Construction Dispute Resolution Mechanism Analysis Based On Transactional Cost

The construction industry is generally acknowledged as the adversarial industry with the frequent occurrence of construction disputes. Yet at the same time, the construction industry has been a champion as it is at the leading edge of creating and implementing innovative dispute resolution methods. Inevitably, dispute resolution costs all parties money, so valuable resources are wasted on dispute and not construction. Therefore, differently from earlier studies, this thesis analyzes dispute resolution in the view of transactional cost, based on Transactional Cost Theory.The basic knowledge on Transactional Cost Theory and construction dispute is firstly elaborated. The concept of Dispute Resolution Transactional Cost is then introduced and what constitutes the cost is analyzed, based on which the comparative analysis is carried out of dispute resolution mechanism in the old and new editions of FIDIC Red Book. Through analyzing the evolvement and its advantages, the thesis comes to a conclusion that transactional cost saving is the very reason behind the evolvement of dispute resolution mechanism. In the following chapters, various dispute resolution methods in the forms of contract used worldwide are discussed, which follows the quantification of the transactional cost of Alternative Dispute Resolution (ADR), in order to illustrate that the selection of various dispute resolution methods has a significant impact on transactional cost saving. Finally, the thesis discusses the inspiration of the above analysis on the reform of dispute resolution mechanism in China. The thesis provides a new angle of vision to the study of dispute resolution mechanism, and also a train of thought for practitioners for the future dispute resolution, namely, the combination of effect and efficiency of resolving a dispute.