What is Construction Mediation?

Construction mediation is a specific type of mediation that occurs within the construction industry. Mediation in general is an alternative to using the court system or binding arbitration to resolve differences. In particular, construction mediation normally occurs between a contractor and subcontractors, between contractors and suppliers, or between construction workers and end-users who may have disputes.

Within the construction industry, there is a lot of potential for problems that could lead to litigation. For example, a contractor might fail to pay his suppliers or subcontractors, who normally are not paid until after a job is done or supplies are delivered; a person who hired builders to build may be dissatisfied with the work and want to sue, or he may fail to pay; or subcontractors may do work improperly or suppliers may deliver inferior quality goods. Each of these situations, and many other related problems, could arise and give rise to the need for construction mediation.

When a dispute occurs, normally the parties would file a lawsuit or submit to binding arbitration, if they had a contract that required them to do so. Legal fees and even arbitration costs, however, can be expensive. In order to avoid these costs, some people involved in construction disputes opt to attend voluntary mediation instead. Courts may also compel parties to go to mediation before permitting them to bring a case, although in those situations the parties will be made to go but not necessarily made to form an agreement since mediation is never binding unless the individuals want it to be.

During the mediation process, a third party mediator facilitates discussion between both of the parties. Each person or group of people presents his side of the story on the disputed matter. The mediator helps the parties communicate openly about each of their positions and tries to guide the other side to see where everyone is coming from. During the construction mediation process, the mediator may use a number of different techniques to encourage communication, including asking open ended questions or asking each side to present evidence.

The mediator may also help the parties see what their options would be if they went to court. Mediators will not make a decision or a ruling, but will instead try to help the parties come to an out-of-court settlement. If the two parties agree to an out-of-court settlement during construction mediation, then they can draw up a settlement agreement and that settlement will become legally binding.