Originally from Dispute Resolution Journal

Every construction company owner has heard horror stories about pursuing project-related claims in court cases that last for years, sapping much-needed cash from projects. When subcontractors are able to specify alternative dispute resolution (ADR) procedures, subcontractors may be able to avoid some of the expense and other downsides of litigation. Not all ADR procedures are appropriate for all subcontractors, however. When evaluating dispute resolution options, subcontractors need to pay special attention to subcontract agreements.

Common ADR procedures include American Arbitration Association (AAA) arbitration and mediation procedures, as well as contractually specified procedures such as submission of disputes for review by dispute review boards, senior executives, project engineers, architects, or construction managers. A white paper published by the American Subcontractors Association (ASA) entitled “Dispute Resolution: The Procedure” explains some of the advantages of ADR and examines what kinds of contract provisions are appropriate when ADR procedures will be used to resolve subcontractor claims.2