The Business Case for Dispute Prevention Processes

Dispute prevention processes are structures designed to prevent conflicts from escalating into disputes and delaying the completion and fulfillment of a contract, which negatively impacts all its stakeholders. To date, such initiatives have proven to be very effective in construction projects. This article makes the case for scaling the use of dispute prevention processes well beyond the realm of construction. Outlined below are some of the key benefits and challenges of dispute prevention processes for business owners, investors, and employees. These benefits of dispute prevention—triggered much earlier than traditional dispute resolution processes—should be deployed by businesses in broader commercial contexts to mitigate the risk that early disagreements grow into impediments to project completion, litigation and costly damages.

Generally, the term "dispute" connotes demand letters, recriminations, arbitration and even litigation. Disputes are presaged typically by disagreements, and processes for dispute resolution become necessary after one side, or the other, believes that damages will ensue. These damages may be monetary or the infringement of a right created by the contract in question. The goal of dispute prevention is to intervene before there are any damages.

The core idea of "dispute prevention" is to avoid business disruption and litigation costs that flow from the initiation of legal proceedings. The authors' collective experience as arbitrators, adjudicators, mediators and business executives has led us to believe that numerous worthwhile projects (including potentially life-saving collaborative research) have collapsed because processes were not in place to support the constituents to continue their valuable work; instead, the parties engaged in litigation and other dispute resolution practices, ending any chance to achieve the initial, promised goal in a timely manner, if at all.