Ep 2 Rationale of using Negotiation and Mediation in Malaysian Construction Industry-Ms Rammit Kaur

Summary

The video script discusses the importance of alternative dispute resolution methods like negotiation and mediation in the Malaysian construction industry. These methods are flexible, cost-effective, and maintain privacy and confidentiality, allowing parties to control the process and find mutually favorable solutions. They also help preserve business relationships and reputations, making them preferable to formal dispute resolution mechanisms.

Takeaways

• 🏗️ Disputes in the construction industry are common and must be resolved promptly to avoid irreparable damages and losses.
• 🔍 Alternative dispute resolution (ADR) is prevalent in the industry, with negotiation and mediation being particularly flexible and cost-effective.
• 🇲🇾 Negotiation and mediation in Malaysia are less formal and are still in a formative stage compared to other dispute resolution methods.
• 🤝 The process of negotiation and mediation is fluid and can be tailored to the parties' needs, without fixed procedures.
• 👥 Parties have autonomy in these processes, with the ability to control the manner and pace of dispute resolution.
• 💡 Negotiation is more subjective, driven by the parties involved, while mediation introduces an element of objectivity through a neutral third party.
• 🕒 The time taken for negotiation and mediation is typically shorter, as parties are already familiar with the dispute details.
• 💰 These methods are economically advantageous, requiring less financial outlay compared to adjudication and arbitration.
• 🔒 Privacy and confidentiality are maintained, which is beneficial for parties who wish to keep their disputes and business strategies undisclosed.
• 🤝 Negotiation and mediation are conducive to maintaining business relationships, as they promote amicable resolution and mutual agreement.
• 💡 The process encourages creative solutions and remedies that go beyond financial compensation, such as future contracts or added warranties.
• 🏢 The industry values entities that resolve disputes amicably, as it reflects positively on their business reputation and approach to conflict resolution.
• 🔑 Confidentiality in these processes also safeguards trade secrets and sensitive information, which is crucial for maintaining competitive advantage.

Q & A

Why are disputes in the construction industry considered inevitable?

Disputes in the construction industry are inevitable due to the complex nature of projects, involving multiple stakeholders with different interests, which can lead to disagreements over various issues such as defects, delays, and performance standards.

What are the potential non-compensable damages and losses that can arise from unresolved disputes in construction projects?

Unresolved disputes can lead to non-compensable damages and losses such as defects in the construction work, project delays, and damage to the business's reputation, which can affect its performance and standing in the industry.

Why is the use of alternative dispute resolution (ADR) common in the construction industry?

ADR is common in the construction industry because it offers a more flexible, simple, fast, and economical approach to resolving disputes compared to formal legal processes.

How does the negotiation process in Malaysia differ from other forms of dispute resolution?

Negotiation in Malaysia is less formal and more fluid, allowing parties to set their own process without fixed rules. It is driven by the subjectivity of the parties involved and does not necessarily require the involvement of external councils.

What is the role of a neutral third party in the mediation process?

A neutral third party in mediation adds objectivity to the resolution mechanism, helping parties to express their concerns and understand the motivations behind the claims, without being restricted by technical contractual and legal arguments.

How does negotiation and mediation assure party autonomy in dispute resolution?

Negotiation and mediation assure party autonomy by allowing parties to have total control over the process, not being restricted by procedural rules, and conducting the process as they deem fit according to their circumstances.

What are the cost benefits of using negotiation and mediation for dispute resolution in the construction industry?

Negotiation and mediation are cost-effective as they rely mainly on internal resources for negotiations and have a lower course of proceedings compared to adjudication and arbitration. They also take less time, reducing overall costs for the parties involved.

Why is privacy and confidentiality an advantage in negotiation and mediation processes?

Privacy and confidentiality are advantages because they allow parties to retain control over sensitive information and maintain the privacy of their dispute resolution process, which is crucial for preserving business relationships and trade secrets.

How does negotiation and mediation help in maintaining business relationships and reputation?

Negotiation and mediation help maintain business relationships and reputation by allowing for amicable resolution of disputes, which is viewed positively in the industry. It also keeps sensitive business information confidential, protecting trade secrets and key personnel details.

What are some creative remedies that parties can consider in negotiation and mediation?

Parties can consider creative remedies such as future contracts, added warranties, or the supply of additional space to compensate for damages or losses, rather than being limited to financial compensation.

Why is it important for parties to consider what would be a palatable resolution for the other party during negotiation and mediation?

Considering a palatable resolution for the other party is important because it encourages a cooperative approach, where both parties are more likely to make concessions and reach an agreement that is favorable to both sides, thus resolving the dispute effectively.

Outlines

00:00

🏗️ Dispute Resolution in Construction: Benefits of Negotiation and Mediation

The script discusses the inevitability of disputes in the construction industry and the importance of resolving them through alternative dispute resolution methods like negotiation and mediation. It highlights that these methods are flexible, cost-effective, and maintain party autonomy, allowing for a more controlled and private process. The script emphasizes the benefits of these approaches, including the ability to maintain business relationships, protect confidentiality, and find creative solutions that are agreeable to all parties involved.

05:02

🤝 Preserving Business Relationships through Negotiation and Mediation

This paragraph focuses on the advantages of using negotiation and mediation in the construction industry to preserve business relationships and reputation. It points out that amicable dispute resolution can enhance a company's image and increase the likelihood of future business opportunities. The confidentiality of these processes safeguards trade secrets and sensitive information, which is crucial in the industry. The paragraph concludes by reiterating the overall benefits of negotiation and mediation in Malaysia's construction sector.

Keywords

💡disputes

Disputes refer to disagreements or conflicts that arise between parties, often necessitating resolution to prevent further issues. In the context of the video, disputes in the construction industry can lead to non-compensable damages and losses, such as defects and delays, which underscore the importance of timely resolution for maintaining project performance and business reputation.

💡alternative dispute resolution (ADR)

Alternative Dispute Resolution encompasses various methods for resolving disputes outside of traditional court litigation. The video highlights ADR as a common practice in the construction industry, emphasizing its role in providing formal dispute resolution processes like negotiation and mediation, which are more flexible and cost-effective than litigation.

💡negotiation

Negotiation is a key component of ADR, involving discussions between parties to reach a mutually acceptable resolution. The script describes negotiation as being driven by the subjectivity of the parties involved, highlighting its informality and the autonomy it provides to parties in controlling the process, which is crucial for resolving disputes in a manner that suits their specific circumstances.

💡mediation

Mediation is another form of ADR where a neutral third party facilitates discussions between disputing parties to help them reach a resolution. The video points out that mediation adds objectivity to the resolution mechanism, with the presence of a neutral mediator helping to ensure a fair process, which is particularly beneficial in more complex or escalated disputes.

💡formality

The concept of formality in dispute resolution refers to the structured and formal procedures that govern the process. The script contrasts negotiation and mediation with more formal processes like adjudication and arbitration, noting that the former are less formal and more fluid, allowing for a more flexible and party-controlled approach to dispute resolution.

💡autonomy

Autonomy in the context of dispute resolution means that the parties have control over the process and its outcomes. The video emphasizes the autonomy granted by negotiation and mediation, allowing parties to conduct the process as they see fit without being restricted by procedural rules, which is important for achieving a resolution that is agreeable to all involved.

💡cost-effectiveness

Cost-effectiveness refers to the balance between the cost of a process and the benefits it provides. The script highlights negotiation and mediation as being cheaper and more cost-effective means of dispute resolution, particularly because they rely mainly on internal resources and require less time and effort compared to more formal processes.

💡privacy and confidentiality

Privacy and confidentiality are critical aspects of dispute resolution, especially in the context of sensitive business matters. The video notes that less formal processes like negotiation and mediation allow for better privacy and confidentiality, which is advantageous for maintaining business relationships and protecting sensitive information.

💡conciliation

Conciliation is similar to mediation but often implies a more directed approach by the third party to help parties reach a settlement. Although not explicitly mentioned in the script, the concept is implied in the discussion of achieving favorable resolutions for both parties, which is a key goal of conciliation.

💡business reputation

Business reputation refers to the overall perception of a business in the market, which can be significantly affected by how disputes are handled. The video suggests that resolving disputes amicably through negotiation and mediation can help maintain a positive business reputation, as entities that can resolve issues without litigation are often viewed more favorably.

💡creative remedies

Creative remedies in dispute resolution refer to innovative and flexible solutions that go beyond traditional compensation. The script mentions that negotiation and mediation allow for varied options of remedies, such as future contracts or added warranties, which can be tailored to the specific needs and circumstances of the parties involved, thus providing a more satisfactory resolution.

Highlights

Disputes in the construction industry must be resolved within a reasonable time to avoid irreparable damages and losses.

Alternative dispute resolution is a common practice in the construction industry.

Negotiation and mediation are flexible, simple, fast, and economical dispute resolution methods.

The practice of negotiation and mediation is formative in Malaysia and less formal compared to adjudication and arbitration.

Parties have control over the negotiation and mediation process, which is fluid and not fixed.

Negotiation is driven by the subjectivity of parties, while mediation adds objectivity with a neutral third party.

Negotiation and mediation allow parties to express themselves and understand the motivation for claims arising.

These processes assure party autonomy and do not restrict by procedural rules.

Negotiation and mediation are cost-effective and rely mainly on internal resources.

The time taken for negotiation and mediation is shorter due to parties' awareness of their disputes.

Privacy and confidentiality are maintained in less formal dispute resolution processes.

Early dispute resolution can help maintain business relationships and privacy.

Negotiation and mediation aim for a resolution favorable to both parties, encouraging concessions.

Parties are not restricted by technical, contractual, or legal arguments in negotiation and mediation.

Creative remedies, such as future contracts or added warranties, are possible in these processes.

Negotiation and mediation can help maintain business relationships, image, and reputation.

Confidentiality in proceedings protects trade secrets and sensitive information.

The benefits of using negotiation and mediation in Malaysia's construction industry include relationship preservation and cost-effectiveness.

Transcripts

[Music]

disputes are inevitable in the

construction industry which must be

resolved within reasonable time

if not it may cause damages and losses

that are not compensable such as defects

and delays which may affect project

performance and business repute

the use of alternative dis resolution in

the construction industry is a common

phenomenon

and is part of a long practice of all

the formal dispute resolution processes

negotiation and mediation are most

flexible

it is simple fast and economical

although negotiation and mediation is

effective means of resolution

and the practice of it has persistently

been integrated as part of the

construction industry the use of

negotiation and mediation is still

formative in malaysia

negotiation and mediation is less formal

in comparison to other forms of dispute

resolution such as adjudication and

arbitration

it is up to parties really how they set

out the process it is not fixed in any

manner and is fluid to the circumstances

it does not necessarily require the

involvement of councils negotiation is

driven by

more subjectivity of parties while the

mediation process adds in some

objectivity into the resolution

mechanism in view of the presence of a

neutral

in an escalated or stage dispute

resolution mechanism negotiation and

mediation process allows parties to

express

and parties in dispute are able to

benefit if not managed to resolve this

skill at least to understand the matter

and the motivation for the claims

arising

negotiation and mediation assures

party's autonomy

it gives the parties a total control in

the manner in which the process goes

parties are not restricted by rules of

procedure and may conduct as they seem

fit according to the circumstances

it is a cheaper means of resolution and

cost effective for parties in dispute

for negotiations parties rely on the

internal resources mainly and when it

comes to mediation the course of the

proceedings is way lesser than education

and arbitration

the time taken for negotiation and

mediation process is also much shorter

as the parties are fully aware of their

disputes and do not require the

additional time and effort to explain

etc to a third party

privacy and confidentiality is a great

advantage for parties in dispute less

formal processes such as negotiation and

mediation which are within the party's

control makes it much easier to retain

privacy and confidentiality

at early stages of dispute parties have

a higher chance of maintaining

relationship if the dispute is resolved

amicably

privacy and confidentiality certainly

enhances this chance

one of the greatest benefit of

negotiation and mediation

is that it is motivated towards

achieving a resolution that is favorable

to both parties when we

it forces parties to give a thought to

what would be palatable resolution for

the other

parties are aware that the process

requires a buy-in an agreement of both

and in order to maintain them parties

are more likely to make concessions

parties are also not restricted by

technical contractual and legal

arguments or principles in their

discourse parties are able to assess

practical scenarios limitations and

complications which some element of

empathy

in a more formal dispute resolution

mechanism

such as adjudication arbitration and

litigation the remedies that are

available to the parties are limited to

compensation

in negotiation and mediation parties

have varied options of remedies

they can come up with creative ways to

compensate for damages or losses by

way of future contracts added warranties

supply of additional space etc

negotiation and mediation also gives

party

an opportunity to maintain business

relationship

image reputation and style of doing

business is a factor that is assessed

carefully by parties in the industry

people are more likely to do business

with entities that are able to sit down

and try to resolve disputes amicably

and less likely to do business with

entities that are litigious in nature

confidentiality of the proceedings

allows for the safe keeping of trade

secrets and sensitive information such

as costing mechanism and key personnel

of experts involved there is therefore a

lot of benefit

of using negotiation and mediation in

the construction industry in malaysia

thank you