The Construction Industry works amidst a complex and competitive environment in which participants work together with disparate views, talents, and levels of knowledge. In this tangled environment, contributors from various fields have their own goals to target, and each one of them expects to make the most out of the project.
It is essential to be acquainted with the cause of conflict to wrap up the construction project within the desired time, budget, and quality. Since there are differences in perceptions among the participants, sometimes conflicts become inevitable. When these conflicts of interest are not managed well, they quickly turn into disputes which may prevent the successful completion of the project.
What is Dispute Resolution?
Contract Administration
The construction industry is filled with instances that contribute to dispute occurrences. While there are several factors that become the underlying cause of disputes, for instance non-payment and workmanship.
Several pieces of research show that construction claims lead to soaring costs and unnecessary time waste in the completion of the project. This typically happens when the parties cannot resolve the dispute themselves, and are required to indulge in expensive, time-consuming legal procedures that severely affects all the participants and consequently the project.
The rising cost, delay, and risk of litigation, prompt construction companies to resolve the disputes outside the courts. This is where ‘Dispute Resolution’ comes into the picture. Dispute Resolution is a process that is used to determine a conflict, disagreement, or claim. Also referred to as alternative dispute resolution, appropriate dispute resolution, or ADR, it is the proposal for settlement when there is an incongruence among various parties in terms of their profits, demands, and ideas, which lead them to claim compensation.
How does Dispute Resolution help in the construction sector?
At the outset, the intention of any construction contract is for the project to run as smoothly as possible in the hope that it will be completed within the stipulated timeline. However, at times, things don’t go as planned. Certain situations and scenarios can often lead to differences that quickly snowball into disputes. Resolution of these disputes usually take place through courts which is a formal process and may involve lengthy proceedings, document disclosures, and reports among other things.
Common types of claims resulting from disputes are:
- Employer claiming against contractor for delay or defective workmanship.
- Employer claiming against design shortcomings.
- Contractor claiming against delays or changes in scope of work.
- Consultant claiming against non-payment of dues.
Since the claim manager works on a lesser number of cases at any given time, the settlement of claims is quicker and less expensive. Also, given the fact that the parties may have their offices in areas different from the site of the project, it becomes much more convenient if the time and place of a hearing are fixed, based on the mutual availability of the parties. Since the hearings are not open to the public domain, the overall relationships are less affected. This aspect is crucial because the parties often want to avoid needless publicity as it skeptically affects their professional reputation and relationships. Let’s look at some benefits of Dispute Resolution in construction claims:
Maintains a business relationship
The processes such as mediation help in maintaining the existing business relationships as the parties are aided towards a settlement. It keeps alive the positive work environment and helps in focusing on the goal.
Lower cost
A simple mediation is a way cheaper option than a trial or arbitration. In the process of dispute resolution, there is no requirement for lawyers who add unnecessary cost and time to the resolution process. In this way, companies can save a lot of time and money and use them in their project, instead.
Confidentiality
The proceedings of mediation are entirely confidential. Contrastingly, litigation proceedings are open in the public domain. That is why confidentiality plays a vital role in protecting the image of the company and project by keeping their dispute away from the public domain.
Speed
The average mediation process of any dispute lasts for only 2-3 days. On the other hand, the trial of the litigation procedure lasts for years, before finally providing the resolution. It is, however, essential to understand that the parties may not be able to forge a resolution early on in the dispute process and it may take many months or even years before the court is in a position to settle the dispute effectively.
In the construction sector, time & money is of great essence and construction disputes in India consume both these essential elements. Contract Square will provide unmatched support at every step and our techno-legal team will help in compiling concrete evidence & substantial documentation on your behalf, for you to build a strong case without the burden of expensive legal fees. We aim at sorting all your Construction Claims at negotiation & arbitration levels, securing just settlement awards, and helping you maintain the financial viability of the project. Connect with us to know more.
