Importance of dispute avoidance in the construction sector « Sum

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Importance of dispute avoidance in the construction sector

Disputes can be lengthy and costly for businesses, particularly in construction where there are so many moving parts to the workforce that it can be all the more common for disputes to arise.

Contractual disputes can prove to be costly for all parties involved and as with any issue, prevention is always better than a cure. By ensuring that you get the basics right, you may put yourself and your business at a reduced chance of descending into a dispute.

Within construction and infrastructure sectors, the number of disputes is increasing each year, prompting for effective resolution services to become even more important. The fact of the matter is, sometimes all parties involved in a contract are not always able to understand one another’s viewpoint or see eye-to-eye, at some point in the working relationship. Therefore, it is important for avoidance dispute specialists, such as Sum, to focus on supporting our clients in avoiding lengthy disputes, particularly during the post-contract stage.

Reasons for disputes

Construction is considered a high-risk business and differences between parties are a common occurrence. With the delivery of a construction project requiring a number of different team members to come together to ensure this very dynamic process is completed effectively, it can be difficult to ensure that every requirement, design, method, sequence and all resources are met. With multiple elements forming any construction project, disputes can come light over any number of issues.

There are a number of reasons why disputes might occur, but some of the most common in the construction industry are:

– Claims are poorly drafted, incomplete, or unsubstantiated

– The actions or inactions of a third party or practise of agencies

– Errors or omissions in contractual documentation

– Contractual obligations not upheld or complied with by employers, contractors or subcontractors

– Failure to administer the contract properly

– Design and build requirements, employer requirements or incomplete design-build requirements

– Differing, unforeseen or alternative ground conditions and utility infrastructure relocation issues

By acting on issues quickly and fairly, you can ensure that advanced administration fees are not incurred alongside any other costs, which result in a better result for the payees, whether this is the public, a contractor or an employer.

What happens when construction project expectations are unrealistic?

As with the majority of construction projects, things will rarely run smoothly all of the time, however, many of those in their respective teams will look to a project manager to answer any questions, identify problems and take action ahead of issues arising. Any project managers allocated should be confident in their ability and should be able to effectively determine the difference between success and failure within the project.

Many projects fail due to not hitting targets or goals because of uncertainty around the activities. With project managers often not accustomed to measuring communication effectiveness, this can cause issues within technical reports and can result in one-dimensional viewpoints when relaying results or instructions.

Considering every project is so vastly different, all resources required to complete it will be different. This includes drawings, specs, ground conditions, building regulations and methodology, trade teams involved and any difficult environments involved in the completion of the project. For every project to work most efficiently, employees and managers alike need to adapt and change to fit the brief and project spec, rather than applying expectancies derived from other projects onto the current one.

The importance of dispute avoidance

When it comes to construction disputes, costs can occur both directly or indirectly. This includes the use of legal services, adjudication, arbitration, advisory and any in-house resources utilised in the process. Some direct costs can, in fact, dwarf the initial claims and amount substantial growth throughout the process.

Where risk averse contracts are utilised as a way to reduce or transfer risk from one party to another, or control or influence one party within the contract, these can often result in project inefficiency and be counterproductive. Quality issues, delays, costs and disputes can all arise from the use of these contracts, and therefore it is important for all parties to remain engaged and proactively in control of the risk management, equally, throughout the project.

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