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An Analysis of Causes of Disputes in the Construction Industry Using Analytical Network Process (ANP)

DOI:10.1016/j.sbspro.2013.12.441
Authors:
Emre Cakmak at Piri Reis University
Emre Cakmak
Pinar Irlayici Cakmak at Istanbul Technical University
Pinar Irlayici Cakmak
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This paper aims to analyze the main causes of disputes which occur in the construction industry. In order to reach this aim, a literature review was undertaken to identify the common construction disputes. The disputes derived from a cross-section of the literature, were classified into main categories and the main causes of construction disputes were determined. Finally, an analysis was carried out using the analytical network process (ANP) approach to determine their relative importance. (C) 2014 The Authors. Published by Elsevier Ltd.
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Procedia - Social and Behavioral Sciences 109 ( 2014 ) 183 – 187
1877-0428 © 2014 The Authors. Published by Elsevier Ltd.
Selection and peer review under responsibility of Organizing Committee of BEM 2013.
doi: 10.1016/j.sbspro.2013.12.441
ScienceDirect
2nd World Conference On Business, Economics And Management -WCBEM 2013
An analysis of causes of disputes in the construction industry using
analytical network process
Emre Cakmak a, Pinar Irlayici Cakmak b*
aOkan University, Istanbul, 34959,Turkey
bIstanbul Technical University, Istanbul, 34437, Turkey
Abstract
This paper aims to analyze the main causes of disputes which occur in the construction industry. In order to reach this aim, a
literature review was undertaken to identify the common construction disputes. The disputes derived from a cross-section of the
literature, were classified into main categories and the main causes of construction disputes were determined. Finally, an analysis
was carried out using the analytical network process (ANP) approach to determine their relative importance.
1. Introduction
The construction industry is a complex and competitive environment in which participants with different views,
talents and levels of knowledge of the construction process work together. In this complex environment, participants
from various professions, each has its own goals and each expects to make the most of its own benefits. In the
construction industry, since differences in perceptions among the participants of the projects, conflicts are
inevitable. If conflicts are not well managed, they quickly turn into disputes. Disputes are one of the main factors
which prevent the successfully completion of the construction project. Thus, it is important to be aware of the causes
of disputes in order to complete the construction project in the desired time, budget and quality.
There are confusion among construction professionals about the differences between conflict and dispute, and
these terms have been used interchangeably especially in the construction industry (Acharya et al., 2006). However,
according to Fenn et al. (1997) conflict and dispute are two distinct notations. Conflict exists wherever there is
incompatibility of interest. Conflict can be managed, possibly to the extent of preventing a dispute resulting from the
conflict. On the other hand, disputes are one of the main factors which prevent the successfully completion of the
construction project. Disputes are associated with distinct justiciable issues and require resolution such as mediation,
negotiation arbitration, etc.
This paper aims to analyze the main causes of disputes which occur in the construction industry. In order to reach
this aim, a literature review was undertaken to identify the common construction disputes. The main causes of
* Corresponding Author: Pinar Irlayici Cakmak. Tel.: +90-212-293-1300
E-mail address: irlayici@itu.edu.tr
Keywords: Analytical network process (ANP), causes of disputes, construction disputes, construction industry;
Available online at www.sciencedirect.com
© 2014 The Authors. Published by Elsevier Ltd.
Selection and peer review under responsibility of Organizing Committee of BEM 2013.
184 Emre Cakmak and Pinar Irlayici Cakmak / Procedia - Social and Behavioral Sciences 109 ( 2014 ) 183 – 187
construction disputes were determined by the help of the literature review. The disputes derived from the literature,
were classified into main categories and their sub categories. Finally, an analysis was carried out using the analytical
network process (ANP) approach to determine their relative importance.
2. Causes of disputes in the construction industry
There has been considerable research undertaken to determine the causes of disputes in the construction industry.
A literature review has been conducted in order to overview the causes of construction disputes. Several researches
from different countries have been analyzed. Then, a table, adapted from Kumaraswamy (1997), is created which
summarizes the causes of disputes which are determined by several researchers from different countries (Cakmak
and Cakmak, 2013).
The causes of disputes are first examined and identified through a relevant literature review. Although researches
have concentrated on various causes of disputes, there is a certain level of commonality in the causes of disputes
(Cakmak and Cakmak, 2013). In this context, it is necessary to classify the common causes of disputes into
categories. The causes of disputes are classified into seven broad categories depending on their nature and mode of
occurrence. As a result, 28 common causes of dispute are selected for further examination in this study (Table 1).
Table 1: Common causes of disputes by categories
Category of Disputes Causes of Disputes
Owner related (A)
variations initiated by the owner (A1)
change of scope (A2)
late giving of possession (A3)
acceleration (A4)
unrealistic expectations (A5)
payment delays (A6)
Contractor related (B)
delays in work progress (B1)
time extensions (B2)
financial failure of the contractor (B3)
technical inadequacy of the contractor (B4)
tendering (B5)
quality of works (B6)
Design related (C)
design errors (C1)
inadequate / incomplete specifications (C2)
quality of design (C3)
availability of information (C4)
Contract related (D)
ambiguities in contract documents (D1)
different interpretations of the contract provisions (D2)
risk allocation (D3)
other contractual problems (D4)
Human behavior related (E)
adversarial / controversial culture (E1)
lack of communication (E2)
lack of team spirit (E3)
Project related (F) site conditions (F1)
unforeseen changes (F2)
External factors (G)
weather (G1)
legal and economic factors (G2)
fragmented structure of the sector (G3)
185
Emre Cakmak and Pinar Irlayici Cakmak / Procedia - Social and Behavioral Sciences 109 ( 2014 ) 183 – 187
The data in Table 1 is used in the process of analytical network process (ANP) approach for determining disputes'
relative importance.
3. The analytical network process
Saaty (1980) first proposed the analytic hierarchy process (AHP) which is a strong and flexible multi-criteria
decision analysis approach. The AHP helps decision makers set priorities and choose the best alternative when both
qualitative and quantitative aspects are considered. The analytical network process (ANP), also introduced by Saaty,
is a generalization of the AHP (Saaty, 1996). While the AHP represents a framework with a uni-directional
hierarchical AHP relationship, the ANP allows for complex interrelationships among decision levels and attributes.
The ANP has four main steps: (1) problem structuring and model construction, (2) preparation of pair-wise
comparison matrices and priority vectors, (3) supermatrix formation and (4) selection of the best alternative.
The model is built from the top starting with the main dispute causes, then the more specific (sub-categories)
ones. Seven main dispute causes are included in the first level of hierarchy and 28 sub dispute causes in the second
level, as shown in Table 1. All of the main dispute causes and sub dispute causes are given a code letter. These
codes will be used in the supermatrix. Once the hierarchy structure is established, the decision-making process can
take place.
The decision-making process has been carried out by a team of experts who have enough experience related to
construction disputes. First of all, the ANP approach was explained to the experts. Interrelations between each
dispute category were established with a network diagram by experts (Figure 1). Then, the experts derived ratio-
scale (as shown in Table 2) priorities reflecting the relative importance of dispute causes via pair-wise comparisons.
Figure 1. Dispute categories network diagram
Goal
Owner
Related
Contractor
Related
Design
Related External
Factors
Human
Behavior
Related
Project
Related
Contract
Related
186 Emre Cakmak and Pinar Irlayici Cakmak / Procedia - Social and Behavioral Sciences 109 ( 2014 ) 183 – 187
The pair-wise comparisons were done with respect to overall goal of the model: analyzing main causes of
construction disputes. Table 2 shows an example for category of disputes and their comparison values. The experts,
in this particular example in Table 2, assigned the "owner related disputes" a weight of 4 compared with the
"contractor related disputes". Thus, the experts consider the "owner related disputes" to be moderately more
important than the "contractor related disputes" as a dispute category.
Table 2: Pair-wise comparison for dispute categories
A B C D E F G
Owner related (A) 1 4 4 1/7 6 6 8
Contractor related (B) 1/4 1 1/5 1/7 6 6 7
Design related (C) 1/4 5 1 1/7 7 4 7
Contract related (D) 7 7 7 1 9 8 9
Human behavior related (E) 1/6 1/6 1/7 1/9 1 1/6 5
Project related (F) 1/6 1/6 1/4 1/8 6 1 7
External factors (G) 1/8 1/7 1/7 1/9 1/5 1/7 1
When the pair-wise comparisons were completed, the super matrix was constructed. Super matrix was
constructed in Super Decisions, a software program developed for ANP applications. Then, the relative importance
of causes of disputes was identified by considering interrelationships between them.
All main dispute categories, their sub-categories and their normalized relative importance values are presented in
Table 3.
Table 3: Relative importance of disputes causes by categories
Main Categories Relative importance of main
cate
g
ories Sub-categories Relative importance of sub-
cate
g
ories
Owner related 0.081163
variations initiated b
y
the owner 0.011806
chan
g
e of sco
p
e 0.018216
late giving of possession 0.000382
acceleration 0.000171
unrealistic ex
p
ectations 0.002524
p
a
y
ment dela
y
s 0.048064
Contractor related 0.301548
dela
y
s in work
p
ro
g
ress 0.151231
time extensions 0.122495
financial failure of the contractor 0.000127
technical inadequacy of the contractor 0.000171
tenderin
g
0.000101
q
ualit
y
of works 0.027423
Design related 0.253987
design errors 0.054377
inade
q
uate / incom
p
lete s
p
ecifications 0.119561
quality of design 0.071209
availabilit
y
of information 0.008840
Contract related 0.259314
ambi
g
uities in contract documents 0.045363
different interpretations of the contract
p
rovisions 0.019974
risk allocation 0.027686
other contractual
p
roblems 0.166291
Human behavior
related 0.026826
adversarial / controversial culture 0.003531
lack of communication 0.016504
lack of team s
p
irit 0.006792
Project related 0.037032 site conditions 0.018516
unforeseen chan
g
es 0.018516
External factors 0.040127
weather 0.002434
le
g
al and economic factors 0.031776
fra
g
mented structure of the sector 0.005917
187
Emre Cakmak and Pinar Irlayici Cakmak / Procedia - Social and Behavioral Sciences 109 ( 2014 ) 183 – 187
As it is shown in Table 3, "contractor related disputes" has the highest relative importance value with the value of
0.301548. In other words, "contractor related disputes" are the common ones in the construction industry. In this
study, contractor related disputes consist six different sub-disputes causes. These sub-dispute causes and their
relative importance values are: delays in work progress (0.151231), time extensions (0.122495), financial failure of
the contractor (0.000127), technical inadequacy of the contractor (0.000171), tendering (0.000101), and quality of
works (0.027423). When all sub-dispute causes evaluated together, it can also be seen that, "contractual problems"
has the highest relative importance with the value of 0.166291. In other words, "contractual problems" is an
important dispute cause in the construction industry. Other common dispute causes are "delays in work progress",
"time extensions", "inadequate / incomplete specifications", "quality of design", and "design errors" all with relative
importance values higher than 0.050. On the other hand, project related and human behavior related dispute causes
are the least common dispute causes with the relative importance value of 0.037032 and 0,026826 respectively.
4. Conclusion
In this paper, the main causes of dispute causes in the construction industry were analyzed. First of all, the main
causes of construction disputes were determined with a comprehensive literature review. Then, the disputes derived
from the literature, were classified into main categories. According to the classification, main disputes categories
were found as; owner related disputes, contractor related disputes, design related disputes, contract related disputes,
human behavior related disputes, project related disputes and external factors. All these disputes categories have
their own sub-dispute causes. After determining the dispute causes, an approach was carried out using the ANP and
an ANP model was developed. The model considers the relevant dispute causes which occur in the construction
projects. Finally, an analysis was carried out to identify the relative importance of the different dispute causes. The
analysis reveals that the contractor related disputes and their sub-dispute categories are the most common ones in the
construction industry.
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... Chua (2012) conducted a study in Malaysia and Singapore and identified that the top three causes of construction dispute were finance and payment issue, disagreement on claims and variation orders. Cakmak and Cakmak (2014) conducted a literature review and identified 28 causes of dispute in construction industry and grouped them into seven categories (owner related, contractor related, design related, contract related, human behavior related, project related and external factors). The authors used analytical network process analysis and concluded that the most important causes of disputes were delays in work progress, EoT, inadequate specifications, quality of design and design errors. ...
... It is undeniable that the complexity of the construction industry, which involve multiple stakeholders, such as developers, contractors and engineers, required proper communication, to avoid misunderstanding and disputes. Discrepancy occurs in Turkey as this factor was ranked as last in the study that conducted by Cakmak and Cakmak (2014). This may due to the differences in the culture of Sarawak and Turkish construction industry. ...
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Article
  • Feb 1997
It is necessary and useful to differentiate destructive from constructive conflict and avoidable from necessary claims; and also to minimize disputes arising from unresolved conflict and claims in construction projects. This paper analyses such needs and proposes means of meeting them through an appropriate classification of construction claims; an estimation of their relative significance in terms of magnitude and frequency; and an identification of the proximate and root causes of the significant claims. A hierarchy of such claims, proximate and root causes is presented, based mainly on data collected from 61 projects and on 46 responses to questionnaires in Hong Kong. Measures of the relative significance of the claims categories are also presented. The results are reinforced by observations from parallel studies in Hong Kong and elsewhere, as well as from the literature. Strategies are suggested to avoid the avoidable and mitigate the unavoidable or unavoided claims, through controlling the controllable causes. Management focus is also recommended on controlling the causes of those categories of claims and disputes that are seen to be significant in terms of higher impact and/or probability of occurrence.
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An Analysis of Causes of Disputes in the Construction Industry Using Analytical Hierarcy Process (AHP)
Conference Paper
  • Apr 2013
In the construction industry, since differences in perceptions among the participants of the projects, conflicts are inevitable. If conflicts are not well managed, they are quickly turn into disputes. Disputes are one of the main factors which prevent the successfully completion of the construction project. Thus, it is important to be aware of the causes of disputes in order to complete the construction project in the desired time, budget and quality. This paper aims to analyze the main causes of disputes which occur in the construction industry. In order to reach this aim, a literature review was undertaken to identify the common construction disputes. The disputes derived from a cross-section of the literature, were classified into main categories and the main causes of construction disputes were determined. Finally, an analysis was carried out using the analytical hierarchy process (AHP) approach to determine their relative importance.
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Conflicting factors in construction projects: Korean perspective
Article
  • Nov 2006
Purpose – The purpose of this article is to identify and explore pertinent conflicting factors in construction projects; which would be helpful for project planners and implementers in assessing and taking proactive measures for reducing the adverse effect of conflict. Design/methodology/approach – To achieve the study objectives, a 43‐item questionnaire survey in a five‐point Likert scale was carried out to collect professionals' experience on conflicting activities in Korean construction projects. Responses from 124 professionals working for owners, consultants and contractors were analyzed. Furthermore, ten face‐to face interviews were also carried out to ratify the findings from the field survey. Later, analytical hierarchical process method was employed to find out the importance weighting as well as responsible party for the perceived conflicts. Findings – This study has found out six critical construction conflicting factors pertinent in Korean context. These factors with importance weighting are: differing site condition (24.1 percent), public interruption (22.5 percent), differences in change order evaluation (21 percent), design errors (17.1 percent), excessive contract quantities variation (8.2) and double meaning of specifications (7.1 percent). The study has revealed that owner (35.6 percent) and consultant (34.18 percent) are mostly responsible parties for conflicts in construction projects. Originality/value – As the previous researches have been indicating increase in conflicts in construction field, this paper is very topical at the moment. This work has tried to explore the underlying problems of the construction field. The study provides field level experiences from which the inexperience construction site professionals could learn the instances of conflicts and not repeat the mistakes in their projects.
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Conflicts, claims and disputes in construction
Article
It is necessary and useful to differentiate destructive from constructive conflict and avoidable from necessary claims; and also to minimize disputes arising from unresolved conflict and claims in construction projects. This paper analyses such needs and proposes means of meeting them through an appropriate classification of construction claims; an estimation of their relative significance in terms of magnitude and frequency; and an identification of the proximate and root causes of the significant claims. A hierarchy of such claims, proximate and root causes is presented, based mainly on data collected from 61 projects and on 46 responses to questionnaires in Hong Kong. Measures of the relative significance of the claims categories are also presented. The results are reinforced by observations from parallel studies in Hong Kong and elsewhere, as well as from the literature. Strategies are suggested to avoid the avoidable and mitigate the unavoidable or unavoided claims, through controlling the controllable causes. Management focus is also recommended on controlling the causes of those categories of claims and disputes that are seen to be significant in terms of higher impact and/or probability of occurrence.
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An analysis of causes of disputes in the construction industry using analytical hierarchy process (AHP). AEI 2013 Architectural Engineering Institute Conference, 3-5 April, The Pennsylvania State University The Analytical Hierarchy Process
  • Jan 1980
  • P I Cakmak
  • E Cakmak
Cakmak, P.I., & Cakmak, E. (2013). An analysis of causes of disputes in the construction industry using analytical hierarchy process (AHP). AEI 2013 Architectural Engineering Institute Conference, 3-5 April, The Pennsylvania State University, University Park, Pennsylvania, USA. Saaty, T.L. (1980). The Analytical Hierarchy Process. McGraw-Hill, New York.