The choice of a construction dispute resolution method can significantly impact the outcome of a construction dispute. Two dispute resolution methods—litigation and arbitration—are described below.

Litigation involves resolving disputes through the court system. In this method, a judge or jury makes a final decision on the dispute based on legal principles and precedents. The proceedings become a matter of public record, making the process more transparent, which can be advantageous in some situations. Furthermore, decisions made in court set legal precedents, informing legal processes and clarity in future cases. Conversely, cases that are part of public record lose the benefit of privacy. Additionally, disadvantages include time consumption, as legal processes can be associated with significant delays. Moreover, judges and juries may lack specialized knowledge in certain industries or technical areas.

Another method for dispute resolution is arbitration. This method involves appointing a neutral third party (arbitrator) to make a binding decision after considering evidence presented by both parties. Arbitration typically offers faster dispute resolution compared to litigation; however, it can still incur significant costs. Moreover, arbitrators come equipped with industry-specific knowledge to provide a better understanding of complex issues.

When choosing between litigation and arbitration for dispute resolution, it is important to consider the nature of the dispute. For example, technical aspects may necessitate the involvement of an arbitrator. Time considerations are also important, depending on the project timelines and whether either party requires expediency in resolution. Cost considerations may also be included, as legal costs further contribute to budgetary overrun and profit loss. Additionally, parties wishing to preserve relationships may wish to conclude matters more privately, wishing to avoid public proceedings. It is helpful to have construction dispute resolution clauses in contracts to define preferred dispute resolution methods in advance and, thus, reduce uncertainty.