How to avoid construction disputes

Frequently construction projects end in long and acrimonious disputes which can be costly, consume large amounts of time and energy, and which sometimes drag on long after the project construction work is complete. These disputes may end inconclusively with no winners - except perhaps the lawyers.

​These disputes occur between clients/owners and contractors, between contractors and their subcontractors and suppliers.

In my last article Avoiding Construction Disputes  I mentioned that I had resolved hundreds, probably more than a thousand, variation claims (change orders) with my clients amicably and without declaring a dispute.

Some recent examples of disputes
https://www.santafenewmexican.com/news/local_news/eldorado-hotel-sues-designers-builders-of-rooftop-swimming-pool/article_fe18b412-90b8-11eb-aafb-33f9dd971cfc.html
https://www.cincinnati.com/story/news/2020/09/02/forest-hills-says-subcontractor-has-grossly-exaggerated-money-due/5684289002/
https://therealdeal.com/miami/2020/09/09/miami-river-condo-association-alleges-10m-in-defects-lawsuit/

So how can we prevent disputes on our construction projects?

How contractors can avoid construction disputes

Contractors can avoid disputes if:

• You have a good signed contract in place.
• You take steps to mitigate and avoid changes and delays by warning the employer ahead of time when information or access is required, and by notifying the employer as soon as a variation or delay arises. The object should not be to trip the client/employer and their team up, it is more important to have a successful project.
• You avoid some employers and some projects.
• Your variation claims are clear, fair and right, with supporting documentation.
• You keep accurate project documentation.
• There is an approved construction schedule which is regularly updated, is in sufficient detail, and clearly shows milestones, links, and durations. 
• You regularly communicate with the employer and their team.
• You are willing to engage and negotiate with the employer.
• You try the cup of coffee approach. A meeting often solves an issue that 10 emails cannot!
• You ask for expert help when necessary.
• If the employer’s responsible person is unprepared to budge you may be able to meet with their manager or even talk to the employer directly.
• It is possible to come up with other solutions to help the employer.
• You do not fight the unwinnable.
• You keep your emotions and ego out of your decisions.
• You understand the other party’s argument and counter it with facts.
• You admit when you are wrong.
• You employ subcontractors and suppliers who are capable of delivering the project, not simply because they are the cheapest.
• You ensure that you deliver a quality project on time.
• You continually monitor the quality and progress of subcontractors and take prompt action to correct problems.

How clients and owners can avoid construction disputes 

Employers can avoid disputes by:

• Not selecting contractors on price alone. Select contractors who have the resources and capabilities to do the work. Contractors whose price is a fair reflection of what the project should cost. The cheapest price seldom works out to be cheap.
• Ensuring there is a proper and fair contract in place.
• Minimising changes and delays to the project.
• Ensuring that the construction project and contractor are managed properly. This includes monitoring progress and quality as the project proceeds, and taking proactive steps with the contractor to rectify the problems. 
• Taking prompt action when problems occur on the project. Don't wait until the end of the project to find fault - it's usually too late by then.
• Understanding the contract.
• Promptly adjudicating the contractor’s variation claims (change orders) in a fair and impartial manner in accordance with the contract document. Ensuring you understand the claim before you reject it.
• Communicating your decision on the merits of a claim to the contractor so it is clear what parts of the claim you reject and why.
• Holding a meeting with the contractor to understand the basis of variation claims and the contractor’s calculations if these are not clear.
• Not trying to profit unfairly from the contractor or take advantage of the contractor.
• Keeping egos and personalities out of your decisions.
• Making informed decisions in the best interests of the project.
• Building trust and collaboration on the project.

Conclusion

Collaboration between contractors and the client or owner, collaboration between contractors and their subcontractors, a team effort can lead to a successful construction project for all. Good communication is essential to successful projects. Aiming for a project that is a win for everyone, rather than a winner take all approach.

​It is possible to avoid construction disputes.

Other useful articles:
Why owners sometimes employ the wrong contractor
Are your subcontractors profitable? Should you care?
what makes a good client?

​This article is from the webinar Avoiding Construction Disputes by the author and information included in author's book Construction Claims: A Short Guide for Contractors. 
This easy to read book demystifies the claims (change order) processes ensuring entitlements are claimed. Learn when you can claim, how to make claims compelling, and the supporting documentation required to win. Your eyes will be opened to numerous events, costs and impacts. Knowing some of these tips could dramatically improve profits and avoid time consuming acrimonious disputes.
Also included is advice for contractors to avoid and defend claims from employers and subcontractors.

​© 2021 This article is not to be reproduced for commercial purposes without written permission from the author.

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