This paper presents a methodology to study the effect of different resolution strategies on the value of the investment in a project-specific dispute resolution ladder (DRL) using option/real option theories from financial engineering, process centric modeling, and system dynamics methodology. Of particular interest in this paper is the integration of these research methodologies into a computer model to support the evaluation of the DRL investment in a particular construction project by taking into account the characteristics of: (1) the project, and (2) the different alternative dispute resolution (ADR) techniques chosen for the DRL implementation. Finally, an example is presented to illustrate the application of the computer model in a real construction project.
Figure 4: Process Model for Conflicts, Disputes and Claims (CDC) Occurrence and Resolution