7 Tips for Avoiding Construction Disputes

A single construction dispute can turn a profitable job into a loss; multiple disputes can put a contractor out of business. Here are seven strategies for avoiding them:

1- Draft contracts carefully.

Ambiguous contract language is probably the most common cause of legal wrangles for contractors. Pay close attention to provisions that affect your right to compensation and/or extensions of time in the event of owner-caused delays or changes. These include change order provisions, no damages for delay clauses, differing site condition provisions and substantial completion requirements.

2- Monitor jobs closely.

No matter how well drafted your contracts, disputes can still arise if your project managers and crews don’t follow contractually mandated procedures. For example, be sure they understand the change order approval process and follow it to the letter. This means complying with all notice and approval requirements and documenting additional costs thoroughly.

3- Have an accurate schedule.

It’s difficult, if not impossible, to assess the impact of delay claims or change orders without an accurate baseline schedule accepted by all parties at the start of the project. A solid schedule also serves as a tool for identifying delays early and taking steps to prevent or minimize them before they lead to potential disputes. If you regularly find yourself falling behind on job progress, look into refined scheduling methods and technology to shore up this problem.

4- Stay up to speed with applicable laws and regulations.

Keep up with laws and regulations that affect your types of projects. If you work on public jobs, for instance, federal or state rules may require certain mandatory contract clauses — and courts may interpret the contract as containing these clauses even if they’re omitted. Failure to comply with these rules is an invitation to disputes or litigation.

5- Train project managers.

By the time a construction company owner learns of a dispute, it’s often too late to prevent dire consequences. Project managers are typically in the best position to spot potential difficulties as they arise. Train yours to identify troublesome issues and act quickly to resolve them. Doing so can often mitigate problems before they turn into full-fledged conflicts.

6- Consider alternative project delivery methods.

New approaches, such as integrated project delivery (IPD), can help reduce disputes. In IPD, contractors, owners and architects (and even major subcontractors and suppliers) enter into a mutual contract. Doing so helps avoid disputes because the parties collaborate from the beginning — agreeing on goals; target costs; and allocation of responsibilities, risks and compensation. Often, they waive liability claims against one another (except for willful misconduct) and make decisions by unanimous consent, subject to arbitration or another alternative dispute resolution mechanism.

7- Take advantage of technology.

Evolving technologies that enhance collaboration and information sharing can help reduce disputes. Take building information modeling (BIM). This technology creates 3-D or even 4-D models that enable the parties to view the completed project from different angles to better understand the spatial relationships between building components. It also helps job contributors see how changes in design or materials affect the project. Notably, by helping the parties identify and resolve design conflicts before construction begins, BIM can be an effective dispute-avoidance tool.

© 2020

Information provided on this web site “Site” by Thompson Greenspon is intended for reference only. The information contained herein is designed solely to provide guidance to the user, and is not intended to be a substitute for the user seeking personalized professional advice based on specific factual situations. This Site may contain references to certain laws and regulations which may change over time and should be interpreted only in light of particular circumstances. As such, information on this Site does NOT constitute professional accounting, tax or legal advice and should not be interpreted as such.

Although Thompson Greenspon has made every reasonable effort to ensure that the information provided is accurate, Thompson Greenspon, and its shareholders, managers and staff, make no warranties, expressed or implied, on the information provided on this Site, or about any other website which you may access through this Site. The user accepts the information as is and assumes all responsibility for the use of such information. Thompson Greenspon also does not warrant that this Site, various services provided through this Site, and any information, software or other material downloaded from this Site, will be uninterrupted, error-free, omission-free or free of viruses or other harmful components.

Information contained on this Site is protected by copyright and may not be reproduced in any form without the expressed, written consent of Thompson Greenspon. All rights are reserved.

Share:

Leave a Comment





This site uses Akismet to reduce spam. Learn how your comment data is processed.

Ready to talk to one of our specialists?

Our specialists are all seasoned professionals who have years of experience working within your industry. Reach out to us today to schedule a consultation.