Construction projects are important elements of any country’s infrastructure and industrial growth. Нe construction industry makes its direct contributions to economic growth of the country. Nepalese Construction Industry contributed around 11% to the Gross Domestic Product (GDP) of the country and it uses around 35% of government budget

This study was conducted during the period from January to April 2018. The method of the study was literature survey from different sources. The purpose of the study was to investigate the causes and effects of disputes on construction projects. The disputes in construction projects are inevitable throughout the world. However, the extent of disputes is more in developing countries like Nepal as compared to others.

The study found that disputes are increasing in the construction industries due to its uncertainty, complexity, and involvement of different categories of project participants. The lack of information in the construction industries leads to many disputes during the construction process. Disputes predominantly arise from complexity and magnitude of works, multiple prime contracting parties, poorly prepared contract documents, inadequate planning, financial issues and communicating problem. If disputes are not resolved promptly, then it tends to drag on, escalate and can cause project delays, lead to claims, require litigation proceedings for resolution and ultimately destroy business relationships. Ultimately, it may degrade the quality of the work.

The construction industry has great employment generation potential. It is estimated that this sector is creating employment opportunities to about one million people. About 60 percentages of the development budget is spent through the use of the contractors. Нe construction industry is a huge organization, in which several construction participants with different background, different knowledge and different mentality work together. НeLr common motto is to make maximum profit with these difference in the results in clashing of ideas, thoughts and perceptions in any decision makes conflicts in such situation become inescapable as well as inevitable. Since, it is always recommended that conflicts have to manage as soon as possible; if not so they rapidly turn into dispute. Disputes have the endemic features in the construction industry.

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ISSN: 2472-0437

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