, CA, United States
Duration: Apr 5 2005Apr 7 2005

Publication series

NameConstruction Research Congress 2005: Broadening Perspectives - Proceedings of the Congress

Other

OtherConstruction Research Congress 2005: Broadening Perspectives - Proceedings of the Congress
CountryUnited States
CitySan Diego, CA
Period4/5/054/7/05

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Keywords

  • Claims
  • Construction Industry
  • Dispute Resolution
  • Transactional Costs

ASJC Scopus subject areas

  • Engineering(all)

Cite this

Gebken, R. J., Gibson, G. E., & Groton, J. P. (2005). Dispute resolution transactional cost quantification: What does resolving a construction dispute really cost? In I. D. Tommelein (Ed.), Construction Research Congress 2005: Broadening Perspectives - Proceedings of the Congress (pp. 889-898). (Construction Research Congress 2005: Broadening Perspectives - Proceedings of the Congress).