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Last edited 04 Jan 2022
Construction projects are usually long-term operations with high uncertainty and complexity, and it is impossible to resolve every detail and foresee every contingency at the outset. As a result, situations often arise that result in disputes between the parties to the contract.
The likelihood of disputes arising can be reduced by:
- Preparing clear, unambiguous and consistent project information with defined information release schedules.
- Properly assessing risks.
- Ensuring funding is in place.
- Selecting an appropriate procurement route with suitable allocation of risk.
- Using standard, unmodified forms of contract.
- Ensuring the project team have the appropriate skills and resources.
- Minimising changes.
- Agreeing realistic time schedules with consistent workloads.
- Programming works so there are no unnecessary delays.
- Managing third-party dependencies.
- Adopting collaborative working practices.
- Maintaining clear lines of communication and keeping good records.
- Issuing warnings where there may be problems.
- Tackling and settling disputes quickly.
- Taking action to mitigate problems.
- Not exaggerating claims.
Where disputes occur, the parties to the contract should first attempt to resolve them amongst themselves, as this is likely to be the fastest and least expensive solution, allowing the project to continue without disruption and maintaining good working relationships.
However, taking disputes to the courts can be expensive, complex, adversarial and time consuming. This may not be appropriate on construction projects, where a quick resolution may be needed so that the works can proceed and where it is important that the parties to the contract maintain a good working relationship.
As a result, construction contracts usually include provisions for the resolution of disputes by agreed alternative dispute resolution procedures (ADR). These are typically less formal than court proceedings and should be faster, less expensive and less times consuming, allowing the parties to maintain a good relationship.
Construction contracts are also subject to statutory schemes, such as the Housing Grants, Construction and Regeneration Act, which impose ADR in the absence of appropriate contractual terms.
ADR typically involves procedures such as mediation, adjudication, arbitration, or a combination. Large or complex projects may have additional tiered dispute resolution procedures (with obligations to negotiate in good faith), dispute resolution boards, steering committees and partnering meetings. For more information see: Alternative dispute resolution.
Where court action is necessary, the Technology and Construction Court (TCC) is a specialist court, which deals principally with technology and construction disputes. However, in many cases, there will be a compulsory Pre-Action Protocol to encourage the frank and early exchange of information about the prospective claim and any defence to it. This can enable the parties to avoid full court proceedings by agreeing a settlement before commencement. It also supports the efficient management of proceedings where full court proceedings cannot be avoided.
- Arrange an informal negotiation/discussion with both parties
- Advise on the various processes and which one to use
- Notify the client of contractual obligations
- Notify the contractor of contractual obligations
- Provide all necessary information when required
- Tread carefully before becoming directly involved
- Provide all necessary advice to the client but not directly negotiate on their behalf.
The Global Construction Disputes Report published by Arcadis in 2019 found that the UK remains the jurisdiction with the shortest average length of time to solve a dispute at 12.8 months, and that the average value of disputes in the UK has fallen 47% to US$ 17.9 million. Negotiation remains the preferred method of resolution.
- Alternative dispute resolution legislation.
- Alternative dispute resolution.
- CLC document on claims and disputes in construction.
- Clear contracts during uncertain times.
- Compulsory Alternative Dispute Resolution.
- Conflict avoidance.
- Construction disputes.
- Contract claims.
- Delays on construction projects.
- Dispute avoidance.
- Dispute resolution board.
- Expert evaluation.
- Expert witness.
- International research into the causes of delays on construction projects.
- Liquidated damages.
- Loss and expense.
- Negotiation techniques.
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