The relationship between distribution of control, fairness and potential for dispute in the claims handling process

Abstract

Parties' concern for fairness has been identified as one of the underlying causes of dissatisfaction and protracted dispute in the process for handling contractors' claims. Social psychology literature suggests that distribution of control over the various stages of any conflict resolution process is a factor that may influence concern for fairness. Despite the numerous studies in social psychology and management research, little or no attempt has been made to systematically investigate how distribution of control over the various stages of the process for handling a contractor's claims for delay and disruption could influence concern for fairness and potential for dispute. This should be a useful exercise in that it would suggest ways of reducing potential for disputes in construction project delivery. This study is an attempt to fill this research gap. Drawing on social psychology theory, this study proposes that, in order to enhance perceived fairness and thereby reduce potential for dispute, (1) the claims certifier needs to exercise a higher degree of process and content control over the early stages of process for handling claims than the control exercised by the employer and contractor; (2) the claims certifier must exercise total decision control so as to enhance the perceived impartiality and neutrality of the decision rendered on the claims. By examining two litigated cases, the study illustrates the relationship between distribution of control, perceived lack of fairness and dispute potential. By adopting the proposed principle for distributing control into the claims handling process and coupled with the use of an independent claims certifier, potential for dispute could be reduced on construction projects.

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