The National Academy of Construction (NAC)1 has determined that disputes, and their accompanying inefficiencies and costs, constitute a significant problem for the industry. In 2002, the NAC assessed the industry’s progress in attacking this problem and determined that although the tools, techniques, and processes for preventing and efficiently resolving disputes are already in place, they are not being widely used. In 2003, the NAC helped to persuade the Center for Construction Industry Studies (CCIS) at the University of Texas and the Alfred P. Sloan Foundation to finance and conduct empirical research to develop accurate information about the relative transaction costs of various forms of dispute resolution.

In 2004 the NAC teamed with the Federal Facilities Council (FFC)2 of the National Research Council to sponsor the “Government/Industry Forum on Reducing Construction Costs: Uses of Best Dispute Resolution Practices by Project Owners.” The forum was held on September 23, 2004, at the National Academy of Sciences in Washington, D.C. The forum brought together 16 leading experts (many of them members of the NAC) on the subject of preventing, controlling, and resolving construction disputes (see Appendix A for the forum agenda). The audience included approximately 150 government administrators and private owners of construction projects.

Speakers and panelists at the forum addressed several topics:

  • The root causes of disputes and the impact of disputes on project costs and the economics of the construction industry;

  • Dispute resolution tools and techniques for preventing, managing, and resolving construction-related disputes;

  • Examples of successful uses of dispute resolution tools and techniques on some high-profile projects;

  • Ways to encourage greater use of dispute resolution tools throughout the industry; and

  • Steps that owners of construction projects (who have the greatest ability to influence how their projects are conducted) should take in order to make their projects more successful.

Neither the forum speakers nor the members of the audience were asked to arrive at a consensus on issues related to dispute resolution practices or to make recommendations. However, there was reasonable consistency among the speakers on virtually all of the topics addressed by the forum. The sections below summarize key points made by various speakers over the course of the forum. Chapters 2 through 10 include detailed summaries of each presentation.


Disputes typically start with a problem and develop into a difference of opinion, which can escalate to disagreements and conflicts that require attorneys and some form of legal action. Root causes of construction disputes identified by the forum speakers included the inequitable allocation of risk


The National Academy of Construction (NAC) is a group of senior construction industry leaders who make themselves available to the nation for advice and service in the interest of improving the construction process. Additional information about the NAC is available from the Secretariat, NAC, c/o Center for Construction Industry Studies, University of Texas, Austin, Tex., 78712-1076 and at http://www.naocon.org.


The Federal Facilities Council (FFC) is a cooperative association of federal agencies having interests and responsibilities related to all aspects of federal facility design, construction, operation, and management. Established in 1953, the FFC operates under the National Research Council, the principal operating agency of the National Academies, congressionally chartered, private, non-profit corporations. Additional information is available at http://www.nationalacademies.org/ffc.

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