Causes of disputes and indicators affecting contractors' claims in transactions with municipalities

Abstract

Construction projects significantly contribute to a country's financial resources, yet claims and disputes have become common in these projects. Many stakeholders consider these disputes among the most destructive events in the industry. In most projects, there is a possibility of claims from parties, particularly contractors, due to differences in project implementation systems. While eliminating claims is impossible, identifying the primary causes and origins of claims can help prevent them from occurring in projects. This study investigated the causes of disputes and claims by contractors in municipalities. A comprehensive literature review was conducted to identify potential factors affecting disputes and claims. Subsequently, a questionnaire was administered to 20 experts and specialists to validate these factors. The probability of disputes occurring and the average probability of these disputes converting into significant differences between contractors and municipalities were measured using statistical tests. Exploratory factor analysis was employed to classify the factors causing these differences, and the probability of conversion for each group was analyzed. The Analytical Hierarchy Process (AHP) method was used to rank the factors affecting these differences. The results showed that indicators related to the consultant's weaknesses and shortcomings, as well as those related to the employer's weaknesses and shortcomings, accounted for a significant share in the occurrence of disputes between municipalities and contractors. Specific issues such as the execution and timing of projects, duplication of work, delays in decision-making, and delays in obtaining necessary permits were found to contribute to disputes and claims. The study underscores the importance of effective project management, timely communication, and collaboration between contractors and municipalities to minimize disputes and claims.