Priority analysis of dispute factors in overseas construction based on FIDIC contract conditions

Abstract

With the globalization of the construction market and the recession in Korea’s construction economy, construction companies in South Korea are extending their business into new international markets. However, there are still more than a few companies that are not making due profits despite the streams of contracts available outside the country. This is because Korean construction companies are undergoing complications in the resolution process of overseas construction claims and disputes. Therefore, the present study examines research from a construction company’s perspective, based on the FIDIC Red Book, a standard form of contract that is typically used overseas for separate bid-based construction contracts. Disputable items were selected through analysis of contract documents and the final dispute factors were derived through literature reviews and interviews with experts. To determine the priority of the dispute factors suggested by the experts who are practically in charge of overseas construction contract management, an FMEA method survey was performed and feedback was received using the Delphi method. Based on the survey results, the priority of dispute factors was analyzed, and the top 10 factors were selected as preeminent key factors for potential improvement and procedural amendment. In addition, this study analyzes whether individual or company system capabilities should be addressed in order to prevent such dispute factors. Based on the findings of this study, it is expected that Korean construction companies will establish strategies to cope with disputes at a corporate level and gain competitiveness in the overseas construction market.