Contractors ignore ADR

Leading contractors are shunning alternative disputes resolution (ADR) as a solution to site conflict despite its success in more than 200 construction cases.

Although many of the big contractors such as AMEC, Balfour Beatty, Sir Robert McAlpine and Trafalgar House are founder members of the Centre for Disputes Resolution (CEDR) they make little use of the system.

Stuart Sinclair of CEDR claims Balfour Beatty has spent 'a colossal amount of money' on a dispute in the High Court with Ossery Road (Skelmersdale) when mediation could have helped.

Sinclair said: 'It is disappointing. Some members don't refer any cases to us. I hoped this case might first have been subjected to mediation.'

Sinclair reckons that if contractors made fuller use of ADR the industry's legal bill could be cut by a quarter - a saving of œ100 million.

Since ADR, a cheaper alternative to conventional litigation, arrived in the UK four years ago some 200 construction disputes with a total value of œ385 million have been settled speedily by mediation, the most popular form of ADR.

One of the biggest disputes to be settled in this way, involving a œ7.5 million construction claim, was resolved in just five days. The md of the firm of contractors involved said that if he could have persuaded the client to switch to ADR two-and-a-half years earlier, then each side would have saved œ1.5 million in legal costs.

And this case is set to be dwarfed by a œ20 million construction dispute that will be heard by ADR mediators shortly.

However Sinclair is worried that ADR might be about to miss the boat, the Latham report having arrived before contractors are willing to stand up and fight for it to be included in the proposed modifications to standard forms of contract.

'It is disappointing that Latham wasn't more positive about mediation,' said Sinclair. 'His concept of having adjudication during the contract, but before practical completion, is fine, but after a contract is finished there should be a stage in the resolution of disputes between the failure of negotiations and the commencement of arbitration or litigation.

'At the CEDR, over 90% of all mediations are settled, so it must be worthwhile,' he added.

'Ideally, the UK construction industry would have been further down the ADR learning curve before Latham looked at the industry. However, we can't afford to miss this opportunity to get mediation clauses introduced. The IChemE contract has this clause - it is a very sensible provision.

'The CEDR must lobby Sir Michael's forum as contractors themselves are not yet fully persuaded to stand up and support ADR vocally in public,' he said.