Dealing With Construction Disputes Pro-actively Instead of Reactively (Part 1)

By Cotney Consulting Group. 

Avoid disputes with these mitigations that can be employed during the pre-construction phase of a job. 

Construction disputes are seen as inevitable, and it is widely accepted that they will occur. Most lawyers or construction dispute professionals attempt to address these disputes in a reactive manner. This article will attempt to consider possible proactive approaches that will help prevent disputes and thus in turn, save the project time and money. 

Before we can look at how construction disputes can be resolved proactively, we need to understand or attempt to highlight what are the major root causes of construction disputes. Upon embarking on a bit of research on the subject I have for purposes of this article identified the following 5 preconstruction phase root causes:  

1 – Client lack of information/Design shortfalls

The contracting parties can do design checks and audits to identify possible problems areas. If there is any information not yet available or not completely finalized with contract signing, the parties should identify these problem areas. When drafting the contract documents these areas should specifically be identified and where possible the parties should agree how it will affect the contract time for completion as well as the costs associated therewith. 

2 – Inappropriate contract type 

The type of project should be paired with the correct type of contract document to ensure that it suits the party’s needs. If the project is for the construction works only and the owner will be responsible for the supply, the parties should not use a supply and construction contract. The involved stakeholders as well as the region should also be considered before deciding on which type of construction contract will be used. 

3 – Access to site 

Parties should in as much detail as possible consider possible restrictions in relation to access or overlapping access conditions to ensure that high risk areas are identified in advance and where possible already negotiate alternative means or option B scenarios. 

4 – Ambiguities in the contract document 

All parties must review the contract document in detail before signing and all ambiguities must be identified before contract signing. The ambiguities should be noted, and clarifications thereof should be documented. Parties should also consider including this document as part of their contract document. 

5 – Poor estimation 

It is advisable that a team should work on the estimation of a project together and that enough time and consideration is applied to ensure various scenarios that might affect the estimation is considered and noted beforehand. If all parties are aware that there might be circumstances which might affect the price or availability of a material or important component, they should attempt to negotiate how these instances will be dealt with before the contract is signed. 

This article focuses on the possible mitigations that parties can employ during pre-construction phase that might help to avoid disputes. Part 2 of this article will focus on the root causes of construction disputes during the construction phase and possible mitigation measures to deal with the causes proactively. 

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Original article source: Cotney Consulting Group