With a significant number of parties involved and potentially high stakes for investors, construction disputes may arise more frequently than in other sectors.

Understanding the most frequent sources of contention, as well as strategies for resolving disputes, is essential for contractors, developers, and clients alike.

Contract variations

One of the most common causes of building disputes is contract variations midway through a project.

Whether it be changes to the scope of work, design modifications, unforeseen site conditions, or client requests, this can substantially impact timelines and costs, leading to delays and disputes.

To prevent these issues, always ensure that all contractual obligations and rights are negotiated fully, documented in writing and communicated as early as possible to the relevant parties.

You should also ensure that you are working in compliance with the Housing Grants, Construction and Regeneration Act 1996, which outlines certain requirements, such as payment provision which need to be contained within a construction contract as defined by the Act.

Delays

Delays can be hugely disruptive to construction projects with a number of steps or parties involved, leading to disputes over compensation, penalties, and liability.

Whatever the delay is caused by, from adverse weather to supply chain issues, contractors and clients need to understand the contractual terms around delays to avoid prolonged conflicts.

This broadly falls into two categories:

• Define delay responsibilities – It is essential to clearly outline the parties’ responsibilities regarding delays in the contract. For example, if adverse weather impacts the schedule, define how that will affect timelines and costs.
• Extension of time clauses – These clauses allow the project timeline to be extended in the event of specific, agreed-upon circumstances, protecting both contractors and clients from penalties.

As with contractual changes, many delay-related disputes can be averted or lessened with good communication.

Defects

Where clients expect a high standard of quality, defects can lead to significant disputes.

When defects arise, disputes may be mitigated if the right processes are in place, such as warranties or guarantees which outline the scope for financial remedy or putting the work right.

Resolving disputes

In many cases, there are steps you can take to avoid disputes – but, when they do arise, you also have several routes towards a resolution, including:

• Negotiation – Often the first step, negotiation allows the parties to discuss and settle issues informally through open communication and transparency.
• Mediation – A neutral third party facilitates discussions between the disputing parties to help reach a mutually acceptable solution while maintaining relationships and resolving conflicts without resorting to litigation.
• Adjudication – Following the Construction Act 1996, adjudication is one of the preferred methods of dispute resolution for construction projects, providing a quick and decisive outcome which can be made binding through the Courts.

For more complex disputes you may turn to arbitration, which offers a formal but private alternative to the Courts, or litigation where a dispute cannot be resolved in another way.

For advice on avoiding and settling construction disputes, please contact our team today.