Effective Payment System for Resolving Dispute in Construction Project Management

This article discusses the importance of an effective payment system in construction project management and how it can help resolve disputes. It reviews the fair value option and its effectiveness in controlling projects. The article also highlights the challenges and issues related to payment management in construction projects. The review includes a critical assessment of the article, preliminary research questions, and personal reflection.

Running head: Research in project management
Research in project management
Name of the Student
Name of the University
Author note

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Research in project management
Table of Contents
1A...............................................................................................................................................2
Description of the topic:.............................................................................................................2
Table for the four relevant articles:........................................................................................3
Summary of the most relevant article....................................................................................4
Critical assessment of the article:...........................................................................................5
Preliminary research questions:.............................................................................................6
Personal reflection..................................................................................................................6
References:.................................................................................................................................8

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Research in project management
1A.
Description of the topic:
The concept of resolving payment related dispute has always found the way in the
field of project development and control. As the construction project, involves a lot
equipment and also it involves a lot of contracts that needs to be signed between the
developer and the several third parties supplying the equipment In order to execute the
project with desired success, project managers always try to create a payment system that is
able to avoid any kind of dispute during the project execution.
Construction Project does not always witness the success in resolving payment
dispute for poor payment management technique. Hence, there has been a constant
requirement for developing a method that ensures success in executing a project. Successful
payment policies is an important issue in the construction project execution field for its
effectiveness in controlling projects. In this context, a review will be prepared for assessing
the effectiveness of the proper payment system and particularly how the issue hampers
project success.

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Research in project management
Table for the four relevant articles:
Articles Keywords
1. Sin, T.A.S., 2016. Payment
issues–The present dilemmas of
Australian construction industry.
University Technology Australia.
Construction project management; traditional project
management; payment dispute; methodology;
methodology elements.
2. Dainty, A.R., Millett, S.J. and
Briscoe, G.H., 2015. New
perspectives on construction
supply chain integration. Supply
chain management: An
international journal, 6(4),
pp.163-173.
Success; construction project; payment issue;
Methodology; Efficiency
3. Danuri, M.M., Munaaim, M.C.,
Rahman, H.A. and Hanid, M.,
2016. Late and non-payment issues
in the Australian Construction
Industry-Contractor's perspective.
In International Conference on
Construction, Culture, Innovation
and Management (CCIM).
Construction development ; large-scale development;
virtual teams, contractors , payment decision making
4. Wu, J., Kumaraswamy, M. and
Soo, G., 2014. Payment problems
and regulatory responses in the
construction industry: Australia
Construction development, construction issues,
project payment

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Research in project management
perspective. Journal of
Professional Issues in Engineering
Education and Practice, 134(4),
pp.399-407.

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Research in project management
Summary of the most relevant article
The authors of the first article has assessed the poor payment design and the impact it
has on the project management, particularly in long term projects. The traditional payment
management approach that tries to resolves the issues at the end of the project had some
faults in terms of project execution and modelling. This outcomes has been tried to improve
in this new method. Traditional construction project execution method as argued by the
authors follows cascading payment planning which is not so effective in long term project
execution. The new method called fair value option according to the article, is particularly a
better choice for executing project in complex and chaotic settings. According to the article
the fair value option is useful for projects that works with contracts which might contain poor
bargain.
According to the article, the success factors of project payment, no matter in which
field is being applied, three parameters needs to be addressed for better project executions.
These factors, according to the article are efficiency, stakeholder satisfaction including the
contractors and the executions of the contracts as a whole. However, the way the three factors
will influence a particular project is inclusive in nature and the effect of these parameters will
be decided by the level of choice in which the project will be executed.
The article has presented a discussion on procedure for making an assessment of the
impact of the fair value option. The authors have suggested for the regression model for this
purpose. According to the authors regression is a perfect choice for this task. The regression
model confirms the effectiveness of the fair value options. The model shows that the process
is particularly helpful in situations where there is a requirement for increasing the interaction

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Research in project management
of the process that are closely related with the project. Sometimes during the project
execution phase, the contracts are needs be terminated. This creates issues as the contractors
demand the principle amount that was agreed when the contract was signed.. Hence, there
should be proper method which might be able to avoid dispute and hence fair value option is
an effective approach which will help the contractor to avail the payment if the termination is
not the fault of the contractor.
Critical assessment of the article:
The article has illustrated the issue of payment management in a lucid way and also
developed the need for having a better payment system for resolving the dispute in the
construction project with better project controlling approach. The authors with proper
argument has chosen the fair value option over the others, specially the traditional
approaches. However, one important thing is missing in the discussion of the article. The fair
value option which have been suggested by the authors, is not tested against any empirical
method which might have been made the argument much stronger and provide it a necessary
validations. This very fact might be considered as the shortcomings related to the article.
The authors have only considered the effectiveness of the fair value option and that
too in the theoretical context. The article has not discussed about the large scale implications
of the particular method. In order to understand whether the particular method is really
effective in practical applications or not, there should be a large empirical analysis that
considers several layers that the projects goes through. This analysis will provide the practical
basis for the application of the model.
The fair value method provides effective measures for managing project that delivers
results. But before applying the method one thing should be noted that the model only
considers single item measurements which might not be always reliable. However the

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Research in project management
problem can be well managed if some modification is done in the approach. The approach is
to introduce an index that solves the issues with the measurement. However the authors has
not suggested or opted for such methods and that goes into the shortcomings of the otherwise
a very well presented article.
Preliminary research questions:
In the review, we study the following research questions:
 RQ1: What payments challenges need to be addressed for achieving success in
construction project?
 RQ2: What issues are most important for effective payment management for
construction project?
Personal reflection
The topic of construction project execution is very complex in nature and this requires
very professional approach for conducting project at corporate levels (Kerzner, 2018). Only a
professional and experience team is not enough in this regard (Kerzner and Kerzner, 2017).
While doing the research for preparing the paper I have learned that although the topic of
construction project execution is highly complex, but the process is possible to manage if
proper approach is followed. As different projects works with different project deliverables,
the outcomes varies. However one thing that is common is the requirement for a good and
effective control technique. Without having a proper control method in place it is not possible
to drive the project with success. However it is not easy to understand which process will
work best for a given project as the complexity and nature of the project varies significantly.
Hence, it requires an in depth study of the project deliverables to understand the project in
details. However, irrespective of the project topic, three variables are very important and they
are customer satisfaction, stakeholder management, proper negotiations and the overall

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Research in project management
performance of the team assigned for the process. All these parameters are effectively
addressed by the agile method. Although the agile method was exclusively developed for the
software industries, over the years the method has become very popular for its capability to
address project related issues very effectively so that the project becomes successful or the
chance of the success becomes high. However, the traditional methods of designing payment
system for construction project execution is not so effective when compared to the fair value
method. The primary reason for traditional methods not being so successful and required
replacement, that these methods follows cascading payment system which is not very much
effective for project that must be executed in chaotic setup. However, before applying the fair
value option in project management, it must be verified through empirical analysis to develop
a stronger concept about the method being applied in practical projects, especially projects
that are deployed in large scale.

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References:
Dainty, A.R., Millett, S.J. and Briscoe, G.H., 2015. New perspectives on construction supply
chain integration. Supply chain management: An international journal, 6(4), pp.163-173.
Danuri, M.M., Munaaim, M.C., Rahman, H.A. and Hanid, M., 2016. Late and non-payment
issues in the Australian Construction Industry-Contractor's perspective. In International
Conference on Construction, Culture, Innovation and Management (CCIM).
Kerzner, H. and Kerzner, H.R., 2017. Project management: a systems approach to planning,
scheduling, and controlling. John Wiley & Sons.
Kerzner, H., 2018. Strategic planning for construction project using a project management
maturity model. John Wiley & Sons.
Sin, T.A.S., 2016. Payment issues–The present dilemmas of Australian construction
industry. Unpublished Masters Dissertations, University Technology Australia, Skoda.
Wu, J., Kumaraswamy, M. and Soo, G., 2014. Payment problems and regulatory responses
in the construction industry: Australia perspective. Journal of Professional Issues in
Engineering Education and Practice, 134(4), pp.399-407.