Avoiding disputes on your construction project.

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Sometimes construction projects end in disputes between the General Contractor and the client or owner. Also, regularly disputes occur between the General Contractor (Main Contractor) and their Subcontractors or Suppliers. These disputes can end in legal action, result in media attention and even disrupt the project - sometimes bringing it to a halt. Usually it’s only lawyers that benefit from these disputes. Yet, somehow disputes are becoming more frequent on construction projects, almost becoming a way of business for some.
​#constructiondisputes #constructionlaw #constructionprojectmanagement

Why construction disputes should be avoided

Where possible construction disputes should be avoided because they:

• are time consuming – don’t underestimate the time that disputes take to resolve, time that could be better utilised elsewhere on the construction project, or on other projects
• can damage the construction company’s reputation – clients and subcontractors often avoid contractors that have a reputation for project disputes
• damage the relationship between the parties – the relationship seldom returns to normal after a dispute
• they are costly especially when they become legal and involve lawyers
• ​they may end poorly for the construction company who doesn’t receive the full value of their claim
• they can disrupt the construction project and sometimes cause further problems

How to avoid construction disputes

Generally most construction disputes can be avoided if appropriate actions are taken, such as ensuring:

• There’s a legally enforceable construction contract in place which protects both parties’ interests. Don’t start construction projects without a proper contract
• The contract is well written and doesn’t have conflicting clauses or contractual loopholes.
• The contractor understands the contract and complies with its provisions. Often Project Managers don’t read the contract until a dispute arises – it’s normally too late then! 
• The contractor communicates with the client and their subcontractors, timeously notifying them when problems and variations arise. An introduction to construction variation claims video 19 -  Variation Claim Notification
• The contractor submits and resolves variations and change orders as soon as practical.
• Clients act in a fair and reasonable manner. 
• Accurate project records are maintained. 
• There’s willingness by the parties to talk and negotiate.
• Personalities and emotions are kept out of the dispute.
• The contractor admits when they’re wrong and doesn’t lodge extravagant claims. 
• The consequences of escalating the dispute are weighed up carefully, since the costs of legal action may be more than the outcome is worth. 
• Expert advice is sought when necessary.
• The construction contract is administered in a spirit of honesty and cooperation by all parties.
• Senior management need to be aware of potential disputes and problems on a construction project so they can take the necessary action and intervene if required to avoid the problem escalating.
  
  

 Unfortunately some clients, Project Managers and construction companies have a reputation for being overly contractual, being unreasonable or being overly enthusiastic with their claims – it may be sensible to avoid working with these companies or people, or if you have to, then ensure your team is competent and able to defend your company. How To Avoid Claims On Your Construction Projects

Sometimes a dispute is unavoidable, but I’ve generally found that most construction variations and claims can be amicably settled without going down the dispute resolution or legal process. 

When construction disputes are unavoidable

​Unfortunately construction disputes which cannot be resolved do arise, and then it’s important to follow the dispute resolution process stipulated in the construction contract. Only as a last resort should you proceed down the legal route. Having said this, though, do not hesitate to ask for a legal opinion or for expert advice. Of course also ensure that senior management is aware of the problems and the next steps being considered.

Just because there is a dispute doesn’t mean you can walk off the construction project. Sometimes construction companies do this, but it could be a fatal mistake if the proper termination procedures haven’t been followed, and may allow the client to take action against the contractor for breach of contract.
​#constructioncontracts

Conclusion

​Contractors need to be contractually astute. They need to understand the terms and conditions of the construction contract when they price the project, ensuring they are acceptable. These terms and conditions should be checked before the contract is signed. Project Managers need to understand their contracts and ensure they administer the project in terms of the conditions. By being proactive and knowledgeable most disputes can be avoided.

For other similar articles read:
15 Questions to ask before starting your next construction project
Are you working for free on your construction project
Will your next construction claim be successful?

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​Paul Netscher has written several easy to read books for owners, contractors, construction managers, construction supervisors and foremen. They cover all aspects of construction management and are filled with tips and insights.
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