Construction disputes can be costly and time consuming and create delays that may end in legal action and project disruption. Escalation of issues may even lead to a project grinding to a halt. With the number of disputes with contractors and sub-contractors on the rise, what steps are available to avoid the potential for problems and to minimise conflict if it does arise?

The most common causes of disputes

Breakdown of a relationship can arise in any circumstances but some of the most common causes of disputes with contractors and sub-contractors include:

• Problems with the paperwork, for example a disagreement over the meaning of an ambiguous clause in a contract.
• Cultural differences arising from confused expectations and communication issues.
• Conflicting goals and work ethic.
• A lack of effective project management, such as co-ordination problems with contractors and sub-contractors that create tensions.

Minimising the potential for disputes

• Ensure that you have a watertight contract. 
  Poorly drafted legal documents leave room for disputes to arise further down the line where there are ambiguities, loopholes and inconsistencies. It’s essential to ensure that you have a legally enforceable contract in place, one without conflicting clauses or confusing language.
• Be clear that all the parties understand the terms.
  Poorly drafted legal documents leave room for disputes to arise further down the line where there are ambiguities, loopholes and inconsistencies. It’s essential to ensure that you have a legally enforceable contract in place, one without conflicting clauses or confusing language.
• Ensure that you have a watertight contract.
  There may be pressure to begin a project quickly but it’s crucial to give all parties time to fully understand the legal agreement before anything is signed. This will ensure that contractors have the right expectation about the project, its goals and rewards, and help to avoid disputes arising as a result of confused intentions or expectations. Particularly important are clauses that relate to payment, rights, obligations and deadlines.
• Meet all your obligations.
  From serving notices on time to making payments as scheduled, meeting your own obligations under a contract can help to reduce the potential complexity of a dispute and may prevent it from escalating.
• Negotiate
  Most minor disputes can be effectively handled by swift negotiation to avoid a disagreement becoming a full-scale conflict. The contract should contain a clear procedure for escalation designed to resolve issues but maintain the relationship.
• Bring in a third party.
  Mediation or adjudication involve a neutral third party who will come in and make a decision about the conflict that has arisen and the best way to resolve it. This option is most appropriate where both parties want to continue the relationship after the dispute has been resolved.
• Opt for arbitration.
  Although the process of arbitration is more involved it is still less costly and time consuming than litigation. An arbitrator will take on the role of a judge and make a decision based on the facts.
• Go to court.
  If all other options to minimise disputes with contractors and sub-contractors have been exhausted then litigation may be necessary.

Disputes with contractors and sub-contractors are best avoided for the benefit of the project as a whole. This starts with ensuring that you have a robust contract in place and continues with effective legal advice and advocacy at every step along the process until the dispute is settled.