Disputes are common in all industries. However, the construction industry is one of the most dispute ridden industries, given the complex nature of its work. As large and complex projects are becoming a norm in the construction sector, disputes involving big claims are also increasing. Entering into litigation means a costly and long drawn case. It is here dispute management in construction helps to resolve the problems and avoid lengthy and expensive litigation. Here we share with you some useful insights on dispute resolution:
Causes of disputes
Some of the common causes are:
●Contract errors or omissions: Though it is one of the most common causes of disputes, it is also the most avoidable one. A well-drafted contract that is fully agreed upon by all parties can help disputes down the line
●Differing site conditions: Often the construction site condition is not as assumed at the time when the contract is drawn.
●Noncompliance: Often owners, contractors or subcontractors fail to either understand or comply with the terms of the contract.
●Payment delays: Whether a claim is poorly drafted or the owner delays the payment, finance-related problems often lead to disputes.
How does dispute management work
Dispute management in construction is important as it prevents the chances of potential litigation which can be long drawn and expensive. Alternative dispute resolution refers to the different ways disputes can be resolved without a trial. These processes are generally confidential, less formal, and less expensive than court proceedings.
Common ADR processes include
1.Adjudication: This dispute resolution process is much inexpensive and shorter than going into courts. In this process, a neutral third party will give a decision on a dispute. An adjudicator is a neutral person who is not involved in the day to day running of the construction contract. Adjudication is a quick process that ensures that cash flow is maintained during construction.
2.Arbitration: Arbitration is another alternative to litigation. In this, all parties will agree to refer the dispute to a third party, the arbitrator. Arbitrations are cost-effective and fast. Arbitration can only take place if both parties have agreed to it.
3.Mediation: Mediation is the most commonly used process in the construction industry to resolve disputes. Mediation is essentially a negotiation facilitated by a neutral third party. Unlike an arbitrator, a mediator doesn’t make a decision. The success of this method depends on the skills and capability of the negotiators. Mediation helps maintain a business relationship. Everything that happens in a mediation is confidential.
4.Litigation: Litigation means taking a dispute to a court of law. Usually, litigation is the last resort when parties cannot resolve disputes between themselves through alternative dispute resolution processes. They will present their respective cases to a court for its judgment. Litigation is not confidential. Also, it costs a lot in terms of both time and money, but sometimes is the last resort for resolving construction claims disputes.
Looking for dispute management services in the construction sector?
Contract Square is an expert at dispute management in construction be it at negotiation or arbitration levels. They are currently managing contracts worth around Rs 24 billion and have ensured successful arbitrations to the tune of over Rs 12 billion and counting. Contract Square:
●Compile concrete evidence and substantial documentation
●Help maintain the financial viability of the project.
●Fight claims battles
