Making alternative dispute resolution work in complex projects

The implementation of large infrastructure projects – both in regions undergoing intensive development, such as the Middle East, and in countries undergoing complex urban revitalisation processes – requires the integration of capital, expertise, and effective management structures. Regardless of scale and level of preparation, every project may encounter conflicts arising from ambiguous contract provisions, changes in the market environment, or implementation issues.

Unresolved disputes can lead to significant disruptions in the implementation schedule, budget overruns, and escalating tensions between stakeholders. For this reason, alternative dispute resolution (ADR) methods, such as mediation, arbitration, or dispute boards, are an important part of a systematic approach to contract risk management. However, their effectiveness depends on these mechanisms being properly anchored in contract documentation and internal project procedures.

The purpose of this article is to present the practical aspects of implementing ADR in complex projects: from the construction of contractual clauses, through the development of internal decision-making procedures, to the cost and time analysis of various ADR solutions.

Clauses – the details that matter
Effective ADR starts with precise contract clauses. Vague statements about ‘amicable settlement’ or ‘ADR procedures’ offer little real protection when disputes actually arise. Instead, contracts should clearly spell out which ADR methods will be used, in what order, how long each step should take, and what procedural rules will apply.

For instance, if mediation is to come before arbitration, the clause should explain how mediation will be started, who will appoint the mediator and how long it should last before the parties can move on. It should also set out the seat of arbitration, the language to be used and which institutional rules – such as ICC or UNCITRAL – will govern the process. These details can avoid arguments later on and help disputes get resolved quickly and fairly.

It’s just as important to make sure that ADR clauses are consistent across all project documents. In large projects, there are usually several linked contracts – covering design, engineering, supply and operation – that can create overlapping rights and obligations. If ADR clauses differ from one contract to another, there’s a real risk that disputes will be handled in different ways, undermining the benefits of ADR and adding confusion at a time when clarity is needed most.

Internal readiness – moving from words to action
Even the best-written ADR clauses won’t help if the organisation isn’t ready to use them. Companies need clear internal processes and decision-making structures that let them respond quickly and confidently when disputes arise.

This starts with knowing who in the organisation has the authority to trigger mediation, agree to arbitration or involve a dispute board. Some firms put in place early warning systems or escalation protocols to catch disputes early, before they take on a life of their own.

Collaboration between in-house counsel and project managers is just as crucial. In-house lawyers can advise on how to use ADR to protect the company’s interests, but it’s often project managers who first see the signs of trouble. Training on negotiation and clear internal guidelines can help bridge this gap and ensure everyone is on the same page.

Culture also plays a big part. In some organisations, every disagreement is treated as a potential lawsuit, making it hard to use ADR effectively. But in companies where ADR is seen as part of good risk management – a chance to fix problems and protect working relationships – it becomes part of how people do business.

Choosing the right tool – weighing pros and cons
Mediation, arbitration and dispute boards are the most common ADR options, but they’re not the only ones. Each has strengths and drawbacks, and the right choice depends on the project and the dispute itself.

Mediation can be quick and cost-effective, especially when both sides are willing to talk. It lets parties find solutions that work for everyone, beyond what a judge or arbitrator might order. But mediation only works if both sides are prepared to make compromises. If one party is unwilling, it can end up as just another step in the process.

Arbitration provides a binding decision by a neutral tribunal, which is often crucial in international projects. Arbitrators can be chosen for their understanding of the sector, helping them see the bigger picture. But arbitration can also be time-consuming and expensive if not managed well.

Dispute boards – including dispute review boards (DRBs) and dispute adjudication boards (DABs) – are used mainly in large construction and infrastructure projects. They’re set up at the start of a project and stay involved throughout, resolving issues as they come up. DRBs usually make recommendations, while DABs issue decisions that are binding unless challenged later. Their real value is in helping projects keep moving, though their impact depends on local enforcement rules and whether the parties are ready to comply.

Other options like conciliation – which mixes mediation with expert advice – or simple negotiation can also play a big role. In fact, for many projects, negotiation remains the fastest and most direct way to keep things on track.

Striking the balance – final thoughts
ADR is not a magic fix. It needs contracts that are clear and practical, teams that are ready to use it properly, and a realistic view of what each tool can achieve.

For companies in real estate and infrastructure, getting these pieces right is no longer optional. Well-drafted clauses lay the foundation for effective dispute management. A culture that views ADR not as a sign of failure, but as an opportunity to manage risks and preserve working relationships, ensures that these tools are actually used when they are needed most. Careful thought about the right mechanism for each situation helps balance the need for speed, fairness and finality.

Ultimately, ADR is about more than just settling disagreements. It’s about safeguarding the time, resources and trust that go into complex projects. In a world of bold ideas and tight timelines, ADR is what helps turn conflict into a chance to build stronger, more resilient outcomes – and keep even the biggest, most challenging projects on track.

It’s up to everyone involved to make sure ADR isn’t just a clause in a contract, but a living part of how projects are run. When that happens, even disputes can become stepping stones to better results and stronger collaboration in the future.