The evolution of ADR in construction disputes

Dispute resolution in the construction industry is notoriously expensive. In recent years disputing parties have been encouraged to seek resolution without resorting to formal litigation through various forms of Alternative Dispute Resolution (ADR). This includes arbitration, adjudication, mediation, and neutral evaluation. While each method varies in its approach and enforceability, they all seek to facilitate settlement without resorting to the courts, ideally at a lower cost.

Mediation has long been a staple of ADR, with neutral evaluation increasingly gaining traction. Both seek to guide the parties towards resolution yet differ in their approach and purpose. In some cases, a hybrid approach may be applied, deploying both techniques on the same dispute.

In this article Peter Caillard explores whether broader adoption of such an approach would enhance settlement outcomes and reduce costs in complex construction disputes.

Mediation in construction: A path to collaborative resolution

Mediation in construction disputes promotes resolution in a non-confrontational environment that encourages dialogue, collaboration, and mutual agreement. A mediator facilitates and guides the proceedings but does not deliver an opinion or decision. Resolution must emerge from the parties themselves.

Mediation has a good track record in delivering resolution in the construction industry, particularly in more straightforward cases. Typically, it involves the following:

• Initiation triggered via contract clause or mutual agreement
• Preparation of own case materials, often with legal and expert input
• Appointment of an impartial independent meditator with relevant industry experience
• Exchange of position statements and supporting documentation
• Mediation hearing involving facilitated whole group discussions and break-out sessions
• Outcome where if successful, a binding settlement agreement is reached

Fundamentally, mediation is a facilitated negotiation which seeks to assist the parties towards agreement. Even when it does not result in full resolution, it may enable partial settlement, or help narrow the issues, paving the way for more focused subsequent proceedings.

Neutral evaluation with expert insight to guide construction disputes

Neutral evaluation, sometimes referred to as Early Neutral Evaluation (ENE), involves an independent expert evaluating the merits of each party’s case. Typically drawn from legal or technical professions, the evaluator provides an impartial, non-binding opinion on the strengths and weaknesses of the arguments presented, together with an assessment of the likely outcome should the case proceed to litigation.

Unlike mediation, evaluation does not involve negotiation. Its purpose is to inform and guide parties, helping them understand the relative strength of their positions.

At a neutral evaluation hearing, the purpose is to assist the evaluator to understand the case and the arguments supporting the disputed matters. Typically, a neutral evaluation process would involve the following:

• Parties agree to engage a neutral evaluator
• Appointment of an evaluator with relevant legal or technical expertise
• Exchange of position statements and other supporting documents
• Hearing is staged at which the evaluator may question parties for clarity
• Delivery of a non-binding opinion that assesses the merits of the case and the likely success of the claim should the matter be pursued
• The parties may use the opinion either to guide settlement negotiations or inform escalation decisions

Neutral evaluation is of greatest benefit in complex, multi-party disputes where an independent expert opinion can help advise on legal positions or contractual arguments. It can expose weaknesses in claims driven more by strategic positioning than substantive merit, prompting parties to reassess or withdraw untenable positions.

A smarter resolution approach: Tailoring ADR to case complexity

The key distinction between mediation and neutral evaluation is that the former focuses on encouraging the parties towards agreement through dialogue and discussion, whereas the latter delivers an independent expert opinion on the most probable outcome of proceedings.

In most jurisdictions, mediation is more widely deployed than neutral evaluation. This may be because disputing parties believe they can have greater influence over a mediation process; it is generally faster and more streamlined, meaning a lower cost.

Consequently, neutral evaluation is more commonly reserved for more complex cases, especially where large sums are at stake or where parties may be entrenched in their positions. Neutral evaluation is particularly effective in those scenarios where where specialist expertise and detailed analysis of issues can help expose weaknesses in claims and promote a more informed dialogue. Promoting realism and reducing posturing increases the likelihood of resolution, significantly saving both time and cost.

Notably, neutral evaluation is gaining traction. In England and Wales, the Technology and Construction Court (TCC) encourages its use, and it is also recognised within the Civil Procedure Rules (CPR).

Benefits of adopting a hybrid solution: For all parties and at every stage

Combining mediation and neutral evaluation in a single, hybrid process can offer several advantages.

In a hybrid process the first stage is for a neutral evaluator to undertake an assessment and deliver an impartial, non-binding opinion. This provides an initial ‘reality check’ for the parties and may result in elements of their claim being set aside or withdrawn.

Mediation follows, either with the neutral evaluator transitioning into the mediator, or with a fresh appointment. Crucially the process is strengthened by the parties’ prior exposure to the evaluator’s opinion, which helps ground discussions in realism.

By entering the negotiation phase better informed, parties are more likely to reassess entrenched positions and engage constructively. This is especially beneficial in complex disputes or where legal clarity is needed. Furthermore, combining the two processes helps promote the notion that this may be the best chance to settle, rather than relying on an assumption that further opportunities will arise down the road.

Combining expert insight with structured dialogue improves the chance of breaking deadlock. There is no greater impediment to early resolution than both parties convinced they would win should the case proceed to court. Concession-making, essential for the process to succeed, is enhanced by better informed parties who’ve received a credible, independent assessment of their case.

Avoiding arbitration or litigation circumvents duplication of parties’ resources and legal fees and can result in substantial cost savings. . Independent experts to advise on technical, quantum and delay issues may still be engaged, but here too a streamlined hybrid process will help reduce costs. It is estimated that disputes which settle at this stage can save up to 90% of the costs associated with arbitration or court proceedings.

Time savings are also significant. Early narrowing of the issues, faster consensus building, and speedier settlement can all be realised in hybrid processes. Furthermore, business relationships built over many years risk damage through a protracted and adversarial dispute process – something that could be avoided by a shorter, more optimised, hybrid process.

Conclusion: Faster, fairer, smarter. The case for hybrid ADR

Mediation and neutral evaluation are powerful dispute resolution tools in their own right, but their combined power is greater than the sum of their parts. Deployed skillfully, a hybrid process has the potential to deliver fast, effective, and mutually acceptable outcomes at a fraction of the cost of arbitration or litigation.

In an industry where time and cost are critical, the fusion of mediation and neutral evaluation offers a compelling path to smarter dispute resolution. By blending the impartial insight of evaluation with the collaborative spirit of mediation, parties are better equipped to confront reality, reassess entrenched positions, and move toward meaningful settlement. This approach not only enhances the likelihood of resolution in complex cases but also preserves valuable business relationships and potentially delivers substantial savings in both time and expense.

As construction disputes grow in scale and complexity, embracing this combined strategy may well be the key to unlocking faster, fairer, and more effective outcomes.

About the Author:

Peter Caillard is a Chartered Civil Engineer with nearly 40 years of experience in the global construction industry. He has extensive expertise in the design and delivery of highways, transport, and infrastructure projects, managing schemes through all stages—from preliminary design to final account—under a variety of contract forms.

Peter’s career spans projects across the UK, Europe, the Middle East, Africa, and North America. His technical experience covers all aspects of highway and infrastructure design, including geometry, pavement construction, drainage, earthworks, structures, public utilities, and materials testing. He is also highly skilled in transport planning for both public infrastructure and private developments.

In addition to his project work, Peter has led research initiatives for the UK Department of Transport, contributed to drafting technical standards in the UK and overseas, and conducted safety audits on a wide range of schemes. He has investigated road traffic accidents and prepared expert reports for litigation.

Peter is frequently engaged in forensic investigations relating to engineering disputes and has testified at planning inquiries, arbitrations, mediations, and planning appeals. Notably, he provided evidence to the House of Commons Select Committee during the passage of enabling legislation for the Channel Tunnel Rail Link.

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