Study On Hidden Costs Of Construction Dispute Solved In The Manner Of Litigation

Construction project dispute occurs frequently. There are four main means ofsolving construction disputes, which are negotiation, mediation, arbitration andlitigation. The cost of dispute resolving increases as the dispute escalates, which doesnot create value. As an alternative solution, litigation costs the most and has the worsteffect on relationship between parties. To help them understand their threshold, it isnecessary to study on the litigation costs. Litigation costs contain hidden costs whichare naturally lack of quantification standard while could be a large proportion ofdispute amount. As a result, for providing the parties of dispute with decision makingadvises, it is essential to carry on the quantification study on litigation hidden costs ofconstruction disputes.Based on the existing research, this thesis identifies11factors that are related tolitigation hidden costs of construction disputes. The method of PCA-FA is applied toreduce the dimension of the11factors and to analyze the weights of each factor. Thefactors are reduced into5integrated impact factors, among which “the cost ofrelationship influence” takes the largest weight.Taking the weights of11factors as the input variables, this thesis established thepredicting framework of litigation hidden costs. The procedures and scope of thispredicting framework is provided with a case study. For the reason that the originaldata that laid the foundation of the framework input variables are from contractorcompanies, the scope of the framework is mainly aimed at contractor companies,while the ideas could be applied to other researches.This thesis collects16litigation cases to validate the predicting framework. Thecontent of the survey includes two parts:1.the value of the framework input variables,for the purpose of measure the theoretical reduction factor;2. the practical reductionfactor that is estimated by professionals. By the comparison and analysis, it isvalidated that the predicting framework suits more for the construction companies,while when used by other companies, the weights should be adjusted.