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The best conflict resolution mechanism should be taken into account during the contract formulation for a project. The contract should be flexible and it should not transfer the risks to any single stakeholder, rather should be in such a way that the risks are effectively shared.
One has to forecast the possible areas of conflict or the general conflicts that may arise during the execution of the project and formulate the contract accordingly, thereby having the required clauses for any conflict that may arise.
Negotiation is best and least cheapest conflict resolution mechanism, if negotiation fail then go for mediation and finally arbitration. it all depend if contract is drafted wisely and which dispute resolution technique is mentioned.
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