Violent conflicts destroy or undermine human, social, economic, environmental and political capital. The cost of the war to the Sri Lankan business community alone has been an estimated $2.2 billion so far. The German Development Corporation(GTZ) with Sri Lanka, is therefore, concentrated not only in contributing to a peaceful settlement of the war through conflict mitigations and reconciliation, but also to ensure that other conflicts in the country are not resolved in a violent manner. Against this background, the aim of this paper is to systematically assess the conflict situation within the context of the ‘Estate Forest and Water Resource Development Project.’ Thus an attempt is made to analyze the present conflict situation with the focus on identifying the underlying reasons for conflicts. As a result, various options and recommendations for effective crisis prevention is made to GTZ, highlighting measures to reduce the potential for conflicts in the plantation sector, ways in which forestry projects can support the plantation sector in terms of crisis prevention and finally steps for crisis prevention approaches in the plantation sector to benefit other economic sectors.