What are the common causes for construction disputes?Through this article we will discuss the common dispute causes found in construction industry.
Most construction projects end up with disputes. This is why construction disputes take more time and efforts of project management team to resolve. If the solutions such as negotiation doesn’t work then Alternative Dispute resolution methods are available before seeking litigation approach.
Construction projects involve many parties other than the main parties to the contract. Employer, consultants, main contractor, subcontractors and suppliers are the main parties involved in any construction project. Therefore it is essential to manage all parties to the contract with proper project management solutions. Although well planned, a construction project can end up with disputes and issues. Therefore disputes are common in construction projects.
What are the Common causes of construction disputes?
Errors in claim submission
Claims are one of the common causes of construction disputes. There are many claim situations arise in construction process including variation claims, extension of time claims and other types of claims such as prolongation claims. These claims must be submitted according to the contract. Poorly drafted claims without proper supporting documents can make grounds for disputes.
Different site conditions
Tender bids are submitted based on existing site conditions. This is why tenderers are encouraged to visit the site before submitting their bid for evaluation. However when the construction starts, the site condition can be different due to soil condition, subsurface conditions, unexpected structures and obstructions. These conditions can cause disagreements and disputes. However there are solutions to avoid conflict including negotiation and contractual claims.
Conflict over construction delay
Most construction projects end up with delays than early planned. If the main contractor or any subcontractor doesn’t perform their duties by the deadlines or according to the project program, it can cause delays in whole construction project. This can leads to disputes and even liquidated damages imposed on the contractor when applicable.
Contract errors
Errors in contract documents including drawings are another reason for disputes. However with proper documentation and checking process, it is easy to avoid these errors.
Poor contract administration
Contract administration process starts with a properly drafted contract document. If there are errors in the contract document, then it can create grounds for disputes. Many claim situations are not a good sign of contract administration.
Poor construction quality
If the construction process is not according to the contract drawings and specifications, then it is a cause of disputes. Contractor must follow standards and specification stated in construction contract before handing over,. Defects and poor quality results in conflicts among the parties.
Conflict over nonpayment of claims
Contractor is entitled to submit his progress claim monthly or as agreed. It is employer’s responsibility to pay the certified progress claims within the stipulated time frame. While in Singapore contractors are protected with timely payment, there are other countries that employer delays the payment on time. This situation can create disputes among the parties and even can lead to suspension of work.
Nonconformity of contractual obligations
From good housekeeping to quality construction, there are contractual obligations which all the parties to follow. If any party to the contract including employer, contractor and subcontractors do not comply with the contractual obligations, then these situations can create disputes.
Above are some of the most common causes of construction disputes. Although there are many reasons and causes for construction disputes, it is necessary to avoid these conflict situations by following good project management and contract administration.
Construction disputes can be avoided by effective negotiation. Proper documentation and record keeping is another way of avoiding disputes during the claim process.
Finally, if the disputes are unavoidable Alternative Dispute Resolution (ADR) methods are available before seeking costly litigation process.
Do you have experience with construction disputes? Please share the types of disputes you have handled before.
Thanks for the amazing piece of information, it’s really beneficial and explains disputes well. There were some minor errors such as using contractor to mean contract under non contractual payment.
Glad the article is helpful.Thanks for pointing out the error.I will check and edit.
thanks for starting an interesting series on construction issues
I am glad these articles are helpful.Thanks for sharing your thoughts too.
bye
Superb article for insights of the topic. Can delay in approvals from client/consultant be a dispute subject?
Thanks, Shubham and glad you find this article as helpful. If the delay is approved through EOT claims, still there can be situations that create disputes.
It’s nice that you mentioned how errors in the contract document could create grounds for disputes. I was reading various books for the past few days and I remember that I read a small bit about construction disputes. I wasn’t aware that something like that actually happens and it seems there are firms that offer services related to it too.