Understanding Construction Disputes and How to Avoid Them

A construction dispute is the situation that a client and a contractor face when there is a disagreement over the contractual terms of a project. It is a conflict that can result from defects in designs, delays to the schedule, cost overruns and misinterpretation of the scope of work. 

If they are not handled thoroughly and respectfully, disputes can lead to financial losses for involved parties, to damaged reputations and even to legal action. Construction companies must treat disputes as serious, sensitive issues and do their best to resolve them amicably, as the potential negative consequences from a dispute can be damaging. 

Common Reasons for Disputes

There are a number of common issues that cause a dispute between two parties during a construction contract. Here are three examples of these reoccurring issues:

Unclear Project Scopes

Perhaps the biggest cause of disputes between companies in the process of a construction project is an unclear project scope. A scope that includes any vagueness or ambiguity leads to a dangerous conclusion: assumptions. A main contractor or subcontractor should never make assumptions about a scope, as there is too much room for interpretation when scopes aren’t clear. Assumptions are a primary driver of disputes in construction and must be avoided at all costs. 

Overlooked Contractual Details

Another common cause of disputes is a lack of thorough understanding of the contract at hand. A contract is not a document that you can afford to skim. Companies signing a contract need to read and reread the contract until they are certain of the requirements — otherwise, they risk missing details that could make a big difference to the final outcome of the project. Overlooking contractual details and making choices during construction that differ from the contracted work will usually lead to a dispute. 

Missed Early Warning Signs

Mistakes and rework are not unusual in construction. But often, they can be avoided if the project managers and quality personnel are proactive enough in their inspections. A dispute is likely to occur when mistakes aren’t noticed until, for example, a milestone meeting towards the end of the project or even during the handover. 

Avoiding and Minimising Construction Disputes

It’s in everyone’s best interests to minimise the potential for disputes during a construction project. Here are some strategies that can help you do this:

Confirm a Detailed Scope of Works

Making sure that everyone has as much detail and clarity as possible in the scope of works is perhaps the best way to avoid disputes. If all parties understand exactly what the client wants and how to make it a reality, there are much lower chances for disputes to occur.

Encourage Questions at All Stages

You don’t want teams on site to feel too nervous to ask a question. Best-case scenario: everyone will feel safe to ask any and all questions in the meetings that you have, from pre-construction to the final phase of the project. Encouraging people to ask questions and seek clarity can help you set potential miscommunications or misunderstandings straight before they result in a dispute. 

Apply Emotional Intelligence

Something that isn’t mentioned enough in construction is the importance of emotional intelligence. Disputes can be tense situations and it’s best to try and avoid serious conflict before it arises or defuse a conflict before it escalates. Listening, communicating well and having compassion for everyone involved can help to resolve disputes amicably before they boil over. 

Always Refer to the Contract

Disputes can arise between companies around whether work that is already finished was in scope or not, leading to disagreements over payment. There are also instances where a subcontractor might disagree that some work is in scope. In these instances, the best thing to do is to refer back to the contract and give specific evidence of the requirement.

Use Real-Time Collaboration Tools

Using a construction management platform is a great way to minimise disputes, because you can keep everybody aligned and give them access to all the information that they need. This transparency and ability to share information with different contractors keeps everybody in the loop, avoiding the gaps in communication that can lead to disputes.

Final Thoughts

There’s a simple mantra that can help you when trying to avoid or solve construction disputes: “No problems, only solutions”. Approaching a dispute as if you’re trying to win a debate is not the way to handle it. But approaching it with integrity, understanding, compassion and a solutions-oriented focus can help you to not only solve the dispute, but to keep the peace between all the companies involved.

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