Construction projects can sometimes lead to disputes that affect timelines and budgets making it essential to seek the right method to achieve an effective resolution. B P Collins’ dispute resolution team and construction sector experts explore the ten most common residential and commercial construction issues that lead to disputes and ways in which they can be resolved.
- Payment disputes: Payment issues, including delayed invoices or retention sums, are common. Disputes typically arise over the amount owed, work quality or payment process delays.
- Variations and changes: Unplanned changes to the scope of work, design, or specifications can lead to disputes over costs, timelines and responsibilities.
- Delays and time extensions: Delays caused by weather, supply chain issues, or poor project management often result in disputes over who is responsible and whether extensions of time or additional costs are justified.
- Professional negligence or work defects: Poor quality workmanship, non-compliant work or claims of negligence against professionals such as architects or engineers if their errors lead to project losses, can result in disputes over rectification costs, delays and liability.
- Design issues: Errors or omissions in design documents, such as architectural or engineering plans, can cause disputes between contractors, designers and clients.
- Contract ambiguities: Unclear or poorly drafted contracts often lead to disagreements over terms, responsibilities and obligations.
- Breach of contract: Failure to adhere to contractual terms, such as deadlines, quality standards, or payment terms is a common source of disputes.
- Disruption and loss of productivity: Issues like poor site management, lack of coordination or unforeseen events can disrupt workflow, leading to claims for lost productivity. Many contracts stipulate predetermined penalties for delays. Disputes often centre on whether the delay was justified and if the enforced penalties are appropriate.
- Termination of contract: Disputes often occur when contracts are terminated prematurely, either due to poor performance, financial issues or mutual disagreement.
- Insolvency: The insolvency of contractors, suppliers or the end client can severely disrupt construction activities and lead to delays affecting the overall contract adherence and financial stability.
Dispute resolution options
It’s critical to choose the right method of resolving a dispute. Examples include:
- Mediation: An independent mediator facilitates discussions between disputing parties, helping them to find a mutually agreeable resolution. The mediator will not take sides or give either party any advice; they will simply look to move the discussion towards settlement. This is a less combative approach, and any agreement is only binding if the parties enter into a contract (which is typically what happens).
- Adjudication: This is a cost-effective approach to dispute resolution as the process is designed to be fast, therefore reducing legal fees and ongoing costs. In most cases each party covers their own costs, and the adjudicator will decide which party (or, if both, in what proportion) should pay their fees.
- Arbitration: In this formal process, an arbitrator makes binding decisions. Arbitration is generally faster and less expensive than litigation while allowing parties more control over the process.
- Litigation: The most formal approach, this litigation involves resolving disputes through court intervention. It is usually always preferable to try and settle a dispute at an early stage, although sometimes it is not possible. As such, the last resort is to commence Court proceedings so that the Court can determine the issue. It’s typically a prolonged and expensive process but may be necessary when other methods fail.
The right resolution method will depend on a mix of factors including the complexity of the dispute, costs, urgency for a solution and if there is desire to maintain a positive relationship.
While disputes are common in construction, they can be effectively managed by understanding the resolution options available. Please contact B P Collins’ dispute resolution team at enquiries@bpcollins.co.uk or call 01753 889995.
