ANALYSIS TO IDENTIFY THE PREVAILING CAUSES THAT LEADS TO ARBITRATION IN CONSTRUCTION CONTRACTS

Construction industry being so vast, it plays a predominant role and contributes a huge amount towards a country's economy. Contracts are being entered into in both public and private sector for the construction of all types of major and minor projects. But on a daily basis, various reasons induce the difference in opinion among the personnel involved in the contract. Such disagreements when not resolved by mutual discussion by the personnel, leads to conflicts and disputes which is required to be resolved at the earliest. The main objective of this study is to find out the common causes of disputes leading to arbitration, which party is mostly responsible for it and to suggest some remedial measures to minimise the arbitration cases. As part of the study, 30 cases were referred out of which 24 related cases were studied. From this, 42 factors were identified and a questionnaire survey was conducted. The obtained data was ranked using Relative Importance Index (RII) method and analysed using SPSS software and the most common causes for arbitration in construction contracts were identified. The final result obtained from ranking stated that delay in payment, loss to contractor and client, loss due to incomplete land acquisition, change in scope of work were the top ranking reasons leading to arbitration. From SPSS analysis, it can be inferred that for almost all of the reasons, there was no significant difference among the responses obtained from contractors, engineers and arbitrators except for the non-settlement of bills. Also, from arbitrator's response, it can be stated that both contractors and clients are equally responsible for arbitration