Despite best intentions at the outset, construction projects often face disputes that lead to claims, delays and mounting costs.
Through our years of resolving construction conflicts, we have seen certain issues crop up time and time again. In this article, we outline the 10 most common pitfalls that set projects on a collision course towards dispute and what you can do to avoid them.
Ambiguous Contract Terms
The contract forms the foundation for successfully delivering a construction project. Yet imprecise terminology, inconsistencies, gaps and lack of clarity in contract terms open projects up to misalignment and disputes down the track.
Using standard forms without particularising to the project invites trouble. To avoid ambiguous contract terms, invest time upfront negotiating clear terms that all parties understand and ensure the contracts you enter work for the project and are contractually sound.
Unrealistic Programme
Overly optimistic programmes that do not factor in adequate contingencies for potential delays spell trouble.
Contractors bid low to win work and then struggle to resource the works in a manner to achieve the progress required by the contract programme. Conversely, events outside of the contractors control, prevent the contractor from achieving the planned progress. Pressure mounts around missed milestones, liquidated damages loom, costs escalate, and parties end up in disagreements.
We recommend ensuring that the contract programme is achievable and regular updates to the programme are provided and explained to the employer, on an ongoing basis. From the outset build realistic schedules, regularly update programmes and administer the time provisions within the contract to ensure your right to an extension of time and/or associated costs are reserved and any employer claim for liquidated damages can be defended.
Poor Communication = Disputes
When issues arise, prompt, clear and open communication provides the best prospect of early resolution. But communication breakdown remains a prevailing contributor towards disputes.
Missing vital notices or approvals, unclear instructions, and failure to promptly address concerns raised all store-up problems for later. Prioritise constant and proactive communication at all levels from day one. Administer the contract.
Inadequate Site Records
Maintaining thorough, accurate and timely records is essential when resolving disputes.
Inadequate document management continues to compromise parties鈥� ability to substantiate claims or defend against them. You must define document responsibilities and protocols upfront. Consistently track changes, keep organised records and carefully file correspondence! A successful and profitable project is dependent upon the keeping of records, records, records!
Changes and Variations
Modifications, no matter how necessary, often sow confusion if not properly administered. Abbreviated variation instructions, scope gaps, underspecified pricing assumptions, missed approvals, and knock-on impacts all lead parties to differ on changes. It鈥檚 vital to control variations with formal change processes, prompt valuations and meticulous records. Notify and build your variation account contemporaneously as the works proceed, ensuring maximum recovery of your entitlement.
Payment Issues
Cash flow constraints quickly fracture relationships and breed disputes. Invoicing delays, improper payment applications, missing approvals, unsupported valuations, withheld sums, and late payments contribute to cash tensions.
Administer payments systematically based on contract requirements and open communication between parties to nip issues in the bud.
Defective Works
Detecting and correcting defective work proves increasingly contentious if not caught early enough.
Lengthy snag lists, persistent shrinkage issues, questions on meeting quality standards or specifications and fixing remedial work out of sequence typically escalate tensions. We advise implementing robust quality assurance and snagging procedures for early identification and prompt rectification.
Subcontractor Disputes
Main contractors often find themselves caught in the crossfire between employers and subcontractors.
Common pain points we often see include material substitution, delays and disruption, defects, programme realignments, variations in pricing, late and under payment, termination and incomplete works.
Ensure that contracts are drafted in a way that ensures parties are clear of their obligations and a contractual process exists to accelerate the resolution of the issue.
Delayed Disputes Initiation
When parties let issues simmer without attempting early resolution, positions harden, and by the time formal disputes get triggered, extensive claims may have stacked up.
Open negotiation can be a good tool to avoid this before disputes reach boiling point. If unresolvable, initiate formal processes sooner rather than later while facts remain clearer in everyone鈥檚 mind.
Failure to Follow Contract Requirements
Resolving construction disputes comes back to knowing and administering all contract requirements.
Yet parties continue falling through misunderstood obligations, missed notices, insufficient records, incorrect valuation approaches and general non-compliance.
Know your contract thoroughly and consistently administer it!
Need Support?
If you are concerned that your project is heading to dispute or adjudication, allow us to assess your position, improve your position to provide you with robust claims and entitlement and advise on your next steps or be your representative.
Visit our dispute services page to find out more, or contact us directly.