Is Dispute Resolution a Part of Risk Management

Isn’t Risk Management what you do prior to a problem occurring and Dispute Resolution what happens after the problem has occurred?

I often talk of construction dispute resolution and risk management as if they are the same thing.  If risk management is the identification, management and monitoring of each risk, that implies that a process has been established to determine how each risk will be handled.  This would include establishing who is best able to handle the risk, an approach to dealing with the risk, and subsequent monitoring to see whether those decisions are appropriate. 

If we define dispute resolution more broadly as implementing systems to deal with and reduce the impact of issues as they are identified – are the two that much different?  Some dispute resolution processes encourage consistent third-party involvement with a project from initiation to completion.  For example, Dispute Resolution Boards (DRBs) are often required to meet regularly throughout the course of a project so that they are familiar with progress and potential issues and, because of this familiarity, are able to quickly understand and deal with issues as they develop.

Many construction risks are not discrete, stand-alone occurrences, but are hard to separate from normal productive activities and often have related residual issues.  There is usually a period of time where consensus on the extent of the issue and appropriate resolution can be initiated prior to there being a significant impact if systems are in place to allow this to happen.  This process does not even have to be non-contentious – as long as there is alignment of purpose, agreements can be reached for many different and divergent reasons.

If dispute resolution is included as a part of a project’s issues escalation process, it would go a long way to meet the desired objective of avoiding or expeditiously resolving issues that could impact a project’s success.  This requires looking at ADR as not the last resort before litigation or what to do when everything else has failed, but rather as an integral part and an important element of the risk management process.