Impacts of Dispute and Litigation in Construction Projects in Nepal
Student: Pratik Koirala
Supervisor: Prof. Dr. Hari Krishna Shrestha
Submitted Date:
February, 2023
Abstract
Many construction projects are being carried out in Nepal with the help of various
implementing agencies such as government agencies, public enterprises and private
enterprises. Disputes arise in construction projects and solving those disputes properly is a
major challenge faced today.
The objective of this study is to identify the impacts of dispute and litigation in construction
projects in Nepal. The research was carried out in two ways. At first, secondary data were
collected from Nepal Council of Arbitration (NEPCA) and High Court, Patan. The cases
were studied to determine the facts regarding various research objectives. Secondly,
questionnaire survey and Key Informant Interview (KII) were carried out for taking
perceptions towards dispute management practices in construction projects of Nepal. The
obtained data were carefully analyzed to arrive at the conclusions set forth in this research.
The findings of the study revealed that disputes in the construction contracts are usually
caused due to inadequate design and site information, commencement and delay
information, unforeseen physical/ site condition resulting to variation, strikes, bandh, riot
(disturbance) or disorder, delay in decision making and settlement of dispute, possession of
site and access to site, unusual weather condition and inflation, unavailability of fuel and
construction materials.
Time overrun and cost overrun are the major problem that arises due to disputes. Negotiation
is the most applied Alternative Dispute Resolution (ADR) method to resolve the disputes
followed by adjudication and mediation. Arbitration is used as the fourth ADR method due
to its high legal value in spite of high time and cost consumption. Alternative Dispute
Resolution procedure for National Competitive Bidding (NCB) contracts is applicable,
simple and satisfactory to all the parties involved. Therefore, there is a need to revise the
construction project contracts and standardize it to include the proposed ADR for disputes
resolution through establishing an official committee, which consists of all related sectors
working in public construction projects, contracting union, engineering syndicate, and
specialist engineering consultancies.
Keywords
Dispute, alternative dispute resolution, arbitration, litigation, construction