Construction disputes, don’t let them derail the infrastructure boom
With UK infrastructure set to grow by 32 per cent over the next four years, the construction industry needs to act now to improve standards of contract management to avoid construction disputes.
Poor contract management is the top cause of construction disputes in the UK, and disputes can suck the profitability out of all manner of projects. Where construction disputes can’t be avoided, it is vital that dispute resolution is fast and efficient, and this is a crucial element of contract management that often gets overlooked until it is too late.
Companies of all sizes are being hit by losses on legacy contracts following shifts in the economic landscape over recent years. By making contract management a high priority, firms can stand themselves in good stead for the exciting opportunities that infrastructure investment will bring.
A common cause of construction disputes is the failure of contractors to understand the true scope of a project specification. At the larger end, specifications can comprise thousands of pages, and it can be a time-consuming process to establish the finer points of what is required.
No matter the size and scope of a project specification, firms must put a front-end risk analysis in place on every project.
This is an opportunity to prevent costly disputes by ensuring the project being undertaken is one your firm is well suited to based on your past experience and has a realistic, achievable schedule, along with a manageable degree of risk.
Delays and problems are common when delivering large projects, but a high standard of contract management can mitigate any negative knock-on effects when issues arise.
If there are delays, or if extra work is required, this must be clearly communicated by contractors. A good contract manager will tell the story of what has happened, alongside the story of what was planned, and then explain to the client why those two stories are different – and who is responsible or liable.
“When disputes can’t be avoided, firms need to speed up the process and increase their chances of success by making robust, coherent claims”
The client should be notified about delays or alterations to the plan within the contract’s allotted timescale, to allow them the chance to react and take an active role in ensuring the project remains on course.
Clear lines of communication and early warnings about issues are crucial to dispute avoidance, and a failure to deliver delay notifications in a timely manner can lead to the right to making a claim being lost.
When disputes can’t be avoided, firms need to speed up the process and increase their chances of success by making robust, coherent claims.
Contracts allow for variations and for construction claims to be made when they arise. However, poorly particularised claims are a big problem, with many firms going in with unrealistic expectations and an aggressive approach.
Claims that drag on become a drain on resources as staff are occupied in chasing entitlements that never materialise, and lengthy disputes can sour the relationship between contractor and client.
Rather than taking a gung-ho approach to new work, with the optional fall back of increasing resources when problems arise, firms must be pragmatic and put measures in place to reduce the likelihood of disputes, and to deal with them quickly and efficiently when they do arise.
With so many trades working together and so many potential interfaces, big jobs in particular have a high propensity to go wrong. But with the proper checks and measures in place, firms can ensure their interests are always protected.
By Joseph Bond, director